Software Customers in the Driver’s Seat: How They Choose Vendors in a Consolidating Market, A New IDC Study

FRAMINGHAM, MA – JANUARY 24, 2006 – According to a newly published IDC study, customers' criteria for selecting software vendors are shifting away from product simplicity and pure innovation, and moving toward specific business solutions that are pre-integrated and interoperable. The study, which analyzes the results of ten recent IDC surveys, finds that customers perceive themselves to be in the driver's seat as they create a new natural selection dynamic for the software industry.

"It should be abundantly clear from the results of this study, which stem from multiple countries, that customers will increasingly select vendors that demonstrate verifiable knowledge of their business – the pure technology buy is a thing of the past," said Tony Picardi, senior vice president of Global Software at IDC.

The study identified the following top three criteria increasingly used by customers to select a vendor:

1. Understanding of the customer's business and providing solutions that integrate and interoperate in their environment

2. Best-of-breed features with superior quality

3. Price and value advantages

"There was relatively little enthusiasm for items such as simplicity and innovation," added Picardi. "Instead, customers are telling IDC that they want software vendors to go the extra mile and produce real solutions that integrate and interoperate in their particular businesses. For vendors, it is clear that the bar is being raised."

IDC predicts that the top three selection criteria – solutions, business orientation, and best-of-breed features – will ultimately yield advantage for vendors perceived as software brokers. Conversely, there will be a marginal disadvantage for vendors that continue to approach the market as pure-play software publishers. The software broker is the purveyor of real business-savvy software that cuts through the complexity crisis, as described in the IDC study, Software Companies of the Future (IDC#33541, June 2005).

The newly released IDC study, How Do Customers Choose Software Companies? (IDC #34724), reviews ten IDC surveys to answer the question of what criteria customers use to select software companies. This research effort identified similar questions answered multiple times in different regions and by various IT and line-of-business leaders. The study provides a future outlook of customers' expectations, and offers essential guidance for both software vendors and consumers.

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