Lean and hungry vendors try tacky tactics
- 17 February, 2003 08:11
While the tech downturn has created a buyer's market for IT executives it has also forced lean and hungry vendors to resort to unsavoury sales tactics.
Even JD Edwards CIO Mark Endry has become so annoyed with the constant barrage of sales pitches he has called one vendor's CEO to complain.
The sales representative, Endry complained, started pitching a product for the eighth time after Endry had previously said no -- seven times.
Endry got a promise that it would never happen again but, "Since then, there have been two more," he says.
"The number of sales calls, e-mails and regular mail has gone through the roof," Endry says. "And if I say I don't need what they're selling, they'll call my boss or someone else in the company."
Allstate Insurance CTO Cathy Brune said: "We literally had vendors sending letters to our chairman; it's been a constant, constant irritation."
IT managers like Wesfarmers Energy's Bill Advic are happy with their current vendors, because of their "genuine interest" in his business needs. But increasingly he is bombarded with cold-calling reps from competing suppliers who won't take no for an answer.
Welcome to the IT recession. Slow sales and keen competition are pushing vendors to use aggressive tactics never seen before.
That's the bad news. The good news: "I absolutely believe we are seeing the best deals we'll see for a long, long time," Brune says.
Perth-based RAC Insurance's IS manager Jeremy Edwards said he hasn't witnessed many cowboy sales techniques himself, like companies badgering whoever they like in the business. "RAC tries to divert this tactic by having vendors deal directly with the IT buyer," he says.
Nonetheless, vendors still approach business-unit heads, but Edwards warns: "Vendors can't take the risk of just approaching any business or IT manager because now they're dealing with a community who are very careful -- almost sceptical -- and scrutinise all of the deals. Vendors have to sell you a better offering."
Edwards has noticed software providers in particular heavily discounting the cost of their solutions. While that may seem an attractive proposition at first, he points out: "All vendors are realising they need to get buy-in with the business. More of them are providing huge discounts and more technical [offerings] than just your average 'software consulting' services.
"But you've got to question where they're going to get their margins from. Increasingly, it's from maintenance or service charges. So, it's the total cost of the solution over time that needs to be considered."
Recalling a time when RAC used an IT consultancy based on customer references, Edwards said the provider failed his organisation's expectations by delivering subpar performance. Neither party gained from the incident, he said, explaining that while the consultant's credibility suffered, the client "was not happy", and the relationship eventually pulled. "Be in no hurry to sign," he said.
George Lin, CIO of Documentum, said that, in the past some vendors were almost pricing like a cartel -- everybody was pretty high, but these days, pricing is a lot more attractive.
But as JD Edwards' Endry points out: "Long-term service or support isn't as much about price as about relationship with vendors, and I don't know that the economy has changed that. Who cares about the price if you're unable to get the support you need?"