Gartner says 2013 will be a Better Year for IT Spending Growth?

According to Gartner’s latest estimates, the reigns on worldwide IT spending are loosening, with annual technology spending growth increasing to 4.2% for 2013. 

This represents a significant uptick in spending growth from the anemic 2012 rate of only 1.2%. Gartner highlights that “business uncertainty is nearing resolution”, and that this is one of the key reasons for increasing their spending outlook.

But is Gartner being overly optimistic?

First, Gartner’s latest outlook mirrors similar rosy predictions from analysts at the beginning of the past three years. In fact, Gartner predicted that 2012 growth was going to be 3.7% before economic conditions in Europe and US uncertainty stymied expected technology spending increases. Unfortunately, as each year has progressed, new macro-economic hurdles appeared and the growth outlooks were summarily reduced.

Second, even if the growth tops 4%, this growth will still be 1/3 less than the prior decades’ 6% growth rate average.

Third, rather than expand, many areas of IT spending are actually seeing growth contract. Most of the true spending increases are focused on select strategic initiatives, especially in Enterprise Software, the Cloud, Mobile Computing and Big Data.

So will Gartner’s rosier IT spending growth predictions ring true into the New Year, or will the figures again be discounted as the year progresses? Although I too am more optimistic about 2013 compared to last, there are clear and immediate challenges that deserve action regardless.

2013 Challenges for IT Solution Providers
Revenue growth is extremely important for IT solution providers, as this growth is required to sustain high valuation multiples. As a result, IT Sales and Marketing will again be tasked to deliver incremental revenue regardless of challenging market conditions and despite the historically low spending growth.

But delivering incremental revenue is a challenge, as tech-purchasing decisions have fundamentally and permanently changed.

Even as the economy improves, buyers remain more skeptical and frugal than ever, demanding quantifiable proof that each investment delivers a quick payback and significant bottom-line impact. As a result, Financial Justification / ROI is now the most important content buyers rely on to make purchase decisions (greatly exceeding the importance of case studies, product demos and thought leadership content), and that over 90% of IT purchase decisions now require a formal business case for approval (IDC - 2013).

IT purchase processes are ever more complex, with IDC reporting 40% more stakeholders involved in the average purchase decision compared to just 3 years ago. Not only are more scrutineers at the table, but the demographics of the participants have changed. With the continued consumerization of IT, according to Gartner, by the end of this decade almost 90% of tech purchase decisions will be controlled not by IT, but by business groups. 

Solution providers may be caught unprepared by this Teutonic shift - the complexity of ever more stakeholders and the significant shift from technical driven purchase decisions to control of the process by the business buyer.

We have termed these changing Frugalnomics, with todays’ buyers more empowered, skeptical and frugal than ever before, and sales and marketing needing to evolve in order to meet the challenge.

The 3 Things You Must Do Now to Win in 2013
To help meet the challenge and Fight Frugalnomics, we recommend three “must do” programs for 2013:

Engage Frugal Prospects with Provocative Marketing
Todays’ buyers are more overloaded and risk averse than ever, and as a result, 58% are choosing to “Do Nothing”, to remain with “Business as Usual” versus considering your solution.

Prospects will ignore you messages and choose to “Do Nothing” unless you can proactively and provocatively quantify that they have a pain worth addressing.

And the leads you thought were such great sales opportunities will stall unless you can help convince the prospect that the issue is a priority and that your solution represents a unique competitive advantage.

In order to connect and engage with “Do Nothing” buyers, through their decision making journey, you need to help them realize:

• Why Change? – the Prospect has a pain worth addressing and a significant cost of “Do Nothing”.
• Why Now? –the Prospect should not wait to address the issue because they are leaving good money on the table (significant bottom-line impact, ROI and fast payback), and they are falling behind competitively (illustrated through peer comparison benchmarks).
• Why You? – that your solutions can deliver unique value at a lower total cost of ownership (TCO).

So how well do you do at answering these questions for your buyers in a compelling and quantified way?

Developing and deploying the right interactive Value Marketing Tools is the key, to provide Prospects the personalized, relevant and provocative answers to these key questions. Click here to learn more.

Empower Sales with Value Storytelling and Quantification
According to SiriusDecisions, the number 1 reason why sales professionals fail to meet quota is their “inability to effectively communicate the value of proposed solutions”.

Sitting in on the majority of sales engagements and you can see that most are still empty product pitches or pseudo-solution engagements with a few cursory questions and canned “death by PowerPoint” presentations. According to Forrester, less than 12% of sales engagements are focused on customer value.

Despite the changing buyer, who needs to understand the bottom-line impact of any proposed solution, the consistent need for value selling in order to meet quota, and the millions spent on solution / value selling messaging and training, less than 12% of sales professionals engage with “value”.

So how well do your sales professionals and channel partners engage with value?

There is a way to overcome the value selling adoption challenge … to better institutionalize and effectively deploy your solution / value selling methodology to sales professionals and channel partners so it actually gets used in sales engagements. To empower sales professionals to engage with powerful value storytelling and “back of the napkin” value quantification. Click here to learn more.

Close the Deal with a CFO-ready Business Case 
CFOs are large and in charge of many IT purchase approvals. According to a Gartner and Financial Executives Research Foundation research survey, the CFO is becoming the top IT decision maker in many organizations, with:

• Over 75% indicating significant decision making involvement,
• 41% indicating being the main decision maker for IT investments.

 For the CFO, most we talk to highlight that proposals:

1. Won't be considered a priority without a business case, and the larger the proposal, the more detailed and formal the case has to be.
2. Won't be approved unless you show that the issue being addressed is a priority with a high cost of doing nothing, and can deliver quantified savings / benefits, significant ROI, fast payback, all with low risks / resource requirements.
3. Won't be signed off unless you can prove your solution has a lower total cost of ownership (TCO) / better value than competitive offerings.

With Finance playing such a key role in IT decision approvals, it is imperative that proposals contain the business case content that CFOs need to provide approval, otherwise your deals will be stalled or delayed in the final stages, and you may be losing critical deals to competitors who make the better CFO case.

So how well do you deliver the business cases that CFOs demand?

There is a way to easily develop and deliver CFO business cases for your solutions. Click here to learn more.

The Bottom-Line

Gartner’s more optimistic IT spending growth estimates for 2013 are good news, but don’t change the fact that Frugalnomics will remain in effect even as technology spending improves.

If not addressed, deals will continue to stall, sales cycles will get longer, and heavy discounting will prevail.

For 2013, IT Marketing and Sales Enablement professionals should consider three initiatives as a top priority to help Fight Frugalnomics:

1. Engage Frugal Prospects with Provocative Marketing
2. Empower Sales with Value Storytelling and Quantification
3. Close the Deal with CFO-Ready Business Cases

This entertaining e-book is a great resource to explore further: Product, Solution, Value – You Decide

Sources:

• Gartner Says Worldwide IT Spending Forecast to Reach $3.7 Trillion in 2013

• IDC 2012 Buyer Experience Study (a survey of 204 IT buying organizations)

• Forrester Sales Enablement Conference 2012

• SiriusDecisions SiriusIndex, results from 2011 - 2012