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Commentary: Tough year for software sales

Early indications reveal increased optimism among IT buyers, but control of software purchasing by CIOs and CTOs will continue to make for rigorous sales processes.

Commentary: Tough year for software sales
By Forrester Research
Special to CNET
February 138, 2003, 4:00AM PT

By Nicholas Wilkoff, Senior Analyst

CIOs are in control of enterprise software decisions. The result? Software sales representatives face long sales cycles that dive deep into features, functionality and vendor viability.

Forrester recently surveyed 102 decision-makers at worldwide companies to find out how they buy software. Specifically, we found the following: • First, CIOs are in control. Forty-six percent of the respondents claimed that the CIO/CTO managed the software selection process, and 59 percent stated that the CIO/CTO authorized software purchases.

• Second, long sale cycles persist. Sixty-eight percent of companies claimed that their average buying cycle for enterprise software was six months or longer.

• Third, features and functionality matter most. Across all stages of the selection process--creating the initial vendor list, creating the shortlist and making the final vendor selection--features and functionality were the most influential factor in the buyer's decision-making process.

• And fourth, in the end, vendor viability is key. Through each stage of the selection process, this area became more important. Nearly 80 percent of the companies claimed that vendor viability was one of the most influential factors in making the final vendor selection.

The path to success
Should software sales reps brace for another tough year? Yes. An early look at Forrester's 2003 projections indicates that there will be increased optimism among IT buyers, but control of software purchasing by C-level executives will continue to make for rigorous sales processes. To improve their success rate, software sales reps should take these actions:

• Hit on key C-level initiatives. What will CIOs and CTOs be focusing on in 2003? Based on 2002 end-of-year trends

Special Report

Technology sales veterans offer some
basic tips on making a pitch.

and early 2003 data, three key themes stick out: consolidation, risk management and integration. To build influence with the CIO, sales reps must map their products' value propositions to these initiatives. For example, risk management concerns mean they will be looking for products that fit their enterprise security model, that are reliable, and that support corporate and industry compliance requirements.

• Know what the deal-breakers are ahead of time. As centralized IT organizations try to consolidate their technology investments, they're focusing on standards such as Java and .Net, and technology vendors such as IBM and Microsoft. Portfolio products that don't fit with their standards of choice will be kicked off their shopping lists. Fifty-five percent of the companies we spoke with said that integration with their existing technologies was one of the most influential factors in making their final decision.

• Plan for "bake-offs." What's causing companies to spend six to nine months to make a software purchasing decision? Buyers are requiring in-house evaluations of their shortlist products. Seventy percent of the users we talked with said they required a vendor bake-off in most product selections. Software sales reps should plan for regular on-site installations and scenario testing of their products.

© 2003, Forrester Research, Inc. All rights reserved. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change.