Top VARs end-user research

250 IT purchasing decision makers tell us what they are looking for in their IT suppliers

"Don't be annoying; we'll be in touch if we need something."

That response from one of the nearly 250 end users who took part in our IT supplier survey for Top VARs sums up the challenge facing VARs seeking to engage with new and existing customers in today's market.

In a world where IT buyers are becoming increasingly knowledgeable, and have all the information they need at their fingertips, many feel they have less of a need for the guiding hand of an IT supplier, at least until the point of procurement.

Indeed, over a fifth (22 per cent) of those questioned in our research said suppliers have little or no influence over the IT goods and services they buy. When they approach an IT supplier, it will be on their terms, and they will simply be hunting for the best price and service.

Not all feel that way, but that figure exemplifies the fact that VARs and other providers of IT hardware, software and services are under more pressure than ever to justify their seat at the table, and must engage with customers in subtler or more inventive ways.

Analysts are queueing up to tell us that IT buyers are engaging with suppliers later in the decision-making cycle and that traditional sales and marketing techniques are losing their shine.

This year's research therefore put a particular focus on discovering how IT suppliers can exert influence in today's market - more on that later.

Some 247 IT purchasing decision makers took part, with respondents drawn from the full spread of verticals including retail, legal, financial services, manufacturing, professional services, media, telecoms, healthcare, education and local and central government.

Just over a fifth (21 per cent) of respondents worked at large firms with over 1,000 staff. Some 16 per cent worked at mid-market firms, with SMBs (31 per cent) and very small businesses (32 per cent) accounting for the remainder.

The main aim was to seek their feedback on how they engage with their IT suppliers, what they like, and what they don't like.

Just like last year, we asked respondents to share their experiences - good, bad and ugly - and they didn't hold back. But before we examine what they love and hate, let's probe how much money they have to spend.

Bulging budgets

The pleasing - and perhaps surprising - news is that just 13 per cent of IT purchasing decision makers said their overall budget for IT goods and services had shrunk in their current fiscal year. Some 42 per cent said budgets were flat, while 41 per cent said their war chests had expanded. However, a year-on-year comparison points to a slight downward trend. Last year, more respondents saw an increase (56 per cent), and fewer had a flat budget (27 per cent) or saw a decrease (10 per cent).

Next, we asked them how many suppliers of IT goods and services they work with. By far the most popular response was ‘between five and 10'. Just three per cent worked with only one supplier, with a further 23 per cent using either two or three providers and 10 per cent bestowing their custom on four. Variety is clearly the spice of life for 25 per cent of respondents, who said they work with 11 or more suppliers.

Whether end users are tending to concentrate spending in the hands of increasingly fewer suppliers was another key question for us.

The prevailing wisdom would suggest customers are collapsing their supply chains and working with a shrinking pool of suppliers. But is that trend being offset by the rise of off-the-cuff relationships struck up between line-of-business executives and SaaS providers?

Intriguingly, far more respondents indicated that their spread of suppliers has risen than fallen. Four per cent said the number they work with has increased greatly, while 34 per cent said it had increased a little. In contrast, only two and 11 per cent said it had decreased greatly or decreased a little, respectively. For 45 per cent, the number had not changed.

Resellers versus vendors

The next question produced a victory of sorts for IT resellers. Respondents were asked which types of IT suppliers they bought from or worked with directly.

Out of the eight categories we ran past them, ‘IT product reseller' finished top, having been selected by 59 per cent of respondents.

But in slightly more worrying news for the channel, almost as many had direct relationships with vendors. For instance, the ‘IT hardware manufacturer' box was ticked by 57 per cent of respondents, while 58 per cent said they work directly with ‘major IT software vendors and developers'. ‘Telecoms providers and mobile network operators' was the other high-scoring category (58 per cent).

Somewhat surprisingly, managed service providers scored a relatively modest 43 per cent, while ‘systems integrators and large outsourcers' languished on a distant 14 per cent. Meanwhile, 49 per cent nominated cloud services or hosting providers, down on the 60 per cent who did so last year.

Supplier attributes

Next, IT purchasing decision makers were quizzed on what factors govern their choice of IT supplier. In previous years, price has always finished top by a country mile, so this year we removed it from the list of options and asked respondents to rate the importance of eight other attributes on a sliding scale from ‘not very important at all' (1) to ‘very important' (5).

Honesty and integrity emerged as key themes in the qualitative section of the research, with many respondents sharing horror stories of suppliers who had promised the earth and fallen short on delivery.

"We want honest suppliers that stick to their commitments and don't lie," one said.

It is therefore perhaps not surprising that ‘service level agreements' were seen as the most important of all the options listed, achieving an average score of 4.05. Some 39 per cent rated it ‘highly important'. ‘References and demonstrable experience" finished second, with a score of 3.96.

One other finding leapt out: ‘Breadth of product and service offering' was seen as being less important than ‘specialised expertise in one technology, service or vendor'. The inference that some may draw, yet again, is that end users are increasingly demanding depth over breadth.

