Firm that provides research and software market services G2 The Value-Driven Purchaser Report, released in June by the Software Buyer Behavior Institute, found that despite dire predictions about tech markets, budgets and business outlooks, companies are looking forward to a good year.
Artificial intelligence (AI) is reshaping software as more buyers are turning to AI for greater value in their software purchases. This will lead to legal teams becoming more involved in the software purchasing process.
G2 has conducted a global survey to reveal the latest trends and insights based on responses of over 1,700 decision makers in B2B software. The survey revealed that despite the economic challenges of today, companies continue to invest in their technology in order to grow.
Businesses under pressure to deliver results in six months ask vendors to not only tell them but also show them. The key finding was that 86% of buyers do not include InfoSec in the purchasing process because of pressure to show results quickly.
Despite the current economic climate, this latest report on software purchases shows that buyers’ expectations have not changed much from last year. The outlook for 2024 software spending is even better. Sellers face challenges, as buyer expectations and scrutiny increase.
Chris Voce said, “As buyers search for quick and easy solutions, software vendors will need to be strategic about how they integrate with other products, educate prospects throughout their journey, and provide efficient training for implementation.”
Top 3 Software Trends for 2023-2024
These trends are emerging among software buyers in the current environment, which is marked by an unpredictability of economic conditions, increased pressure on vendors, changing buyer expectations and a growing focus on AI.
Despite the uncertain economic climate, buyers expect to increase their software and technology purchases. Almost half (49%) said they expected spending to increase this year. Only 9% of buyers predicted that spending would increase this year. Sixty-six per cent of those who predicted an increase in spending cited economic uncertainty as a reason for the change.
Even more promising is the outlook for 2024. Over half (55%) of respondents said that spending would increase next year, while only 6% predicted a decrease. Projections for the performance of next year are almost identical to those stated this year. Seventy-five percent saw a spending increase despite economic uncertainty. This compares to 78% who predicted a decline in spending.
Software buyers are increasingly relying on AI and prioritizing its features in their software purchases. A large majority (81%) stated that AI functionality is very or important in future software. Only 4% of respondents said AI functionality was not important. Nearly the same 78% also trust in the accuracy and reliability AI-powered solution. Fewer than 2% of respondents say that they don’t trust AI at all.
Source: Buyer Behavior Report 2023 G2
AI Becoming a Foundation
Researchers report that businesses are rushing to get a competitive advantage because of the hype created by generative AI. AI-powered solutions are trusted, and this gives a competitive advantage for any AI-powered product.
Voce was surprised by the response. He said that AI capabilities were driving more aggressive spending on software.
He told the E-Commerce Times that companies are willing to invest in AI despite economic uncertainty. “AI functionality becomes paramount for businesses despite the widespread skepticism around AI use.”
According to the report, software buyers plan to spend 60% more on AI next year. 72% of them will be spending over $100,000.
“This underscores the explosive growth we can anticipate AI software products to experience in 2024 — beyond what we have already seen this year. It shows that software companies who incorporate AI capabilities into their offerings have an advantage in the future.
The Unauthorized Software Market Will Continue to Grow
Voce noted that as AI becomes the main selling point for software, legal departments will be more involved in software purchases. Voce noted that 84% said their IT department was responsible for security and privacy assessments when evaluating software.
“Fifty percent said that their legal department has been involved. This is expected to rise in the next few months as companies become more aware of the use of their data and their accountability for the outcomes of generative AI products,” he warned.
There will also be unofficial IT practices. Software buyers are more interested in business processes. Voce says that shadow IT is caused by the pressure of delivering results.
Eight out of ten respondents (80%), said that they had an official purchasing process in place to purchase software. Despite acknowledging that business pressures still drive changes in behavior.
“Those who said they have purchased shadow IT — 87% of mid-size and 93% of enterprise organizations — did so because they needed to move quickly,” Voce said.
Priorities for Software Purchases by Business Size
Software buyers are primarily concerned with value, scalability and ease. Priorities vary depending on the size and type of company.
According to the survey, small businesses prioritize ease-of-use and ease-of implementation. The survey found that medium-sized and enterprise companies prioritize solutions that can keep up with growth. They also rank scalability third in importance when selecting software.
The key is to find solutions that work well together without adding complexity. Voce prioritizes the ease of integration over software costs.
He added: “Eighty-percent of our respondents said it was important that the software purchased integrates with their existing solutions.”
The survey did not include this question.
Vendors are required to meet a 6-month window of results
Voce reports that the business value of software is what drives buyer decisions. The survey of software buyers around the world confirmed that buyers still open their budgets to software investments which they feel will help them create value in their businesses.
Vendors who are vying to get a share of this increased spending face major roadblocks. He said that value is central to the goals of buyers, and it shapes their decisions.
Vendors must demonstrate quick value. Voce, based on feedback from respondents, said that for those who expect software spending to rise in 2024, the need to see an ROI in six months was the most important factor in the purchasing process.