Ernst & Young Study Finds Only 2 Percent of Info Tech Buyers Trust Vendors' Financial Justification for Purchase Decisions; 80 Percent Say Financial Support Critical for Internal Funding
NEW YORK, Sept. 3, 2002 - A survey of information technology buyers at Fortune 1000 companies, commissioned by Ernst & Young's Decision Analytics group, reports that only 2 percent of IT purchasers have a high degree of trust in the financial data supplied by vendors to support purchasing decisions. The data is alarming since nearly 80 percent of IT purchasers view financial justification measurements, such as return on investment, as an important element in securing internal funding for purchasing decisions and many rely on IT vendors for such an analysis.
While an overwhelming majority cited financial justification of purchasing decisions as being very important, 43 percent said that such an analysis is not conducted due to a lack of internal resources and an additional 42 percent cited a lack of adequate data to quantify the financial implications of a decision.
"In today's fiscally responsible environment, trust and confidence are critically important," says Howard Bass, practice leader of Ernst & Young's Decision Analytics group. "A technology investment isn't going to make it through the approval process if it doesn't carry with it a reliable financial analysis showing the impact the investment will have on an organization's bottom line. The results from this survey make that abundantly clear."
And the burden of providing a reliable financial analysis rests squarely on the shoulders of IT vendors, with 60 percent of those surveyed expecting the solution provider to bear 100 percent of the cost and 96 percent indicating that the vendor should pay at least half. In addition, 46 percent felt that they would trust financial data more if an independent third party conducted the analysis.
Adding to the general distrust buyers have of metrics supplied by IT vendors, 96 percent reported that they were inundated with marketing brochures and sales presentations reporting on the value propositions of various technologies which held little value in the purchasing decision process. A more customized approach was expected by 45 percent of respondents, citing case studies specific to their organizations as an example.
"The survey results show that a customer's perception of quality and objectivity is directly linked to the types of communication that vendors use in the sales process," adds Chris Mazzei, a senior manager in Ernst & Young's Decision Analytics group. "Leading IT vendors will be the ones that can provide a customized, verifiable value proposition to their technology solutions that can be supported by an independent third party. Ernst & Young is working with numerous vendors and organizations right now to put those types of quantifiable measurement processes in place," he added.
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