Tech vendors: ignore those dollar signs behind the curtain

Think your vendor's ready to deal? Maybe not: New Forrester Research survey data shows that despite the recession, tech vendors are pushing customers buzzwords about innovation, value and ROI -- not lowering prices.

As is the case with selling McMansions, Mercedes SUVs and 63-inch HDTVs, pushing expensive technology products and services during a global recession isn't an enviable task. Late last year, when the economic meltdown began and corporate IT budgets went under the CFO's knife, tech vendors had to hastily reevaluate their marketing messages and overhaul their sales tactics.

In turn, during the first months of 2009, "many technology companies operated in a general state of confusion," notes Forrester Research analyst Chris Andrews, in a new report. "As the credit crunch of late 2008 took its toll on spending, technology vendors were adapting their strategy on the fly-trying to quickly align their long-term growth objectives with the new economic realities."

Of course, just like those pristine and empty 4,500-square-foot estates languishing under the Nevada sun, nothing in the CRM application's code, BlackBerry smartphone, Cisco router or outsourcing deal had actually changed since the disastrous fall.

It's just that what tech customers felt was absolutely necessary or of immediate value had shifted dramatically.

Price, conventional wisdom held, would now be king, as companies would cut back on non-essential IT spending and drive licensing, service and related tech costs down. And the vendors would have to adapt their messaging to appeal to the needs of their cash-strapped clientele. "Price Wars" were at the gates!

It turns out, however, that that hasn't exactly been the case.

The Price Isn't Right

For sure, technology buyers have cut back on any non-core spending. But in the Forrester report, "How The Recession Is Affecting Tech Vendors," which includes data culled from a May 2009 survey of 110 senior-level professionals from a mix of hardware, software, services and telecommunications companies, Andrews writes that despite the macroeconomic challenges, "technology vendors remain aggressive about innovation, growth and their ability to provide new solutions to the market."

"Furthermore," he continues, "they are less focused on using price as a lever to address changing customer needs."

The Forrester survey probed the survey base about the specific marketing and sales tactics that vendors use today. Their responses showed that vendors weren't simply cutting prices to win business, or using price as a main component of their marketing and sales strategies. "Given that price sensitivity among IT and business buyers has increased as a result of the economic conditions," Andrews writes, "we find it very interesting that using price as a marketing message or as a way to generate new sales is a very unpopular tactic for technology vendors."

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Tags IT budgetsglobal financial crisis

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Thomas Wailgum

CIO (US)
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