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.


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

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