Ganesh Shankar is the Chief Executive Officer and cofounder of Responsive, a market leader for strategic response management.
Predicted slower global economic growth is having a ripple effect across the technology industry. In January 2024, the technology and financial sectors experienced one of the largest months for layoffs in almost 15 years. Investors increasingly reward organizations that practice financial discipline. Gone are those days when management said, “Grow at any cost!” Instead, companies are under tremendous pressure to operate efficiently and grow more sustainably.
Not surprisingly, CFOs, CIOs and other C-level executives are re-evaluating their currently deployed technologies and are choosing to only renew select solutions or purchase new technologies that deliver demonstrable value or are better aligned with their corporate mission. Organizations want to see real ROI and tangible business outcomes associated with their technology investments, and as a result, technology rationalization is becoming the new norm.
An Uptick In Contract Renegotiations
With the increase in technology rationalization, technology vendors find themselves navigating difficult discussions with their current customers and prospects. For example, many customers are seizing these uncertain economic times to renegotiate annual subscription contracts with their existing vendors. Today, customers are saying, “I don’t care if inflation or the Consumer Price Index (CPI) is high—I want my pricing or licensing fee to stay flat or come down from what I paid last year.”
What Technology Vendors Can Do
As organizations reassess their technology investments, technology vendors need to clearly communicate—and demonstrate—how they are delivering value to their customers. Here are six actions vendors can take to do just that.
Align your solution to a very clear value proposition: It is more important than ever that vendors be crystal clear about the value that they are offering customers. Remember, technology can play a critical role in reaching desired business outcomes. Listen to your customers to better understand the challenges that they are facing and ensure your company is providing the right capabilities. Be sure to share customer testimonials and proof points to demonstrate how your solution is helping to solve real-world problems.
Stay focused on customer success: Today, it is even more critical for vendors to maintain a positive experience with customers. Unfortunately, many organizations wait until renewal time to check in with customers. Instead, organizations need to regularly touch base with their customers and ensure they are happy throughout the entire customer journey—not just during onboarding and renewal—and quickly address any issues that might arise.
Provide an amazing user experience: Technology vendors need to invest better in the user experience. If your users—customer employees, partners, etc.—dread using your tool, you need to increase your solution’s value—and efficiency—by offering new features and capabilities to provide a more positive user experience. Today, users are looking to streamline operations and reduce time spent on tedious tasks, enabling strategic allocation of time and a substantial increase in productivity.
Mitigate risk and meet regulatory compliance: As security threats increase and industry, federal and state compliance requirements become more complex, technology vendors must empower their customers to effectively mitigate risks and meet regulations.
Deliver solutions that can help accelerate revenue growth: As business conditions change, so do technical needs. Technology vendors need to look for new ways to scale and help their customers accelerate revenue growth, whether they are expanding in new markets, delivering new services, minimizing resource wastage or optimizing profitability.
Provide consistent brand voice and tone throughout the customer journey: Throughout their journey with your organization, customers may interact with a wide range of employees, from customer success and account managers to marketing and finance. Remember, consistency matters—be sure to develop and enforce an external communications program that delivers the same brand voice and tone across all customer interactions.
Technology rationalization is here to stay for the foreseeable future. Companies are looking across their technology portfolio to see where AI-powered tools can help enhance the value of their current investments.
With mergers and acquisitions expected to make a comeback in 2024, investors and boards of directors will pressure organizations to review combined technical assets and consolidate. The emergence of GenAI is also forcing organizations to re-evaluate their technology investments. Vendors without AI stories are quickly becoming obsolete.
Change is inevitable. The good news is that technology vendors can take steps today that will help them not only weather but even succeed during these unpredictable economic times.
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