how customers choose solutions providers 2009

Final Data Report | Abbreviated Summary | F016AS AND

How Customers Choose Solution Providers, 2009: The Importance of Personalization, Epiphanies, and Social MediaABBREVIATED SUMMARY

Final Data Report | September 2009

Prepared by:

Julie Schwartz

Senior Vice President

Thought Leadership and Research

ITSMA

Katie Espinola

Senior Research Analyst

ITSMA

Olivier Nguyen Van Tan

Managing Director

PAC

Final Data Report | Abbreviated Summary | F016AS © 2009 ITSMA and PAC. All Rights Reserved. 2How Customers Choose

Summary: How is buyer behavior changing?

Cost containment is giving way

to innovation and expansion.

Recovery is around the corner in 2010. Prepare now.

Social media usage is up. Almost non-existent two years ago, social media is

now becoming central to the technology-based

solutions buying process.

If you are not

already playing,

get in the game.

Buyers want marketing to add

value.

Only thought leadership will capture buyers’ attention

and keep them engaged.

Invest, collaborate,

and innovate.

Expectations for

personalization and

customization are higher.

A strong reputation and proven track record are table

stakes. Today, buyers expect you to know and

understand their unique business issues.

Do your

homework.

There are many paths to reach

buyers.

There is no silver bullet marketing tactic. You need a

combination of on- and off-line channels to create

demand and generate and nurture leads.

Find your

customer’s

preference.

Everything seems to be

important.

Facing tighter budgets and a demand for greater

personalization, marketers have a resource issue.

Develop reusable

campaign assets.

How can you stand out in such a market? You need

to differentiate account by account with precision-

targeted value propositions.

Partner with sales.


Source: PAC, 2009

415,026 411,009 415,026 458,003 486,364

256,660 258,962 271,487 288,869310,124

660,414 670,253701,893

742,601789,849

2009 2010 2011 2012 2013

IT Services (CAGR 4.6%)

Software Products (CAGR 4.8%)

Hardware (CAGR 4.0%)

$1,332,099 $1,340,224$1,404,450

$1,489,473$1,586,337

CAGR

2009–2013

4.5%

PAC Forecast: Worldwide IT Spending (in million USD)

The recovery is in sight for 2010


We entered this recession with lean IT spending; little room to cut compared to the previous recession

What is happening to your IT spending (including hardware, software and IT

services) so far in 2009? Compared to 2008, has your 2009 budget…

% of Respondents (N=355)

1415 15

25

14

11

7

Strongly

decreased

(more than

-11%)

Decreased

(between -5%

and -10%)

Slightly

decreased

(between -2%

and -4%)

Stayed more

or less the

same

(between -2%

and +2%)

Slightly

increased

(between +2%

and +4%)

Increased

(between +5%

and +10%)

Strongly

increased

(more than

+11%)

Source: ITSMA and PAC, How Customers Choose Study, 2009


Companies are either protecting themselves from a riskier environment and/or making the most of their current IT resources

Note: Up to three responses allowed.


What are the top

three technologies

that you consider as

priorities for your

company in 2009?

% of Respondents

(N=352)

7

1

2

3

3

4

4

7

7

7

7

8

9

10

12

13

13

16

28

33

34

50

Other

SOA

Mobility

Systems upgrades

CRM

Collaboration tools and technologies

Green IT

Unified communications

Business intelligence

ERP

Networking

Systems maintenance

Java

Open source

Web technologies (HTML, PHP, etc.)

Risk and compliance

Cloud computing

Microsoft .NET

Virtualization

IT optimization

IT security

Back-up, archive, disaster recovery


Stage 5.

LOYALTY

Post-Purchase

Evaluation

Evaluate

satisfaction

Measure value

delivered

Stage 4.

CONFIDENCE

Selection and

Purchase

Select the

provider

Negotiate the

contract

Ultimate sign-off

Stage 3.

INTEREST

Alternative

Evaluation

Finalize the

short list

Solicit proposals

Evaluate

alternatives

Stage 2.

AWARENESS

Search

Clarify objectives

and solution

specifications

Identify

alternatives

(short list)

Stage 1.

EPIPHANY

Need

Recognition

Explore the

possibilities

Identify a need

or opportunity

Buying

Processes

Relationship

Stages

Now, more than ever, marketers need to base their activities on customers’ buying processes

ITSMA’s Relationship Model/Buying Process

Source: ITSMA, 2009


Stage 1. Create demand. Help potential customers identify problems and opportunities

Stage 5.

LOYALTY

Post-Purchase

Evaluation

Evaluate

satisfaction

Measure value

delivered

Stage 4.

CONFIDENCE

Selection and

Purchase

Select the

provider

Negotiate the

contract

Ultimate sign-off

Stage 3.

INTEREST

Alternative

Evaluation

Finalize the

short list

Solicit proposals

Evaluate

alternatives

Stage 2.

AWARENESS

Search

Clarify objectives

and solution

specifications

Identify

alternatives

(short list)

Stage 1.

