ROI holds the key to winning over buyers

As customers restrict their IT spending to the bare essentials, Sean Williams outlines the best approach to building business.

IT investment today is a world away from what it was just a few short years ago. The boom sales of the 90s have gone and with them the easy sell to new customers.

To move your business forward it is important to accept this, and understand that a new model is required.

Most established businesses have a preferred core application, and it is only because of specialist requirements, or where the author of existing software ceases to trade, that they seek out new systems.

Therefore, it is vital to sustain the effort of maintaining clients through upgrades and the streamlining of processes.

Research from PMP suggests that businesses are investing in bite-sized chunks of additional software, in such areas as management information systems, customer-focused processes and the internet, to develop and enhance their existing systems.

There are two key drivers for IT investment. The first is pure necessity; there is no choice. The investment is made either for essential maintenance or, more dramatically, just to stay in business. The second type of investment is designed to improve the operational effectiveness of the business.

It is generally easier to measure in relation to return on investment (ROI). Whether customers like it or not, products become obsolete. Software vendors continue to produce new versions, or upgrades, to keep pace with technological change and/or legal requirements.

A number of key areas have a significant impact on the success of any project, including available resources, skill levels and, more importantly, accurate information from the supplier. Without this information your prospects and customers will find it difficult to evaluate your proposed solution in relation to ROI.

However, assuming this information is in place, the biggest single constraint against IT investment is cost.

Today's market is a tough one. We are dealing with buyers and directors who have been through the IT acquisition hoop many times. These days, wary buyers are even more reluctant to commit to a purchase.

Leasing and rental can help you to overcome their objections. You can tie in your hard-won customers over several years and enjoy the business benefit of forward planning.

Just think what effect it would have on your budgeting process each year if you knew in advance that 80 per cent or more of your support contracts were already in place.

Sean Williams is chief executive of Syscap.