Demand across the B2B technology sector as a whole is varying heavily right now. With the current economic turbulence, some tech and consulting firms have seen a slowdown in client spending along with delayed project decisions, while others are inundated with opportunity and struggling to cope.
There is no doubt that many organisations are still spending on technology. 70% of UK businesses are planning to spend more on tech in 2023 than in 2022, according to PwC research₁. PwC’s 2023 CEO study revealed an appetite for carefully considered, strategic investments that will help secure long-term growth.
While CEOs are re-evaluating their budget priorities and identifying what tech to invest in, marketing and sales leaders have a similarly difficult challenge in identifying and targeting those in-demand investment areas using the right tactics and channels - and knowing where to focus isn’t always obvious, especially as buyer behaviour is changing so quickly. Sales and marketing leaders need insight to ensure decisions relating to target industries and accounts, propositions, thought leadership and demand generation are as informed as possible, and aligned with the demands of their buyers.
As an organisation who regularly conducts research directly with B2B buyers to understand buying trends, we wanted to share what we are seeing in the tech and consulting space in early 2023, in the hope it helps sales and marketing leaders define more effective strategies.
Over the last few months, we’ve spoken with nearly 150 individual UK buyers of consulting and technology services spanning digital transformation, cyber security, risk management, data analytics/AI, automation, cloud computing, customer experience, product engineering, HR services and leadership development.
While we obviously won’t share any client specifics, our latest blog highlights the most common, general trends in buyer behaviour. With the help of ChatGPT, we’ve also compiled and then added the latest research from analysts and other well-known tech and consulting industry commentators.
General buying behaviour
Through last summer and autumn, as issues around the cost of living crisis, high inflation and the impact of the war in Ukraine took hold, there was naturally caution among buyers.
Many pushed back spending decisions or budget planning on core tech-related projects and programmes, especially around external spend on consultancies or new tech platforms. Instead, they aimed to leverage in-house skills more widely, so that they could still progress key projects internally.
However, in Q1 of 2023 sentiment is growing more positive as fears around a recession are easing - with the expectation that it will be avoided or be shorter and shallower than previously thought. Unsurprisingly, budgets are being released, key projects are being given the green light and some are moving fast to make up for lost time.
This more positive outlook for organisations selling tech to business comes with a caveat, though. There is now far greater scrutiny on any external spend relating to technology products and services. In an uncertain world, clients want more certainty that whatever investments are made, will actually make business improvements. This poses a challenge for suppliers to find ways to convincingly demonstrate a strong business case, along with outcome certainty.
One related point is that industry specialisation is often seen as one of the biggest supply-side weaknesses. This leads to doubts around whether consultancies and tech firms really understand a buyer’s business well enough to make a difference.
What are buyers buying?
The areas of B2B technology which are seeing the biggest levels of investment are those which are deemed mission critical, such as core infrastructure and security, along with continued digitalisation.
Forbes refers to a survey₂ of IT decision-makers across the US and the UK entitled, ‘The Most In-Demand Services In 2023’, which found the most in-demand areas are digital transformation services, cloud computing, Artificial Intelligence (AI)/machine learning, and cybersecurity services.
AI is clearly a hot topic, spurred on by the growth of interest in OpenAI’s ChatGPT, and a forecast of over $500billion₃ for AI spending in 2023. Buyers we’ve spoken to are ambivalent about AI. They’re keen to explore its potential, but wary about disinformation, copyright breaches, ethics and legislation, especially in the longer-term. Many expect the introduction of regulation to emerge later in 2023.
Skills remain a difficult gap for businesses to plug, with no sign that the problem will be alleviated any time soon. Expertise in data analytics, project management, software development and system integration are in the highest demand right now. The same PwC survey₁ stated that, ‘40% of UK CEOs believe the tech skills and understanding of their teams lag behind the demands of their strategic objectives’.
And among all of this, there is an increasing focus on environmental, social and governance (ESG) practices, alongside ‘Green tech’. Businesses are looking to ensure that any technology they deploy supports their sustainability goals, so this is becoming another high growth area.
Other areas worthy of note that are increasingly in demand are those that can help buyers leverage Web 3, immersive-reality, customer experience, identity management, as well as technology that can help streamline operations.