EPIPHANY

Need

Recognition

Explore the

possibilities

Identify a need

or opportunity

Buying

Process

Relationship

Stages

Create idea- and trend-based thought leadership

Help clients discover and respond to the most important business issues

they face

Take clients out of the day-to-day to collaborate and spark new ideas

Arm partners/sales/business developers with content

Epiphany

Marketing

Process

Source: ITSMA, 2009


Solution providers are only moderately helpful at sparking epiphanies

Note: Mean rating based on a 5-point scale where 1=not at all helpful and 5=very helpful.


How helpful are solution providers in bringing you new ideas and showing

you the possibilities to solve your business challenges?


16

23

34

17

10

Very helpful = 5

4

3

2

Not at all helpful = 1

Mean = 3.2


Stage 2. Generate Leads. Make it easy for potential buyers to find you

Stage 5.

LOYALTY

Post-Purchase

Evaluation

Evaluate

satisfaction

Measure value

delivered

Stage 4.

CONFIDENCE

Selection and

Purchase

Select the

provider

Negotiate the

contract

Ultimate sign-off

Stage 3.

INTEREST

Alternative

Evaluation

Finalize the

short list

Solicit proposals

Evaluate

alternatives

Stage 2.

AWARENESS

Search

Clarify objectives

and solution

specifications

Identify

alternatives

(short list)

Stage 1.

EPIPHANY

Need

Recognition

Explore the

possibilities

Identify a need

or opportunity

Buying

Processes

Relationship

Stages

Develop and implement integrated awareness campaigns—on- and off-line

Balance both push and pull marketing

Amplify reputation through word of mouth marketing

Work with sales to develop solution-specific value propositions

Awareness

Marketing

Process

Source: ITSMA, 2009


When companies identify a need, they proactively seek out alternative solutions

I do the research and

find the appropriate

solution providers

(63%)

The solution provider

contacts me first (37%)


When you have a business problem that requires a technology-based

solution, what percentage of the time would you say you do research and find

appropriate solution providers versus them contacting you first?

Mean % of Time (N=355)


Speak to colleagues for referrals 68

Do an online search including, company websites,

whitepapers, podcasts, Webcasts, etc.39

Speak to your existing solution providers and

hardware and software vendors32

Get advice from consultants 28

Check the blogosphere, social networks, or online

chat boards27

Speak to or check publications of industry

analysts such as Gartner, PAC, IDC23

Speak to or check publications of financial

analysts such as Merrill Lynch or Goldman Sachs19

Read business and trade publications 19

Pay closer attention to advertisements 15

Respond to emails and cold calls from consultants

or solution providers14

Other 1

Buyers rely on their colleagues to point them to alternative solutions; nothing else comes close

Note: Numbers may not add up due to rounding.


What are the

first three

steps you take

to identify

alternative

solutions?

% of

Respondents

(N=355)

4

6

5

6

8

8

9

9

11

33

5

5

6

8

11

10

8

13

14

17

1

6

5

9

6

5

11

12

11

14

19

Step One Step Two Step Three

Total


Three-quarters of buyers are using social media in the purchase process—that’s huge!


Which of these Web-based tools do you use to gather information and

communicate with colleagues during the purchase process?


None

(25%)

Which of these Web-based tools do you use to gather information

and communicate with colleagues during the purchase process?


39

41

47

50

58

Plaxo

Twitter

Facebook

Blogs

LinkedIn

Note: Multiple responses allowed.

(75%)


US buyers trail their European and Brazilian peers when it comes to social media…by a lot!

US

(N=170)

UK

(N=50)

France

(N=50)

Germany

(N=50)

Brazil

(N=30)

45

6 6

2

7

None


Which of these Web-based tools do you use to gather information and

communicate with colleagues during the purchase process? (By country)

% of Respondents


Stage 3. Personalize and customize. Know the buyer’s unique business issues

Stage 5.

LOYALTY

Post-Purchase

Evaluation

Evaluate

satisfaction

Measure value

delivered

Stage 4.

CONFIDENCE

Selection and

Purchase

Select the

provider

Negotiate the

contract

Ultimate sign-off

Stage 3.

INTEREST

Alternative

Evaluation

Finalize the

short list

Solicit proposals

Evaluate

alternatives

Stage 2.

AWARENESS

Search

Clarify objectives

and solution

specifications

Identify

alternatives

(short list)

Stage 1.

EPIPHANY

Need

Recognition

Explore the

possibilities

Identify a need

or opportunity

Buying

Processes

Relationship

Stages

Develop and implement coordinated, multiphase, multichannel lead

nurturing programs

Turn qualified leads over to sales

With sales, develop targeted value propositions based on knowledge of the

customers’ business issues

Interest

Marketing

Process

Source: ITSMA, 2009


Today, everything is important; no particular attributes stand out

Note: Mean rating based on a 5-point scale where 1=not at all important and 5=very important.


When evaluating alternatives and selecting the company to help you

implement the solution, how important are the following to your decision?