For any supplier looking to play the ‘local card' in their pursuit of customers in their geographic area, the bad news is that ‘a desire to work with local companies' was considered by far and away the least important of the eight options, with a comparatively lowly score of 3.16. Word of mouth recommendations (3.53) also scored relatively poorly.

Sphere of influence

We also wanted to know just how much influence suppliers wield over customer buying decisions in today's market.

We therefore asked respondents to select which among five options best describes how they generally view the role IT suppliers play in their purchasing decision-making process.

In most cases, they hold at best only moderate sway, the findings suggest.

Over a fifth (22 per cent) see them as no more than fulfilment houses, plumping for the option of ‘they have little or no influence: we have decided what we want by the time we approach them and are just looking for the best price and service'.

Nearly half (47 per cent) had a slightly more generous view, rating their influence as ‘moderate' and saying ‘we generally know what we want but sometimes a supplier offers thought leadership or guidance that feeds into our decision making'.

This ambivalence was backed up by comments that respondents left in the qualitative section. "IT providers have no influence on our purchasing decisions; if we want a service, we'll come to you," read a fairly typical one. Another claimed that suppliers "have become almost redundant in purchasing decisions".

Around a quarter of respondents, however, said their organisation does admit a wider role to suppliers, with 24 per cent saying most purchasing decisions are ‘an equal mix between our own market research and advice and guidance we receive from suppliers'. But just one per cent said they ‘lean very heavily' on suppliers in the purchasing decision-making process.

These figures are consistent with the notion that end users are becoming more knowledgeable and savvy, meaning suppliers must endeavour to influence them in more imaginative or understated ways.

Standing out

This theory was put to the test further in our next question, which asked our IT purchasing decision makers to say how likely six methods or techniques are to convince them to consider engaging with an IT supplier for the first time.

The subsequent qualitative section of our research uncovered a particular loathing of cold calling, so it was no surprise that the majority (61 per cent) of respondents said a cold call or email was ‘not likely at all' to persuade them to engage with a new supplier.

Underlining this vitriol, when we assigned a number to the five response options (‘very likely' equalling five, ‘neutral' equalling three and ‘not likely at all' equalling one), cold calling and emailing received a pitiful average score of 1.65.

For suppliers looking to engage IT purchasing decision makers for the first time, the best way to their heart - at least among the options we gave them - would seem to be providing helpful engagement via online industry and social forums. This received an average score of 3.43, with over half (57 per cent) saying they would be either ‘quite' or ‘very' likely to engage with suppliers that do this.

Thought leadership is often touted as a successful way for tech providers to influence end users in today's market. But does it hold sway with our respondents? Yes, to a degree: ‘Blogs from staff demonstrating thought leadership in a relevant field' was the second most highly rated option, with an average score of 2.99. Some 35 per cent of respondents said this was either ‘very' or ‘quite' likely to lead to an engagement.

Helpful engagement via social media (2.85), prominent advertising in a relevant magazine or other media (2.85) and prominent positioning on Google searches or vendor portals (2.72) all had an average score below the "neutral" score of three. This goes to show that it is tough - but not impossible - to grab end users' attention in a world in which many feel they already know what they want, even though the majority are open to some subtle cues from suppliers they see as experts or thought leaders.

Conclusion

The results of this year's research will give VARs equal cause for concern and celebration.

On the plus side, the data suggests end users generally have slightly more to spend on IT this year than last.

Contrary to what some may believe, the findings indicate that end users are, on average, working with more suppliers than a few years ago, and that they tend to value specialism over breadth of offering. Some 59 per cent said they use IT product resellers, more than any other category.

But to what extent that relationship extends beyond just fulfilment is another matter, with the vast majority of respondents saying that IT suppliers hold at best only moderate sway over their IT purchasing decisions.

Worse still, many who left comments in the qualitative section felt IT suppliers are becoming less influential and now see little role for them beyond simply delivering the product.

That said, most seem open to having their preconceptions challenged by IT suppliers who are able to demonstrate a deep understanding of their business or open their eyes to something they'd not previously considered.

Many of the comments suggested that suppliers looking to gain influence early in the cycle should ditch cold calls and consider more inventive or understated techniques to get their message across, be that through thought-provoking webinars, free demos or try-before-you-buy schemes.

We asked respondents to give a warts-and-all account of their experiences with IT suppliers, and we got a fair amount of horror stories. Instances where suppliers had over-promised and under-delivered or who were generally dishonest, were unresponsive when issues arose, sold them things they didn't want or need, or who bombarded them with nuisance calls were fairly common.

But these tales of woe were more than matched by accounts of IT suppliers that had gone above and beyond. Examples of where suppliers had helped save organisations thousands of pounds, had gone to great lengths to understand their needs and people, had put giving impartial advice ahead of their bottom line or who had wowed with lightning-fast response times were all given.

It may be harder to influence end users than ever before, but any VAR who achieves the above will surely always prosper.