Why Companies Regret the #1 Reason Driving their Purchasing Decisions
Managing Director, Software and Network Transformation
Technology, Thought Leadership, Digitization, Enterprise Networking, Security
Cisco just published Ready, Steady, Unsure – A Technology Perspective into Asia-Pacific’s Readiness for Digital Transformation, a report aimed at finding the gaps and harmonies between companies’ Digital Transformation strategies and their top investments in new technologies and IT infrastructure.
The good news: companies in Asia-Pacific are optimistic about their digital future. Eighty eight percent of them feel they have the right Digital Transformation strategy and another 88% think they are adequately prepared to adopt the relevant technologies for the future. Cognizant of the role IT infrastructure plays, 70% of companies are also proactively modernizing, particularly their networks. The network is the only element that connects all things digital—cloud, Internet of Things, mobility—and, for sure, it needs to evolve to become more agile, easier to manage and secure as more things, people and data get connected.
When asked about which parts of the network they had modernized in the last three years, 47% of companies in Asia-Pacific said they upgraded their routing, 63% adopted SD-WAN technologies, 62% modernized their switching, and 71% of companies improved their wireless capabilities. Even for those companies that have not yet gotten around to modernizing their networking, many are planning to do so very soon—33% of companies in the case of traditional routing, 60% in the case of SD-WAN, 54% in the case of switching, and 75% in the case of wireless.
All of this looks fantastic, and it seems the huge optimism for the future of Asia-Pacific networks is well warranted. Unfortunately, the bad news comes in here: many companies have already modernized or plan to modernize their network based on price. Not just that, 42% of companies say they don’t adopt the relevant technologies to Digital Transformation because of budget constraints.
All evidence in the Ready, Steady, Unsure study points to how much companies regret this decision. In a world where the competition can move at light speed and user experience is critical to keeping your customers, it is hard to imagine that, according to report, 40% of companies compromised innovation and 40% post-sale support from the IT vendor in order to bring down the costs of their IT infrastructure purchases. Sadly, our survey results provide evidence for what we see all too often – companies do put price first without fully thinking through what part of the business outcome they are undermining.
When assessing a modernization initiative, too many companies choose to look only at the price of the network solution alone and go with the cheapest options available. They fail to look at the total cost of ownership for the solution or to assess the increased risk associated with the tradeoff of valuable features, higher quality or better post-sale support. This decision actually costs them more in both the short term and the long term—in higher management and operational costs, in security breaches and cyberattacks, in business downtime, a degraded user experience or network outages.
According to the report, 37% of companies have learned this the hard way and admit they regret cost-based infrastructure decisions for various reasons: 49% of them had to top up their initial investment, 48% feel their cost-based infrastructure proved to be unreliable, and 45% say that the performance of that infrastructure didn’t meet their expectations. Perhaps counterintuitively, a willingness to choose network modernization solutions based not on price but on quality not only helps to avoid these risks—it also brings new digital capabilities that can enhance competitiveness and improve outcomes for customers.
So, the next time you’re looking to modernize your networks, be aware of the tradeoffs and risks implicit in that all-too-enticing drive to get the lowest price. Make sure you are thinking about the business outcomes you are trying to deliver and the experience you want your customers to have. Also, ensure you are giving yourself and your organization the best chance of success with the technology decisions you make. Finally, remember: if you think you are getting a too-good-to-be-true deal, you probably are. You get what you pay for.
Learn more about Cisco’s report: https://www.cisco.com/c/m/en_au/digital-ready/index.html