Mean Rating (N=355)

2.9

2.9

3.0

3.2

3.2

3.2

3.3

3.3

3.3

3.4

3.4

3.5

3.5

3.5A commitment to deliver measurable business results

Knowledge and understanding of your unique business issues

Available resources to meet deadlines and speed time to market

Quality of software support

Knowledge and understanding of your industry

Previous experience with your company

A proven track record backed by customer references

A highly-tailored, customized solution

IT skills and certifications

Proactively offered innovative and insightful ideas

Thought leadership on the solution areas you are most interested in

Local presence

Offshore and nearshore resources

International presence


Stage 4. Provide proof points to mitigate risk

Stage 5.

LOYALTY

Post-Purchase

Evaluation

Evaluate

satisfaction

Measure value

delivered

Stage 4.

CONFIDENCE

Selection and

Purchase

Select the

provider

Negotiate the

contract

Ultimate sign-off

Stage 3.

INTEREST

Alternative

Evaluation

Finalize the

short list

Solicit proposals

Evaluate

alternatives

Stage 2.

AWARENESS

Search

Clarify objectives

and solution

specifications

Identify

alternatives

(short list)

Stage 1.

EPIPHANY

Need

Recognition

Explore the

possibilities

Identify a need

or opportunity

Buying

Processes

Relationship

Stages

Provide TCO/ROI data and tools

Mitigate risk via case studies, references, and demos

With sales, develop targeted, role-based value propositions

Provide sales with proposal development support

Confidence

Marketing

Process

Source: ITSMA, 2009


The attributes that are most differentiating during the selection process are relationship-based

Note: Up to three responses allowed.


Think about a recent competitive bid situation. Which of these factors truly

differentiated one solutions provider from another?


1

10

19

20

22

22

23

25

26

28

29

29

36The company that knew our business needs better than the others

The company with which we had a past relationship, so we knew what to expect

The company with better client references

The company that brought all the right resources into the selling process

The ―safer‖ choice based on brand reputation

The company that was more collaborative throughout the selling process

The company that brought more new thinking and ideas to the selling process

The company that offered the better price

The company with the strongest recommendations from analysts or consultants

The company that had the best knowledge of the technology

The company that was more open and upfront than the others

The company with the best understanding of the industry

Other


Stage 5. Measure and communicate the value you provide

Stage 5.

LOYALTY

Post-Purchase

Evaluation

Evaluate

satisfaction

Measure value

delivered

Stage 4.

CONFIDENCE

Selection and

Purchase

Select the

provider

Negotiate the

contract

Ultimate sign-off

Stage 3.

INTEREST

Alternative

Evaluation

Finalize the

short list

Solicit proposals

Evaluate

alternatives

Stage 2.

AWARENESS

Search

Clarify objectives

and solution

specifications

Identify

alternatives

(short list)

Stage 1.

EPIPHANY

Need

Recognition

Explore the

possibilities

Identify a need

or opportunity

Buying

Processes

Relationship

Stages

Provide tools to measure ongoing value delivered and progress toward

customers’ solution KPIs

Manage advocacy, reference, and community-building programs

Work with sales to monitor and nurture customer satisfaction

Loyalty

Marketing

Process

Source: ITSMA, 2009


The most common relationship-building programs are business content focused, small and personal

Note: Multiple responses allowed.


In which of

these solution

provider

relationship-

building

programs do

you

participate?

% of

Respondents

(N=355)

3

41

44

45

49

49

50

51

52

57

57

60Executive-level business events (e.g., seminars, meetings)

Private briefings

One-on-one, executive-to-executive relationships

Small, intimate, local peer networking events

Client reference programs

Online communities/social networking that the solution provider facilitates

Dedicated ―microsite‖ or portal for your company with information about their project work and thought leadership

Account-based or one-to-one marketing programs

Customer advisory councils or boards

Social or recreational activities (e.g., golf outings, dinners)

Joint PR/advertising/co-branding

Other


Research Methodology

355 telephone interviews

Conducted June and

July 2009

Five countries:

– US

– UK

– France

– Germany

– Brazil


Who did we speak to?

IT (50%)Business

(50%)


Are you a business or IT professional?

% of Respondents (N=355)What is your job title?


C-level, GM,

President (37%)

Director

(17%)

VP/Assistant VP (30%)

Manager (16%)


Geographic Distribution


Country % of Respondents (N=355)

US (49%)

UK (14%)

Brazil (9%)

Germany (14%)

France (14%)


Which companies were included in our sample?


Approximately, what is your company’s

annual revenue, is it ___?


23

15

22

14 1413

$200–499M

$500–999M

$1–4.9B

$5–9.9B

$10–20B

Over $20B

What is your company’s primary business?


15

14

13

12

11

11

10

7

7 Other

Business services

Financial services (e.g., banking, insurance, investments)

Public sector (federal and state or large local only, NOT education)

Retail/distribution

Energy/utilities

Healthcare

Communications (telcos, media, entertainment)

Manufacturing (consumer and industrial products)


Julie Schwartz

Senior Vice President

Thought Leadership

and Research

ITSMA

[email protected]

+1-781-862-8500, Ext. 112

Contact

AND

Olivier Nguyen Van Tan

Managing Director

PAC

[email protected]

Phone: +1-646-277-7255

Cell: +1-917-744-7902

Katie Espinola

Senior Research Analyst

ITSMA

[email protected]

+1-781-862-8500, Ext. 114

how customers choose solutions providers 2009

Technology