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A successful enterprise-technology purchase is one that meets the expectations of stakeholders in delivering against the use cases for which it was bought. Here’s what to know to make one.
For enterprise technology investments to achieve their goals, and for purchasers to be satisfied with their decisions, enterprise tech buyers need a rigorous process through which to identify critical stakeholders, align their potentially disparate objectives, secure budget — which increasingly comes from outside of IT — and monitor the progress of key steps that any buyer team must take to evaluate and deploy technology solutions.
Those key steps include:
Plan. Create your evaluation team, define objectives, establish timelines, identify budget and finalize the plan.
Research. Identify basic needs, research technology basics and understand the vendor landscape.
Build use case requirements. Identify processes and use cases that the enterprise technology/solutions must support, specify detailed requirements and rank them by importance, and get consensus on those requirements from key stakeholders.
Evaluate specific vendors. Share objectives and requirements with vendors, evaluate their pitches and proposals, conduct detailed due diligence and score vendors, culminating in your final choice.
The modern enterprise technology customer is more tech-savvy, has numerous opportunities and use cases for tech, has access to more options and information than ever before — but often regrets their purchase. Gartner research showed that 73% of tech buyers who had bought but not yet implemented their products/solutions already indicated high regret.
In a 2022 study, Gartner enabled tech buyers to characterize their regret by asking them to indicate to what extent they agreed with two specific statements:
“The offering we ultimately purchased is failing (or failed) to meet our expectations.”
“We initially considered offerings that were much more ambitious than what we ultimately decided upon.”
The survey of more than a thousand enterprise-tech purchasers showed that high-regret buyers tend to:
Lack focus and clarity in their buying approach. Conflicting objectives are the clearest precursor to regret, occurring in almost 90% of high-regret cases. High-regret buyers are less likely to have identified clear evaluation criteria and/or are unclear on the specific outcomes and goals of the intended project. They are more likely to continuously change project objectives and to allow occasional decision makers to sway decisions.
Have prolonged purchasing cycles. Enterprises that declared a high level of regret surrounding a major technology purchase decision took seven to 10 months longer, on average, to complete a purchase compared with those with no regret.
Are more likely to make no decision at all. These would-be buyers are more likely to cancel buying efforts regardless of how much time and effort vendors put into wooing them.
Low-regret buyers, by contrast, focus on topics and outcomes, gain internal buy-in, and rapidly focus on working with the one vendor most likely to help them achieve those outcomes.
The results of the 2022 Gartner Tech Buying Behavior Survey showed the mean contract value of an enterprise technology purchase was $11.3 million and the median was $3 million. But many “IT buyers” are not from IT, which means that funding is typically distributed across multiple areas of the business.
A successful tech purchase therefore requires consensus among multiple stakeholders throughout each stage of the purchasing process. And these stakeholders should be represented on a buying team that is aligned on the objectives of the purchase. While 69% of buying teams build some sort of business case, most are not securing budget prior to engaging deeply with providers. This creates stress and conflict among team members and results in complexity and delays in the buying process.
Buying teams have six to seven members on average, but it can be far more. For IT services deals greater than $5 million, for example, the buying team averages 15 stakeholders. Gartner research shows that IT influences most tech purchases — though those IT staff are increasingly likely to work within business units. Buying teams are fairly stable across deal size and typically have stakeholders from three to four functional areas.
Public-sector buying teams are significantly more likely to include operational or business subject matter experts, who have a deep knowledge of the business processes impacted by the acquisition of a new solution.
Buying teams typically utilize three to four third-party resources to inform their decision process for tech purchasing, most commonly consultants to manage vendor selection, sourcing and contracting. (See Gartner BuySmart™ self-service tool for streamlining enterprise technology selection.)
C-level executives participate in a decision-making capacity — and are the most likely members to have veto power, despite being “occasional decision makers” who don’t participate actively throughout the full vetting and purchasing process.
Significantly, conflicting objectives for the purchase among the buying team are a common driver of purchase regret. Scope changes are also the most common reason for delays in the buying process (also see “How long is the buying process for tech purchases?”)
The acceleration of digital transformation initiatives continues to drive increased purchases of a wide range of hardware, software and integrated solutions. Growth is technology’s No. 1 job in the digital economy (and especially for IT strategy during recessionary conditions), but Gartner research shows that the primary objective of enterprise tech spending is still most often to improve operational efficiency and/or productivity.
For technology investments to achieve these and other goals such as increased business agility and improved customer and/or employee experience, it’s key for the organization to stay ahead or at the forefront of technology trends and forces and to align around the use case and requirements of the purchases.
Among IT services buyers, 43% are developing a quantified business case based on key performance indicators (KPIs), and 49% are developing a financial business case. These are not mutually exclusive as some buyers do both, but these data show many buyers still have incomplete and/or inconsistent IT services buying processes.
Define objectives specifically and assign return-on-investment (ROI) expectations as you create the business case. Some key steps:
Research technology basics to better understand use cases within your industry, critical capabilities vs. nice-to-haves, and alignment with your organization’s roadmap. Understand how peers in your sector have solved similar problems to gain context and insights.
Understand the landscape of available tools and vendors within the technology space your team is evaluating, including available categories and solutions offered.
