When asked about technology purchase regrets, veteran tech exec Sanjay Macwan digs deep for a classic hyped technology that has yet to pan out: smart glasses.
Nearly a decade ago, as the technology was hitting the market, Macwan and his executive colleagues were “hugely interested in leveraging the technology,” he says. So they took a leap, spending on both hardware and software products in their bid to develop augmented reality experiences. But the venture didn’t pan out.
“The technology was not mature enough at the same time the business model — how to make money making augmented reality content — wasn’t mature enough. And we had to retreat,” says Macwan, currently CIO and CISO of Vonage, adding that the experience helped him refine a four-point framework he now uses when buying technology.
Before investing, Macwan, his IT team, and other stakeholders ask four questions:
Can they articulate the capabilities they want from the technology and ensure the technology can deliver them?Do they have the necessary skills to implement the technology?Can they successfully operationalize the investment?Are there metrics to gauge whether anticipated ROI is being realized?
Macwan approves a purchase only when he and his teams can answer yes to those questions with a high degree of confidence. The framework, he adds, helps ensure all the pieces needed for success are in place before inking a deal.
He acknowledges that had he implemented this approach a decade ago, he would have recognized that the investment in the smart glasses and AR technology wasn’t a good move.
CIOs seeking to avoid similar regrets going forward would benefit from a similar approach to IT purchasing, tech leaders and industry experts say.
Tech purchase regret on the rise
Research shows that many organizations still struggle to make good IT purchases. In a recent survey, Gartner found that 56% of organizations have a high degree of “purchase regret” when it comes to their largest tech-related purchase in the prior two years. Gartner categorized a purchase as “high regret” when respondents agreed that the purchased offering is failing or failed to meet expectations and that they considered offerings that were much more ambitious than what they decided on.
The research, which was based on 1,120 respondents at the manager level and higher in North America, Western Europe and the Asia-Pacific region, determined, however, that the technology itself wasn’t the issue, says Hank Barnes, a distinguished vice president analyst and a research chief focused on enterprise buying behavior at Gartner. Rather, it’s the buying process.
“It’s much more around the decision practices,” Barnes adds.
That, though, can be fixed — as Macwan shows. There are indeed steps that CIOs can take to strengthen the buying process to limit the chances of ending up with a purchase the organization regrets. Here are five such moves.
Provide more guidance to non-IT tech buyers
Gartner’s research shows that an organization’s level of regret varies based on the processes it uses to make tech-buying decisions, as well as who and how many stakeholders are involved.
For example, the research shows that 67% of people involved in technology-buying decisions are not in IT and that non-IT buyers are more likely to regret a tech purchase when CIOs aren’t the ones making the final decision, as organizations report regret only 38% of the time when the CIO is final decision-maker compared to the overall rate of 56%.
Gartner also found that non-IT buyers are more likely to scale back their plans, which also leads to higher levels of regret.
And with tech spending on average split evenly between IT and non-IT departments, such as marketing and finance, according to CIO.com’s 2022 State of the CIO survey, there is a rising risk of purchase regret at most organizations these days.
But Barnes sees an opportunity for CIOs to turn this around by offering more specific and formalized guidance on tech spend they don’t control — for example, by working with non-IT decision makers on how to scope out their planned purchase, vet vendors, review case studies, and plan for implementation.
“As buying gets distributed, CIOs and their teams have to help others recognize what they need to do to make a purchase decision,” Barnes adds. “CIOs can help [non-IT buyers] look at the integration impact, operational impact, security, and how to get those functional groups involved to help. CIOs can coach, orchestrate, enable these other groups.”
Take a strategic approach to engaging vendors
Gartner’s research also shows that sound vendor management practices can greatly impact purchase outcomes. For example, while it’s natural to take in information from vendors during the buying process, no-regret buyers take a more strategic — and selective — approach to information-gathering, Barnes says, adding that they aren’t doing deep dives with all the vendors, a move that can cause confusion, information anxiety, and the fear that they could be missing something in the deluge of details.
“Buyers today are dealing with too many choices, and it’s too many good choices,” Barnes says. “So smart buyers study; they go in-depth with vendors; then they pick a lead and go deeper.”
