Author: Hank Barnes from Gartner
As organizations look to become more agile, we are seeing changing in buying approaches–but all is not well. In a recent Gartner survey, we discovered that our 506 respondents (in mid-sized enterprises or larger) had considered over 8000 significant software purchases (25K+ or 50K+ depending on organization size) in the past two years. Most importantly, 43% of them were ad hoc buying efforts—efforts that were not tied to strategic plans or existing budget commitments.
Generally (I will be diving deeper into this in research for clients), the completion rate–that is the license is bought or the SaaS contract is signed–is about the same for ad hoc and planned purchases. Consider that again. Organizations are as likely to buy something that they consider on the fly as they are for something that they had planned for.
Is that agility or is that a sign of problems? We think it may be a little of both.
Certainly, it is a good thing if an organization realizes that their needs have changed or addressing one thing is more urgent than another (I blogged about urgency late last year and now have research published for Gartner clients). But if the pattern indicates an inability to act and thrashing in their buying efforts, then that is a problem.
Research from CEB (now Gartner) showed that B2B customers (not just for technology) typically experience that buying efforts take twice as long as they anticipated.
And, even when they complete a purchase, many feel regret with the decision (largely that they “settled” for something that was less than ideal).
The implications seem clear. Even as organizations try to move faster, they often move slower. A willingness to be agile invites them to consider new ideas, but they have not mastered the process of prioritization. They have not mastered the process of how to buy (many feel they are in a constant quest for more information–but never really know when they have the information they need). They have not mastered the art of building consensus–resulting in the perception that pet projects are being pushed rather than what is most important. And what is most important seems to be nebulous and constantly changing.
This presents similarly mixed implications for providers. On the one hand, organizations are willing to adapt and change–you don’t have to get your project in the strategic plan to be considered. But on the other hand, to win, your battling other projects, shifting priorities, and lots of buyer uncertainty. Providers that can help buyers navigate these waters, prescribing paths to success and value, will experience less frustration, less stalled (or no decision) deals, and more satisfied customers.
There is a lot more in the survey that our team will be exploring in upcoming research (like the urgency note). It will also be the focal point for one of my presentations that the upcoming Gartner Tech Growth and Innovation Conference, April 30-May 2. Join us as I explore the issues of “broken buying” and what can be done about it.