Enlist an evaluation team by selecting a mix of relevant, forward-looking perspectives, including IT, as well as roles, functions and business technologists and fusion teams that will champion or use the technology. In addition to cross-functional users, try to include team members who are known change enablers, who can help your team prepare for implementation and adoption hurdles that otherwise lead to purchase regret. (Also see “What is a buying team and who should be on it?”)
Define specific objectives and key performance indicators (KPIs) that will help your team later measure and report on ROI.
Establish a timeline that includes critical phases of the purchasing process, tasks, a go-live date and post-purchase events such as implementation roadmaps, training and adoption.
Exploring, from initially exploring options to engage with providers.
Evaluating, from engaging with the first potential provider to choosing a winning provider.
Engaging, from choosing a winning provider to signing the contract(s).
Several factors contribute meaningfully to delays in the buying process. Scope changes are the most common reason for delays in the buying process: 73% of buyers report moderate or significant delays to buying as a result of this. But most buyers grapple with other factors too, including security concerns and the emergence of “surprise” steps.
In one Gartner study, 71% of buyers were delayed by surprise steps in the buying process, suggesting that many buyers don’t have a clear idea of how to make a tech buying decision. Another two-thirds of buyers cited that their decisions were delayed by an inability to get product or implementation information from providers.
Enterprises that declared a high level of regret surrounding a major technology purchase decision took seven to 10 months longer, on average, to complete a purchase compared with those with no regret. (See “How do we ensure we don’t regret our tech purchase later?”)
Following best practices in the buying process can reduce these delays. (See “What is the best way to buy enterprise technology?”)
To select the right technology for your organization, you need to thoroughly understand your requirements. First, research technology basics to better understand use cases within your industry, critical capabilities vs. nice-to-haves. Understand the landscape of available tools and vendors within the technology space that your team is evaluating.
Identify processes and use cases the technology must support before specifying detailed product requirements or ranking requirements by importance. Then build more detailed requirements to help you determine whether a given technology vendor will be able to meet your specific needs as defined in your business goals.
Once done, customize according to your priority needs, but in general you’ll need to scope and weight the following:
Functional requirements to meet specific use cases and user needs
Technical requirements that fit your organization’s available infrastructure and meet security needs
Support and services, including implementation assistance, service level agreements (SLAs), training and ongoing customer support
Customer or industry peer references and user ratings
Potential pricing and commercial terms against your budget, including implementation and training costs, service or maintenance fees, license fees and renewals
Prioritize by asking yourself:
Is this requirement essential to my organization or objectives?
If so, the priority is high
Is this requirement highly desirable, but not necessarily essential to my organization or objectives?
If so, the priority is medium
Is this requirement optional, and not a barrier to the success of my organization or objectives if it is not met?
If so, the priority is low
Make sure you achieve consensus within the buying team on these requirements and their priorities. It is this list that you will share with potential vendors. (Send a requirements questionnaire to all vendors under early consideration.) Failure to build a complete and relevant list will make it difficult to determine whether a given technology vendor can meet your specific needs. (Also see “How do I rate the vendors offering the technology I need?”)
After creating a list of vendors and products that potentially fit your agreed-upon requirements, your team can proceed to evaluation. This stage of the purchasing process often proves to be the most time-consuming because it involves multiple conversations and meetings with vendors.
To optimize the team’s time and focus, short-list (and screen out) based on criteria such as:
Alignment. Analyze vendor responses to find those most aligned to delivering on your requirements.
Capabilities. Work closely with IT to conduct detailed due diligence on vendor capabilities, including security and risk assessments, implementation and post-purchase support and other critical areas.
Reputation. Check vendor references with other in-industry users or customers, asking pointed questions about outcomes, satisfaction, vendor responses to problem-solving and trouble-shooting.
Only invite shortlisted vendors to conduct more detailed demonstrations. At those meetings, be candid and comprehensive in sharing your objectives and requirements.
In evaluating top candidates, use a common scorecard to enable all purchase team members to rate vendors on your key criteria. Synthesize the findings into a dynamic scorecard that can keep track of how each vendor is performing compared to others. This makes it easier to make a final selection. (Also see “How do I pick my technology vendor?”)
When you are ready to compare vendor performance, be sure that all requirements have been scored across all vendors. If any are not scored, be sure to understand why. Beyond an oversight by the team, common reasons include:
That capability was not available from that specific vendor. This should be noted and given the lowest possible score.
The capability is available but was not demonstrated. This should be scored appropriately and reasons noted as some — such as ‘did not understand our needs or follow guidance’ — may impact scores on the qualitative relationship more than, say, ‘time or technology issues prevented live demonstration of capability.’
Once the team chooses a vendor, review the decision, selection criteria, and other key considerations and share that information with stakeholders and budget owners to ensure that all stakeholders feel confident in your final decision.
Document why you have selected that vendor, providing information such as:
Their score against whatever criteria who used
Scores for all vendors to show how all vendors were evaluated, selected or rejected.
Scores by requirement category for your chosen vendor versus others
Technology summation, describing the type of technology/solution being evaluated
Qualitative comments that provide additional context around the scorecard results.
The next step will be to negotiate contract terms, so always craft and consider a Plan B in case you can’t reach acceptable terms.