What B2B Technology Buyers can do When Their Budget is Under Scrutiny
The current economic environment is leading to uncertainty across industries. Employees are being furloughed. Businesses are locking their doors. Spending is coming to a screeching halt. Researchers are working feverishly to predict 2020 outcomes. Forbes recently reported on several findings focused on how COVID-19 is affecting Tech Budgets. Here are the top trends and what you can do when your budget is on the chopping block.
Tech Budget Trends
- Goldman Sachs predicts a six percent quarter-on-quarter drop in the US GDP for the first quarter of 2020. An alarming 24 percent drop is expected for the second quarter. Before COVID-19 hit, they predicted just a five percent decline for the second quarter.
- Enterprise Technology Research (ETR) recently polled over 1,000 CIOs across the globe. Their data showed global IT spending will be flat this year, but will likely continue to trend downward into negative trends as the economic fallout advances. As 2020 began, CIOs expected a four percent increase in global spending. Their assessment of this shift is that “enterprises are moving towards a ‘keep-the-lights-on strategy.'”
- Forrester researchers are predicting tech budget shrinkage, but their report indicates the environment of uncertainty we are living in. Their forecast shows a two percent rise in global IT spend this year, but adds there is a 50 percent chance global spend could shrink by two percent or more.
Some Things Can’t Be Cut
While budget cuts often mean IT projects are delayed, shelved or cut completely, the COVID-19 crisis has given rise to IT needs that simply can’t be cut. For example, IT related to working remotely is vital to keeping many companies up and running, as more workers are logging in at home. A survey from CIO found that 96 percent of organizations implemented work-from-home policies within the first week of lockdown.
Seamless remote working is going to be the biggest differentiator between companies that successfully navigate the crisis and those that do not. Investment is most likely to rise in virtual private networks and desktop infrastructure, as well as hardware and software security. Companies may also be buying more computers as they try to provide devices to remote workers. IT managers as well as vendors will need to work closely to meet demand.
Investments in security are vital, as well as cloud computing. Companies rely on cloud services to remain connected, to serve their customers and to retain access to the valuable data they’ve been amassing. Cutting services that provide these important functions would cause more economic harm than good.
What Can You Do About Maintaining Vendor Contracts?
Overall spending will decline, especially if there is a prolonged downtown. As an IT manager, however, you know the importance of maintaining essential services. What can you do to maintain vendor contracts when you are working on a shoestring budget? Here are four tips.
- Do an honest assessment. What is truly vital? If a vendor is associated with a new IT deployment, could the project be delayed and those resources allocated to a more vital vendor contract? Inventory departmental SaaS applications. While cloud software spending is usually governed by annual or multiyear contracts, SaaS contracts are often month-to-month, and could be cancelled more easily. Look for low usage or even duplicate SaaS services to start cutting back.
- Communicate demand with your vendor. It’s likely demand is increasing, especially if you are working with technology that facilitates remote work. CIO says there is already a gap in new technology delivery expectations and actual timelines. If your firm is requiring new technology, increased licensing or other upgrades, now is the time to assess that demand and communicate your needs to your vendor.
- Renegotiate contracts. Even fixed multiyear contracts can be renegotiated. The threat of cancellation, even when penalties are involved, will often move vendors to work with you. They are feeling the burden of the economic crisis as well, and would probably prefer to renegotiate terms than lose a customer completely. Ask for special consideration. Offering to make it just a temporary measure may make your offer more appealing to your vendor. For example, ask for delayed billing or discounted usage. Many vendors are even offering free usage in some instances. Your goal is to continue uninterrupted workflow while decreasing financial pressure.
- See if there are better vendors out there. If you’ve been using the same vendors for years, this is a good time to evaluate your needs and what other options are out there. Look to your network of industry peers to find out what solutions they are using. Or, use a third party like Vendor Neutral to compare tech vendors. You may come across solutions that are even better than what you had. Before you completely cut parts of your tech stack, look at other options.
Get More Bang for Your Buck
Closing locations, layoffs, more remote workers, delayed projects, and reduced demand for products and services is all leading to lower revenue for companies across industries. In fact, 61 percent of enterprise line-of-business and technical leaders report that COVID-19 is having a significant impact on their budgets, initiatives and programs. Maintaining operations during this crisis will be vital to companies who recover. IT is the backbone of maintaining vital operations.
As an IT manager, it’s important to strategically plan IT spend. What vendor relationships are essential? What resources could be combined? What vendors are negotiable with payments? Could another vendor provide greater service for the same or less money?
Answer those questions easily through Vendor Neutral’s Simple Stack Selector. Finding the right vendor will ensure you get more bang for your buck. In an environment where every dollar matters, narrowing down a shortlist of vital vendors is going to ensure critical IT functions stay up and running. A brief assessment will match your needs against more than 400 vendors to find the ones that align with your goals and priorities the most. Get your custom report today! Contact us to find out more.