The Gulf Between Buyers and Sellers Widens in IT, Says IDC

Published: Month XX, 2007

by Timothy Prickett Morgan

The analysts at IDC spend a lot of time talking to IT suppliers to understand their strategies and products, and they spend a similarly large amount of time talking to IT managers and C-level executives to try to understand the challenges they face in their data centers. A new report put out by IDC this week focuses on the interface between the two--where IT buyer meets IT seller.

As anyone who follows the quarterly results of the major public IT players can attest to, many complain from time to time--some, more frequently--about lengthening product sales cycles and smaller deal sizes and how these two issues affect their top and bottom line. In IDC's view, this is a symptom of a different problem and not the problem in itself.

"Sales costs continue to rise, yet IT vendors remain focused on transaction-oriented practices designed to drive revenue, and the gulf between the buyer and seller continues to widen," explains Lee Levitt, director of IDC's sales executive practice and author of the report, An Intensive Look at Corporate IT Buyer Requirements: Selling is Dead. It's All About Relationship Management Now. "The IT industry as a whole has matured significantly over the past few years, but vendors' sales strategies have not kept pace. While buyers express interest in a deeper relationship with their suppliers that includes increasing the pace of collaborative innovation, IT vendors continue to spend too much time in traditional sales team education and management processes."

The report was based on detailed interviews from 40 IT players in the hardware, software, services, and telecom areas and 25 IT shops that consume their wares and services. The majority of the IT shops surveyed said they spend more money with and work better with vendors that are aligned with their buying processes. In plain English, this means vendors that are willing to do deals that take a little longer to close as well as make smaller deals with companies will be more successful closing sales because IT managers are being scrutinized by bean counters for every dollar spent and are being asked to do more with less dough each year.

Moreover, IT shops are worn out from "feature fatigue," which is trying to keep track of all the new gadgetry coming out of their current or prospective vendors. When the CEO and CFO are asking CIOs to solve business line problems, talking about server virtualization (just to pick one) or some other new technology misses the point. IT shops also want their vendors to show up with the right technical people when they come to call, so they can get their questions answered as an early part of the sales cycle. They also say that while price and performance continue to be key differentiators when choosing IT suppliers, the performance of the sales team--in terms of getting the right solution for a particular problem and meeting budget and time requirements--is now a significant part of the buying cycle, too.

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