Buying tech in enterprise
In the modern business landscape, regardless of their core products or services, companies increasingly rely on technology for various critical functions. Therefore buying the right technology products and services is fundamental to the success of that business. For larger enterprises, this presents unqiue challenges:
- Higher value - The larger the company, the more money is at stake and the more scrutiny the decision will receive.
- Customization - Enterprises products and services tend to be more customizable and require more integration with existing systems.
- Switching costs - Once a solution is implemented, it can be expensive and disruptive for buyers to change suppliers.
As a result, every buying decision carries more risk and to minimize this risk, buying typically involve more stakeholders across the organistion and a longer, more complex process.
I co-founded savvi to help buyers and suppliers navigate this and in this article, I'll explore the technology buying process in more detail. I'm hoping this will help suppliers better understand the challenges buyers face and how to better serve them.
The Buying Team
This is what a typical "buying team" looks like:
| Role | Description |
|---|---|
| Head of Business Unit | Usually a Senior Exec who owns the department P&L |
| Development Team | The team that will benefit directly from the acquisition of the product or service |
| Enterprise Architect | Works with CTO/CIO to set the technology strategy |
| CIO or CTO | C-Level responsible for IT or Engineering across the enterprise |
| IT Procurement | Responsible for managing suppliers and contracts |
| Legal and Finance | Responsible for reviewing all legal and financial decisions and agreements with 3rd parties |
According to Gartner, the average B2B purchase in 2019 involved 6.8 stakeholders, a number that continues to grow with IT and Finance wielding increasing influence across most decisions.
The Buying Process
Buying decisions follow multiple stages over an extended timeline. Large purchases can take over a year to complete and research shows that these cycles are lengthening.
While specific steps vary by company, common high-level stages include:
- Identifying a Problem or Need
- Researching and Comparing Potential Solutions
- Defining Requirements
- Selecting Suppliers
- Validating the Decision
Rather than a linear sequence, it's best to view these as iterative tasks buyers revisit multiple times.
Key Buying Stages
Problem/Need Identification - The trigger to purchase something new often comes from a pain point or a desire to create a new innovation.
Solutions Exploration - Next, companies weigh options like building vs. buying, or product categories to consider. This stage sets the foundation for what's in and out of scope down the line.
Requirements Definition - Buyers specify criteria for functionality, cost, company standards, etc.
Supplier Selection - Depending on the purchase size, this sometimes goes through a structured RFP process - typically lead by Procurement. Buyers gather information from supplier formally submitted documents to compare vendors against their criteria. This is commonly a multi stage process that involves shortlisting vendors and then going through rounds of presentations and negotiations before landing on the chosen supplier.
Final Approval - Finally, buyers validate choices through vendor references and internal presentations to senior leadership. This is the last chance to address any concerns before the final decision.
Supplier Management - Once a purchase is made, on-going supplier management is critical to ensure the buyer is getting the value they expected.
Information Sources
Throughout the process, the buying team continues to gather information from many sources, including:
- Industry Publications and Analyst reports e.g. Gartner Magic Quadrant, Forrester Wave ...etc
- Vendor events e.g. Conferences, Webinars, Meetups.
- Vendor partner networks e.g. Microsoft and AWS partners
- Peer and Internal Recommendations
- Glassdoor and LinkedIn to research the vendor company culture and employee satisfaction.
- Suppliers own marketing content
While buyers control much early research independently, good vendors invest the time to help buyers with the initial framing of problems and the art of the possible by exploring innovative and feasible solutions. This can have a significant impact on the final decision.
Creating consensus
Getting everyone onboard is a critical part of the buying process. The larger the company, the more people involved and the more difficult it is to get everyone to agree. If you are a supplier, here are some things to think about when trying to create consensus:
- Get Diverse Perspectives: Make sure you spend the time to understand the varied interests and viewpoints from across the buying team.
- Avoid Analysis Paralysis: Avoid prolonged discussions that doesn't lead to a decision. Help the buyer by providing a clear path to a decision.
- Understand Power Dynamics: Manage influence and internal politics and how to navigate them.
- Overcome Change Resistance: Help the buyers to clearly articulate the benefits from the technology you are offering and how to manage the transition. Sounds obvious but it's often overlooked.
- Use Data to Support Decisions: Data is a powerful tool, help them understand how to use data to support their decisions.
- Manage Expectations: Ensure the buyers has a realistic understanding of what's possible and what's not. This is especially important when dealing with new technologies.
- Be Transparent: Be open and honest about your product and services. Buyers appreciate transparency and it helps build trust.
- Communicate effectively: Make sure you are concise and to the point. Use video, screen recordings, diagrams and other visual aids to help communicate your message. Email sucks for communicating complex ideas.
Summary
In conclusion, navigating the technology buying process in large enterprises requires a deep understanding of the complexities involved and the ability to adapt to the needs of various stakeholders. As a supplier, focus on clear, proactive communication and tailor your approach to address the specific challenges and dynamics of each buying team. Offer innovative, realistic solutions, understand internal decision-making processes, and help the buyer use data to make decisions. By doing so, you can effectively guide buyers through each stage, from problem identification to post-purchase management, fostering a productive and trust-based relationship.
In a future article, I'll explore the Supplier Selection stage in more detail and the challenges buyers face when evaluating suppliers.