'We want our AI and we want it now' say software buyers
It's long been a paradox of the information age: Technology budgets always seem to get tighter and tighter, yet millions upon millions of dollars, euros, and rupees are spent each year on solutions with questionable returns.
Now, Gartner Digital Markets -- a user-review service launched by the consultancy -- has attempted to shed some light on what shapes buyers' perceptions of software. Its latest survey of 2,499 executives finds that 20% are considering switching software vendors, downgrading, or canceling a recent subscription. Another 61% are seeking upgrades for their recently purchased software.
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Is this any different than previous years? The survey doesn't say -- and the software industry has always been in a state of never-ending flux. Who was demanding generative AI-based solutions two years ago, right? However, the results do shed some light on what users want.
Sure enough, AI is now front and center of software purchasing expectations. At least 92% of businesses are considering investing in AI-powered software in the year ahead, the survey finds.
Security is also a decision factor, with 47% prioritizing security and cyberattack concerns in software investments. But this also suggests, ahem, that 53% do not see security as an important feature, which is rather alarming and puzzling.
The Gartner survey finds continued emphasis on cost control -- 31% of businesses have replaced their software simply because it costs too much. A majority of software buyers, 53%, say they have passed on vendors with costs that are too high. In addition, more than one in five, 21%, rejected their purchase because "it was too buggy or prone to failure."
In essence, it's truly a buyer's market when it comes to software. Software buyers are demanding more functionality, especially AI features to enhance efficiencies and productivity. As reported above, more than nine in ten see AI as a way to achieve this. The Gartner analysts predict that spending on AI software will grow close to 20% annually, reaching $298 billion within three years.
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Interestingly, while this is considered the age of off-the-shelf or downloadable software, most enterprise managers prefer customization from their vendors. A majority, 59%, want customized solutions, versus 41% preferring off-the-shelf packages.
The largest portion of technology spending goes into managing and improving IT itself. The following are the shares of spending over the past year:
- IT management, architecture, and security - 28%
- Sales and marketing - 15%
- Industry-specific or other software - 14%
- Financial and business management - 11%
- Data and analytics - 8%
- Support and service (help desk, customer service) - 8%
- Human resources and training - 7%
- Project management and collaboration - 9%
The leading motivations for software purchases "point to a need to maximize output, improve operations, and reduce
security vulnerabilities," the researchers state. The survey finds the top triggers of software investments over the past year included productivity improvement requirements (52%), security and cyberattack concerns (47%), and needs associated with outgrowing current technology (43%).
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On average, the software evaluation process takes approximately five months, with a majority (82%) of respondents taking between one and six months, the survey shows. An important consideration is the software provider's integration support and willingness to collaborate, followed by the sales team's understanding of the issue/situation, knowledgeability, and product demonstrations.
Then there's the final four.... typically, software buyers come up with a list of four vendors they intend to consider for final purchase.