Published on the 29/06/2023 | Written by Heather Wright

Tech decisions too price focused, expert warns…

Australian and New Zealand organisations are robbing Peter to pay Paul, putting a disproportionate focus on the sticker price of technology and project cost, and failing to focus on the ‘arms race’ that is customer experience.

Daryl Wright, Forrester principal analyst says survey data shows local businesses are taking a more inward-looking view, focussing mainly on improving efficiency, productivity and profitability, rather than an outward, customer focused, view.

Wright told iStart Australian and New Zealand technology leaders, who only make up part of buying teams these days, have a big education job ahead of them to move the dial from that disproportionate focus on pricing.

“Price is important, but the customer experience is what is going to drive your revenue and ultimately your profitability.”

His comments follow a Forrester survey looking at the top things buyers are looking for from vendors, which put pricing at the top by a long margin, at 71 percent, for local businesses. China, in comparison put pricing at just 35 percent.

“It’s a telling picture,” Wright says.

Also of concern is that inward-focused view of local companies, rather than the outward, customer-focused, view, despite this being the age of the customer.

“The interesting thing is when you compare this to other countries and the parameters, we offered people to select – things like building out a digital business, or improving customer experience or outcomes, those sorts of things – businesses in this part of the world were a lot more focused on their own outcomes such as pricing and profitability and their own efficiency, rather than what the customer is doing.

That lack of customer focus comes despite a separate survey of chief marketing officers showing strong agreement that business growth will come from creating high quality customer experiences.

“The success of businesses is about supporting customer outcomes. Obviously, the business has to operate efficiently and the rest of it, but it’s almost an accountant’s view of the world, rather than a businessperson’s view of the world.”

While Wright says Forrester’s data doesn’t reveal the reasoning behind that, his own experience working in senior roles globally in technology, before returning to Australia, is that accountants ‘rule the roost a lot more in businesses here than they do in other parts of the world’.

“If you look at places like the US and UK, they’re more about taking big bets on the future, spending money to make money. Whereas in this part of the world we seem to sit on our investments and sweat them as long as possible, and drive performance out of efficiency and cost saving.

“That’s not to say people don’t invest, but it’s a lot harder to get money to invest externally. That’s my own experience and I think from talking to other people, that is probably what is going on.”

Forrester’s survey, which looks at what information is deemed most important for the purchase process, paint a picture of local businesses thinking less about features and functioning and more about that pricing, he notes.

The desire for information around technology trends is lower than other countries at 61 percent (India is at 73 percent for example), while information on deployment options is at 48 percent versus 58 percent for China and 55 percent for India.

“Price is a really big driver for us. It’s not that we’re not looking at the other things, but pricing is a really big criteria,” he says.

When it comes to vendor selection price is the leading reason to choose a vendor for A/NZ companies.

“Personally, I think that is a bit of a worry.”

Wright says part of the problem likely lies in technology functions within businesses across Australia and New Zealand being ‘very, very cost driven’.

But that leaves things like the ability of the technology to meet your needs as ‘less important’, he says, noting it was identified by just 20 percent of A/NZ respondents as a primary reason why they selected a particular vendor for a purchase.

Respondents were able to select up to five criteria.

“On the other side is reputation – buyers in this part of the world are very focused on reputation as being an important driver. That’s more important than industry expertise and leadership, and more important than the ability of the offering to meet our needs.”

It is, Wright says, ‘a strange perspective’.

“There’s this view of meeting costs and that perception of it as opposed to being able to judge the business in terms of expertise and such like.”

Perhaps most surprising is the low ranking of a vendor’s ‘ability to handle the end-to-end project’ which garnered just 16 percent for Australia, versus mid-20s for all other countries.

“Where software implementation fails is in the integration and implementation side of things, and vendor support for that is critical. Obviously, people are outsourcing to system integrators and so on, but SIs and centres of excellence are typically not across more specialty software sets than the vendor so the vendor needs to be in a position to supply a level of consulting expertise to manage that end-to-end process.”

Wright is urging A/NZ businesses to focus their business from the outside in, to become a partner for their clients.

“The arms race for people at the moment is not to be pushing down those costs, it really is to provide the best customer experience, the best relationship, driven from the customer side. And that implies understanding your customer well.”

That comes about through deploying the technology to enable an insight-driven business, he adds.

Having a balanced, 360-degree view of the needs of the business is also critical.

“Yes, price is important, but the customer experience and how you create that experience, that personalisation, speed of interaction and quality of interaction is what is going to drive your revenue and ultimately your profitability.”

And while many businesses are tentative about investing in technology in the current uncertain economic environment, Wright says that investment remains key.

“The digital experience is a long-term arms race. None of these great experiences – the integration of processes, unified customer experience right across your organisation – none of that comes quickly.

“To stop when your competitors are continuing to invest is very dangerous. Focus on positioning yourself for the recovery.”