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How are buyers buying?
TrustRadius research₄ has found that B2B buyers generally want an autonomous, independent approach to buying. That is to say that they want to conduct their own research online into the available options, easily collect pricing information, and come to their own decision with as little interaction with vendor sales staff as possible.
However, our own research with buyers has found that this is only half the story. While buyers do want to conduct online research in the education stages of their buying process, they still want to engage with knowledgeable sales people as they progress - so they can get answers to their specific questions.
We’ve found this particularly with consulting-led solutions that solve complex problems, as opposed to more straight-forward software purchases, where the benefits and pricing are easy to establish.
It’s more logical that buyers of software will progress further through their buying journey with a self-serve mindset (with demos and trials making it easier to evaluate offerings), than buyers of technology services - particularly those in more complex areas. The latter is increasingly where thought leadership is recognised as key to demonstrating superior expertise.
Generally, when buyers have specific questions they want them answered quickly. They rarely want to engage with an AI-driven chatbot providing basic information. Increasingly though, they care less about the channel through which they engage with a sales person. Noone expects regular face-to-face meetings - a Zoom call, email or phone call will suffice - but they do want to deal with someone who is clearly an expert.
Decision-making trends and selection criteria
According to Source Global₅, brand reputation and expertise remain important factors when buyers are assessing potential technology solution providers, which is why showing strong subject matter knowledge and demonstrating a proven track record is essential. But now, for the first time, implementation skills are being prioritised more than anything else.
Source suggests, over a third of businesses say they want consulting firms to be proactive in suggesting solutions that can improve their productivity. This means they’re looking for providers who can not only explain the solution to a buyer’s specific problem, but also demonstrate how that solution solves the problem in practice.
On the software side, Gartner’s global software buying trends survey 2023₅ revealed that two key issues often become deal breakers, when buyers are making decisions. Firstly, inconsistent pricing information - typically what is presented on a website versus the final proposal. The second is the perceived steep learning curve that the buying organisation would have to go through, and any associated downtime.
Another very common trend we have found is that buyers now value established relationships more than ever. It means they often favour existing partnerships, as they represent a higher level of trust and lower level of risk. That doesn’t mean that winning new business is impossible, but you’ll need to work harder to convince buyers of your ability to deliver.
Trust is also established through greater transparency. It’s clear that buyers are growing ever more savvy, and to some extent, more suspicious. We heard of many buyers suggesting that credibility can be gained as much through being honest about a lack of capability, as presenting a compelling bid. It’s also seemingly more apparent to buyers when a vendor doesn’t have the skills it claims to possess.
In Summary
Uncertainty is the number one business challenge facing tech and consulting buyers. It’s no surprise then, when it comes to investing in technology, that buyers want as much certainty as they can get.
Our key takeaways therefore serve as a good reminder for sales and marketing leaders of tech and consulting firms:
- Survey potential buyers directly to understand first-hand what their investment priorities are right now
- Identify the most in-demand areas in your product/service portfolio and focus on evolving your propositions and offerings to buyers’ current needs
- Use insights into your target accounts to identify their business imperatives and tailor your propositions to those individual businesses
- Provide as much information as possible to help buyers build a robust business case for investing in your solution
- Demonstrate your track record with relevant industry case studies, which show clear outcomes and ROI
- Ensure consistent information is available online to meet your buyers’ information needs, while ensuring subject matter experts are available to address specific questions
- Focus on established relationships as new business is much harder to win in the current climate
This interim focus should see you through what will hopefully be a short period of uncertainty.
References:
- UK CEO Survey, pWc 2023
- The Most In-Demand Services In 2023: Survey Reveals What IT Decision Makers Want, 2023
- IDC forecasts global AI spending to go past half-trillion mark by 2023, AI Business 2023
- 2022 B2B Buying Disconnect: The Age of the Self-Serve Buyer, TrustRadius 2022
- What will really matter in 2023? Five key trends in consulting and professional services, Source Global Research 2023
- Software Spending Report 2023, Gartner 2023
- What significant shifts in B2B buyer behaviour means for 2023, Forbes 2023
- What are the top software buying trends for 2023 for UK firms?, Capterra 2023
- High Growth Study 2023, Hinge Research 2023
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