Macwan takes a similar approach, saying he challenges vendors to ensure they can deliver on the capabilities his company needs. “Then I’ll take the top vendors and ask their viewpoints on how to operationalize [their products] within my shop. And I’ll ask how they’d measure our success using their products. We have internal metrics, but I also want to hear from them on how best to measure. They should have a proof point to share,” he says.
If those questions sound familiar, Macwan’s approach to vendor engagement shows the advantage of being intentional about gathering the targeted information you want as part of your IT purchase assessment framework.
Buyer beware: Know what you’re getting — including hidden costs
Executives must keep in mind the dictum “caveat emptor,” or “let the buyer beware.”
More specifically, CIOs — whether purchasing technology on their own or working with colleagues — need to thoroughly understand what they’re buying: its capabilities, its integration and support requirements, its shortcomings, and so on, says Michael Spires, principal and Technology Transformation Practice lead at The Hackett Group, a consulting firm.
It sounds basic, Spires admits, but many don’t do thorough enough reviews.
“Yes, there are people who can help you and systems integrators you can hire, but if you haven’t worked with a technology before, you have blind spots. You might not realize how hard it would be to drive adoption, or change from one set of services to another, or how easy or not it is to configure, or whether there’s a standard way to do it, or if it will be too rigid to meet your needs,” he says.
Spires says organizations also often fail to perform a thorough accounting of costs related to tech purchases, so they don’t have accurate total-cost-of-ownership figures. That’s not surprising, Spires adds, given how easy it often is to be distracted by the promises a new technology investment offers.
“The benefits are sold upfront,” he says, “and the challenges are minimized or hidden. But those challenges can lead to cost surprises or those challenges for some organizations can be insurmountable, both of which leads to regrets.”
Assemble the right purchasing team
The players on your purchasing team also have a profound effect on investment outcomes, according to Gartner’s research, as buyers with no regrets were shown to have more diverse buying teams with more functional groups involved.
This finding, however, doesn’t suggest that more people in the process is the answer, Barnes says. In fact, too many can be detrimental. Rather, the key is to create a collaborative process that ensures just the right staffers with the necessary expertise are performing a more thorough assessment of possible purchases so that questions, issues, and needs are addressed in advance, he says.
Organizations that don’t assemble that expertise during the selection process often see delays as they hit requirements (such as security reviews) that they didn’t know in advance they needed to address, Barnes says. More problematic, those organizations are also more likely to realize after the buy that they missed issues that either can’t be addressed or can’t be circumvented easily, leading to a higher likelihood of buyer’s remorse, he says.
Sunil Kanchi, CIO at UST, notes that CIOs should think broadly about who may have valuable insights that could impact buying decisions when assembling their purchasing teams.
For example, Kanchi is working with his firm’s CHRO, in addition to other executives, to understand the company’s projected staffing needs to ensure new enterprise systems will work not just in the short term but can adequately scale as the workforce grows.
Be ready to pivot and move fast
When it comes to technology purchases, another regret can be not moving fast enough. Merim Becirovic, managing director of global IT and enterprise architecture at Accenture, says his clients often wonder whether they’re falling behind.
“With the level of technology maturity today, it’s a lot easier to make good decisions and not regret them. But what I do hear are questions around how to get things done faster,” he says. “We’re getting more capabilities all the time, but it’s all moving so quickly that it’s getting harder to keep up.”
A lag can mean missed opportunities, Becirovic says, which can produce a should-have-done-better reproach. “It’s ‘I wish I had known, I wish I had done,’” he adds.
Becirovic advises CIOs on how to avoid such scenarios, saying they should make technology decisions based on what will add value; shift to the public cloud to create the agility needed to keep pace with and benefit from the quickening pace of IT innovation; and update IT governance practices tailored to overseeing a cloud environment with its consumption-based fees.
“So you can fail fast through proof of concepts, so you’re not committing and finding out a year later that it’s not going to work. It’s much easier today in a cloud world to try things fast, to try things quicker; there’s no better time to do that,” he says.
His own company is doing just that. Becirovic points to ongoing tests around artificial intelligence capabilities that aren’t quite ready for prime time. “We’re trying a lot of different things and throwing them out fast or putting them on the shelf and saying we’ll come back in six or nine months when we see a little bit more capability being delivered,” he explains.
Creating the environment to take that approach, Becirovic says, helps head off both bad purchases and missed opportunities.
Budgeting, IT Leadership, IT Strategy, Vendor Management