It wasn't too long ago that I wrote about the odd couple in a metaphor where Felix was the neat and organized IT guy who didn't want to change anything and Oscar was the messy line of business guy. Well guess what Oscar has now taken over as the purchase decision making power of information technology products and services has moved away from CIOs to line of business and CFOs. This shift began ten years ago with the advent of the SaaS model, and the inability of CIOs to understand and innovate IT fast enough to address business priorities. Recent Gartner research from their EXP members (CIOs) reinforces this and has found that only 5% of CIOs can authorize an IT investment and that the decision must be approved by the CFO.
Information technology has always been a major competitive weapon for global businesses and even more so today with advent of digital marketing and the incredible rise of web channel ecommerce. IT plays an even more pivotal role as business begins to adapt to what is being coined "the new normal" as it refers to customer experience management and evolution of the social customer. CIOs of the 1980s- 90s and even the early millennium have not adapted fast enough to understand the challenges that business faces in the new competitive landscape of the millennium. The fact is that today you can get IT without the IT guys, which is why there are now more than 1600 SaaS products and services available to business according to Jeff Kaplan at Thinkstrategies.
Let's get back to the influence shift. At SAP we began to notice a significant change in the purchase decision making process more than five years ago when the waning influence of CIOs and IT professionals began to show up in our research. Over the last five years we launched primary market research surveys to understand not only the purchase decision making process, but also who (what channel) influences the process and at what stage.
We tailored the research methodology to profile the business software purchase decision making process and segmented it into six stages including:
- Maintaining awareness of technology and industry trends.
- Creating and reviewing business strategies.
- Developing and reviewing technology architecture.
- Specifying solution requirements.
- Establishing vendor/product short lists.
- Selecting the vendor
Overall we found that the business software purchase decision making was becoming more centralized and collaborative and increasingly so in the SMB market. LOB managers were heavily involved in stages two and six of the process, with CEOs and non IT LOB being the most influential followed by IT.
Current Major Influencing Channels
The next part of the research explored what channels of influence, peer groups, industry analysts, technology press, industry press etc, delivered information that influenced their perception of business software products. There were actually twenty four different categories but here is what we found.
- Peer groups, colleagues outside of the company and peer group and/or membership in professional society again ranked very high in influencing mediums within the top ten.
- Customers, business software vendors, IT consultants and business consultants ranked second, third, fourth, fifth and seventh in the top ten, followed by partners, systems integrators and industry press.
- Although industry analyst influence also increased it was not as pronounced as LOB and was nearly the same for SMB as in 2006, and was ranked 15th in companies with <500 employees.
- Technology press, industry press, job function press and general press fell significantly lower in influence level since 2006. Financial analysts, CPAs/accounting firms, academics and venture capitalists were the least significant influencing mediums.
Future Channels of Influence
The majority of respon dents indicated that the current influencing channels would not change significantly over the next twelve months. Peer groups, conferences and industry specific events are still the place to be in the market and were again reinforced by comments in the open ended section of the survey.
- Social media, blogs, and other social media platforms are quickly gaining influence as they aggregate groups and trustworthy content.
- Webinars and virtual events are seen as important influencing mediums.
- Blogging and social media were again reinforced as important by comments in the open ended section of the survey.
Influencer Importance of Business Software Decision Making
We found that overall peer networking with colleagues in person/offline was the most important influencing channel followed by:
- In person/offline events.
- Speaker in person at company.
- Colleague peer networking online.
- White papers
- Email, events-online webinar-virtual, research organization 1:1 consulting, and research organization publication.
We found for the most part that business software vendor opinion was driven by five factors, and we found that corporate citizenship and environmental issues ranked near the bottom influencing issues, especially in the United States.
1. Customer service
2. Pricing
3. Products and services
4. Technology and R&D
5. Company management
Net/Net
The insights from this research are important to both the buyer of business software and perhaps more importantly to the vendor. If you are a vendor focus your marketing and communications efforts on:
- Non IT and LOB.
- IT analysts.
- Business influencers focused on specific areas such as CRM-SaaS etc.
- Peer groups offline and in person events.
- Strong business software vendor evangelists and speakers.
- SMPGs, social media peer groups as related to software solutions.
- Invest in industry specific event and conferences.
- Webinars and online virtual events.
- White papers
- Vertical industry specific press
If you are a buyer of business software this research provides a clear picture of how your peers are selecting business software, what is important and what channels they leverage in their software decision making process. Until next time I wish you great selling and marketing in the millennium.
As Gary Hamels so aptly quoted, "influence is like water it flows everywhere."