Technology Buyers: So Many Needs, So Little Time

While much has been written on how vendors can get the most out of their analyst relations strategies — both in blogs and in my book — little has been written about how technology buyers can maximize their use of advisory firms. Jim Zimmerman, in his blog, AnalystPerspectives, presents this issue in a well-written post.

It got me thinking about the sales cycles I’d been involved in with technology buyers, and how convincing some of these prospects of the value of an advisory firm is hard work.

Buyer Segments

What made the difference was having an analyst who had actually done what they were looking to accomplish. Many didn’t need to do vendor scoping; they needed guidance and influence on contracts, pricing and insight that they had no way of getting without outside help.

Jim’s post got me to thinking about how the segments of technology buyers break out, as the needs vary significantly by each of these types of buyers. Now it pains me as a lover of all things analytical to put these segments out without a thorough research methodology behind them — with insights gained at the 99 percent level of confidence. Yet, I felt it would be hopefully useful for those technology buyers to consider when looking at hiring an advisory firm.

Here are the segments that emerge from my experiences:

• Do-it-yourself researchers. CIOs and directors of IT in smaller companies, often with highly complex products and services, see their needs as so unique and different that an advisory firm of any kind is not seriously considered. Compounding this are smaller budgets, often just enough to pay for upgrades, maintenance and possibly a few critical applications. This is clearly the toughest sale of all for an analyst firm to make.
• Make the pain stop segment. This segment is responsible for the balkanization of advisory firms in the technology buying community, as it focuses on curing a major pain in their organization now. Often this is where a legacy order management system somehow is no longer synchronized to pricing — or worse, where engineering change control processes have broken down and products are being delivered to customers out of their specifications.

  The make-the-pain-stop segment looks to any advisory firm with hands-on experience in solving their problems, and will often hire several smaller advisory firms — many of them one or two-person firms — to get the pain to stop. The ROI here is saving an account, their jobs and possibly the company.

• Process strategists transitioning to process owners. This is where the action is for advisory firms selling to technology buyers. Sure, all technology buyers now have process religion; but it is one thing to agree with and quite another to implement process change in any company.

  The risks of making the wrong IT decision to support a new process are often huge, as companies typically over $100 million are in this category and are by definition global in operations.

  Correspondingly, they have budgeted for analyst firms and evaluate potential advisory firm partners by their knowledge of not only their own industry, but of pricing threats to their existing strategies and knowledge of performance-based metrics to benchmark performance. Many, many IT organizations see Salesforce.com as a threat to not only their enterprise CRM systems in this market, but to their ability to control pricing with other software vendors.

  One CIO kept asking me for Salesforce.com pricing, and I had no idea what to tell him. The sales vice presidents had done an end-run and brought in the hosted app on trial basis, and the next thing anyone knew, there were over 100 active users. Now, that is viral marketing at its best. However, the CIO told me that there is a major hole in the technology buyer advisory services firms on pricing alone. The last time I spoke to him, he was fighting to get Salesforce.com on their in-house servers and it was difficult to do that.

  Gartner had told him of other SaaS (Software as a Service) based CRM firms, but could not get the pricing ammunition the CIO wanted either. This is the segment where contract negotiation becomes important to the technology buyer, as does guidance on vendor viability in niche areas of their overall strategy.

• Process re-engineering on steroids. These companies are those that have multiple ERP instances across three or more continents, are the reference account names that can literally propel a small best-of-breed software vendor into existence (like Cisco and General Electric have done, for example) and are more interested in working only with advisory firms who have the ability to influence Oracle, Microsoft or SAP specifically on their behalf, on maintenance pricing, upgrades and service.

  Companies in this segment have their own analysts who can track vendors; they don’t specifically need that. They contract with analyst firms to get their influence back onto vendors, and also to understand how the surveys completed by analyst firms will potentially impact their IT strategies.

Nevertheless, the bottom line is this: Technology buyers want to be process owners and are now process custodians for the most part in many companies. This is a risky place to be, so many evaluate advisory firms on their ability to deliver the ammunition they need in terms of contract negotiation, including new purchases and maintenance upgrades, influencing vendors on their behalf and finally, minimizing the risk of making a bad decision.