Manufacturer software spending will be a major focus for budgets in 2024. In fact, more than 54% of manufacturers plan to spend at least 10% more on digital business software replacement or upgrades this year, according to a survey of 481 manufacturers by Gartner.
Expectations behind manufacturer software spending
The topmost recent purchase for U.S. manufacturers spending on software was business intelligence and data analytics software. Among those manufacturers, 79% of businesses expect a positive return on investment (ROI) within 18 months of purchasing this type of tool, Gartner says.
But manufacturing companies also are not entirely happy about the digital software spending decisions they make, Gartner discovered. That dissatisfaction stems from various problems.
For example, half of manufacturers (47%) when spending on software say identifying the right technology is the most difficult when planning investments in new applications. That was followed by compatibility with their existing systems (44%).
Evaluating software purchases
It takes most manufacturers six months or less to evaluate and pick a new software tool. The vast majority create a list of potential vendors when looking for new software. Of those, 87% have five or fewer vendors on it. Meanwhile, 80% actively engage with only three vendors, according to Gartner.
The process of selecting and implementing new software can be complex and, unfortunately, not satisfactory for many manufacturers — 48% reported buyer’s regret from a recent technology purchase.
What manufacturers regret post-purchase
Manufacturer software spending regrets are often driven by higher-than-expected costs (38%) or implementation issues (35%). Poor functionality (34%) is another product-related factor that disappoints buyers. In these cases, they noted that the technology was often not advanced or had fewer features than needed, Gartner says.
When manufacturers were asked what they would have done differently to avoid regret when purchasing software, most respondents said better alignment of stakeholders was needed to clarify goals and requirements. This would include not only the software features they want, but also other needs such as cybersecurity.
Additionally, more extensive research is needed to create the initial list of vendors. Doing so may also help ensure the reliability and reputation of the supplier with a risk assessment, says Gartner.
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