Basic Instincts

In all my meetings with IT vendors in the last 60 days, one question that I

have never failed to ask is "On what basis are enterprises taking IT

purchase decisions, especially after the tough days of downturn?" In most

cases the respondents laughed and pondered, before replying, and I was shocked

and surprised.

All along, we have been told by the CIO fraternity that RoI is what they are

basing their purchase decisions these days. The usual explanations were that

enterprises buy if their costs can be cut anywhere between 5% to 15%, or if they

can reduce production cycles by 5% to 10% they will invest in IT, and so on. But

nobody said that a lot of the IT decisions were based



on some very basic instincts. It was only after nudging and cajoling the vendors
that one got to know that it's not always about RoI. In fact, it's often

about things other than RoI.

Ibrahim Ahmad If every customer starts working on RoI before placing an order, that order will never be placed. The industry will just not move

One had always thought that that enterprises were maturing, and more and more

economics and statistics were going into IT purchase decisions. But vendors

believe that in many cases, IT purchase decisions are still being taken on the

basis of non-RoI factors. There are personal factors such as the desire to have

a costly sleek looking notebook or printer on your desk. Or cultural factors

where an MNC or a MNC-like Indian company has to have certain minimum level and

specs for it's IT infrastructure such as a PC for every manager. A lot of IT

is purchased to make life easy for employees. Like getting a printer for every

department or floor, so that people don't have to keep running between

departments or floors to pick up a printout. Personal relationships also often

end up in orders being placed for IT products or services.

There have been so many instances where consultants advice has influenced

purchase decisions. In many cases, it is the good old price factor, which

decides which way the order goes. Another very interesting reason for taking

specific IT purchase decisions is the MNC diktat, where the parent company has a

worldwide policy on vendors and specs, and no one dares disobey that.

Therefore, if it is none of these reasons then users ask us questions on RoI,

one vendor explained to me with a smile. It will be very unfair not to believe

the vendors. After all, the IT industry is on the recovery path, and there is no

reason for vendors to be unhappy.

The vendors must all be very disappointed, I thought. The users are not

moving up the maturity ladder. They are using the latest technology, but the

buying methods are still very primitive. I was in for a surprise, again. Vendors

are by and large happy that RoI is still far away from becoming a big purchase

factor. Their point is that, RoI is a very tricky and complex thing to be worked

out by enterprises. Technology changes and price drops add to the complexity.

Therefore, if every customer starts working on RoI before placing an order, that

order will never be placed. The industry will just not move. Many vendors are

happy with life without too much RoI, because they think it will make selling

very difficult.

I personally feel that RoI is a good thing, till a point, and will continue

to get more and more important, especially in places where the organization is

high up on the IT usage curve. However, in many cases RoI will not have any

bearing on



purchase decisions. I also think that it is in the interest of vendors to start
pushing for RoI, though they should try and bring in non-commercial components

into the RoI calculation models. Components like job comfort leading to higher

efficiency, personal relationships leading to better service levels, pride in

work with gadgets of personal technology preferences, may not be tangible, but

play an important role in running any business. RoI should not and will not

completely replace the gut feeling.

The author is Editor of Dataquest Ibrahim

Ahmad