Amid all the doom-and-gloom in the market, the technology sector remains robust thanks to companies' continuing efforts to adopt new cloud-and-AI based systems. But as purse strings get tighter, businesses need to get more savvy about their tech purchases if they want those investments to succeed.
It’s clear that, despite cost-cutting in other parts of their organizations, executives aren’t pushing pause on the critical digital overhauls that will help define the future of their businesses. Researchers at Statista predict global digital transformation spending will reach $3.4 trillion by 2026. But while the word “digital” is now in the daily lexicon of most executives, IT modernization efforts are no longer the bottomless pit of money they once were.
Companies are more focused than ever on maximizing their spend and getting the biggest return possible. And for good reason. Enterprise buying decisions have long seemed tribal, political and agenda-driven, resulting in decisions that may not be logical or even address the actual problem a company sought out to solve. Adding to that, the market is increasingly clogged with half-baked products that are marketed as some magic solution. Only after the ink has dried on the contract do most customers realize how bad or expensive the tools actually are.
During the COVID-19 pandemic, Robert Harris, a communications technology consultant, helped a higher education client replace a 30-year old PBX system. The client had a preferred vendor, but couldn't determine how many seats they would need for their first year of classes until the pandemic was over. Harris advocated for transparent pricing and enterprise discounting from their preferred CCaaS vendor. When that vendor was unable to budge, Harris proposed bringing in additional vendors for consideration and making sure the client had access to the value promised by the cloud technology.”
It’s the reality of buying business software: Due diligence is necessary to make sure you’re not getting fleeced. Failing to do due diligence could result in runaway costs for a tech buy that is providing no help to the business. It also keeps companies tethered to IT providers that prevent them from true modernization.
“One of the value propositions of cloud is agility and flexibility, but many vendors will try to lock customers into rigid pricing and service contracts,” said Harris. “It takes some real work to benchmark subscription costs but it always pays off.”
To ensure investments in enterprise technology are successful, IT buyers must create a process that entails thorough planning, research, outlining use case requirements, assessing vendors, reviewing contracts, and pricing.
Before even reaching out to vendors, companies need to understand what their pain points are. By identifying the problems, businesses can then start to work with vendors on the appropriate solution. That’s becoming more important as organizations expect their software to solve multiple challenges simultaneously.
For example, when shopping for new contact center software, reviews posted on customer peer review sites indicate customers want digital channels, integrated AI, and, increasingly, broader features for collaboration, workforce engagement management, and integrations into CRM.
One of the largest customer peer review sites is Gartner Peer Insights. AWS and Dialpad, two vendors with conversational AI platforms, now have a large number of customer reviews for their CCaaS solutions. That suggests customers are already beginning to think about how to use AI to change the reputation of the call center from a customer complaint dumping ground to the core of an enterprise’s efforts to provide individualized care to each consumer. But executing on that call center goal requires new cross-collaboration between departments.
It’s why any successful IT purchase is now also contingent on bringing in voices from around the business. Part of that is cost. Software is getting more expensive. The average contract value of an enterprise tech purchase is now estimated to be $11.3 million, with a median of $3 million, per a survey by Gartner. As IT becomes a bigger budget item, it has to become more than just the CIO’s responsibility to ensure a corresponding ROI.
While the CIO owns the IT systems supporting contact center projects, the rising costs of operating a contact center are directly felt by the CFO who is concerned with current and proposed costs, and the VP of Customer Service who is most often the Executive sponsor for contact center projects (who is ultimately accountable for success ). But these aren't the only stakeholders affected by rising costs. The telecom department that manages the company's telecom services is impacted, as are teams in Procurement who are responsible for selecting and negotiating the best contracts for the company. In addition, Finance and Accounting teams may be involved in managing budgets, tracking costs, and analyzing ROI for the contact center system, just as HR needs to be consulted before contact center disruptions exacerbate agent attrition. Building a consensus to outsource or select a new CCaaS system requires the cooperation of all these stakeholders, and a catalyst to ‘build the bridges’ across the organization.
"In the case of CCaaS there is awareness of unpredictable costs, yet it is so easy to underestimate the extent – integration with CRM, professional services, transaction charges, telecom costs, and even severance payments. The question has to be asked three times over, what other costs will we face?" said Stephen Purkiss, one of the world's leading procurement specialists. "In almost every Enterprise, there is a decision to be made on ownership and accountability. Both the CTO and VP of Client Services are integral to success, however, these leaders have quite different goals and responsibilities. With ownership comes the associated budget and ultimately influence and power.”
But software is also no longer built for siloed teams. More tools are being designed to work across departments. And as other divisions, like marketing and sales, get their own tech budgets, voices beyond the CIO should be helping to lead the negotiations. In fact, 67% of those involved in IT buying decisions are not in IT, according to the Gartner survey, suggesting that anyone can become a tech buyer for their organization.
As the pool of buyers expands, it’s critical that IT and non-IT folks alike leverage a range of third-party resources before buying, such as consultants to manage vendor selection, sourcing, and contracting, as well as industry analysts to optimize spend and reduce risk. Additionally, IT buyers can learn from the experiences of their peers by utilizing free peer review and ratings sites to gain an understanding of customer sentiment. Gartner analysts consider Peer Insights as one factor (among many) in creating Gartner's expert-led Magic Quadrant reports.
Economic downturns become prime opportunities for forward-thinking companies to invest while others are pulling back. But as available capital constricts, businesses need to be smarter-than-ever about how they approach IT buying.
Bringing in more voices to the discussions – whether that be third-party entities or other executives within the business – is one of the only surefire ways to avoid getting stuck with bad software.
