We may be living in times of economic uncertainty, but that doesn't seem to be stopping companies from buying new software, according to the G2 Software Buyer Behavior Report. In fact, it seems to be a primary reason why buyers are increasing their budgets. But with spending comes bigger expectations of software vendors.
G2's report, based on a survey of 1700 global software buyers, states that 49% of companies are increasing budgets for software, and only 9% are decreasing budgets. Also, 55% expect to increase budgets in 2024, which is not far away.
It's possible that the increase in budget for software is coming at the expense of employees. In Integrate's State of Marketing Budgets, staffing levels decreased for 36% of that study's respondents (of course, it increased for 36% as well). The numbers were slightly different in terms of budgets, with 39% increasing budgets and 37% decreasing budgets.
One of the reasons budgets may be increasing is the growing demand for AI. It shouldn't surprise anyone that AI is an important capability buyers seek. The study found that 81% said it was important or very important that the software they purchased had AI functionality. It wasn't stated what type of AI - which is important because we know there are different types, and a lot of marketing software already includes AI and automation.
However, with the excitement around generative AI and the increase in vendors touting they now include it in their software, it's a good guess that it's sitting at the top of the list.
Privacy and security are top concerns
Just because budgets look good doesn't mean the purchase process is straightforward for software vendors. Privacy and security have become significant concerns, with 86% of companies requesting a security assessment before they select the right software.
This is especially true with the integration of generative AI into many solutions, particularly OpenAI's ChatGPT. The risk of having private company and customer information get out into public large language models is a concern every company needs to discuss with potential vendors. Not just discuss, but actually see and understand how it doesn't happen. According to Eunice Buhler, General Counsel, G2:
The problems that can arise with it are still being discovered. Legal ramifications or litigation related to ChatGPT has yet to come out. We're finding out what the data privacy concerns are in real time, and that's why we want to take a bit of a cautionary approach.
Here's something interesting, though - 54% of respondents said they've bought software without having it approved by IT or InfoSec. And only 24% include security in the research phase, which is the largest phase of the purchase process, according to this study. Shadow IT strikes again!
The top reason security is left out is that users felt the need to move quickly to deliver results from software so they didn't have time to 'waste' on little things (like corporate security!).
It's not just security that needs to be involved in these decisions. Legal is expected to play a larger role in the purchase process, with 40% expecting to include legal in security and privacy assessments. The number is higher in EMEA countries due to stricter regulations, but it's only a matter of time before the US requires similar regulations across the country.
Integration important, ease of use more important
Companies want to buy software that works with other software without added complexity. That's one of the five factors that G2 says are shaping buyers over the next 12 months. But although integration is important, it sits at number 8 on a 14-point checklist of considerations for buying software.
But integration is really important. Software must work together to ensure a company delivers the best experiences. Data, especially, needs to be shared. Sometimes that means purchasing everything from a single vendor (78%), and sometimes it means one solution that does it all (84%). And sometimes, that means looking for composable software with connections with other software.
The most important considerations were ease of use and implementation, the ability to scale as the team or company grows, and ROI within six months to a year.
The ROI expectations are worth pointing out. You only need to look at the pressure on marketing to understand the need for technology to create better experiences for the right customers. And it's not only about finding new customers; it's about keeping existing ones. In the Integrate study, customer marketing was the top investment for 2023.
Sales' role in the buying process
In last year's G2 Software Buyers Report:
60% of buyers agree or strongly agree that a vendor's sales team isn't involved in the research phase of the buying journey. However, there is an expectation that sales proactively engage early to help buyers. That would mean less "selling" and more "helping." Pushy sales drive the lack of trust many buyers feel, but a salesperson offering help can move the buyer in the right direction.
In this year's report, 66% said the same thing. In fact, sales are still the least influential source (one percent), down from three percent the prior year. The most influential included industry experts, colleagues or professional networks, online reviews, and internal influencers.
I'll point to Jon Reed's new dbook here on the informed buyer. From a marketing perspective, we need to rethink how people buy, and this study only proves that point. Reed's perspective includes reaching not just the buyer but the community around them (industry experts, professional networks, internal influencers…):
Buying is increasingly a consensus process. Buyers rely on "trust networks" inside and outside of their company to make buying decisions. It's not just about reaching buyers, it's about reaching their networks.
How companies buy continues to change. New technologies come into play that they expect to see in their products. Generative AI is the new shiny technology, and many see it as a game changer, so they expect software vendors to incorporate it. I've talked to many vendors who have done just that, including Sitecore, Phrasee, Conversica, and GTMBuddy.
Generative AI capabilities go well with the need for ease of use and quicker ROI, but as the G2 report found, it also brings concerns over privacy and security, so companies need to tread carefully.
The G2 report covers all types of technology, but from a marketing perspective, the story is consistent. Overall, it's good to see that companies recognize this isn't a time to slow down; it's more about making smarter choices in technology and how they work.