What factors limit the adoption of new technologies? This question is critical for things like IoT, 5G, and even AI, but we don’t seem to have much of a track record in answering it. I used to jokingly say that our view was “technology sucks”, meaning that simply making a new technology available sucked money from buyer pockets involuntarily. That’s not my actual view, of course, but the fact is that a lot of the ways we try to predict technology shifts aren’t much more logical.
From time to time, I’ve mentioned in my blog that “my model says” something, and it always surprised me that few ever asked what the model was. For those who don’t know, it’s based on predicting buyer decisions based on the factors that influence them. Simple surveys started to demonstrate minimal predictive value within five years of when I started doing them, so I thought modeling how decisions were made might help. I gathered information from 277 companies who I grouped into 32 behavior clusters, surveyed to find out how they made decisions, and then took the information from each cluster and scaled it based on the extent to which members of that cluster represented the market. I’ve kept the model updated over the years, and I still use it.
CFOs were obviously a big part of this, because while they aren’t the only factor in technology decisions, they are the executives who set the parameters for how spending is approved. They also see the project plans, and in some cases they even participate in technology reviews. To answer the question I opened with, I want to use my model, but also reference remarks CFOs have made to me about new technologies.
The point I think I should open with is simple; CFOs overwhelmingly support the statement that “a new technology should, and will, receive a more intensive pre-adoption review than one that’s been around, particularly one that’s already been used by the company.” This shouldn’t be surprising; CFOs are rarely technology evangelists. It also neatly raises my next point, which is what makes up such a review.
What influences a buyer in the early consideration of a new technology? The answer has changed subtly over the years. In 1989 when I first asked, the top four influences were our own experience, the experience of a trusted peer in the same vertical, specific influential publications, and the vendor we trust the most with our data center technology. In early 2021, the top four were our own experience, the experience of another major company in our vertical, the vendor we trust the most in the data center, and our most trusted network vendor. Let’s decode the shift.
It’s not a surprise that buyers trust their own experiences first, nor that they trust the experiences of other companies in the same field. We have seen an erosion in “trusted peer” experience as an influence; most buyers don’t now indicate they’d have to know a technology reference. It shouldn’t surprise us to find that the data center vendor with account control has significant influence, even if the new technology isn’t explicitly part of the data center. The major data center vendor is very likely to have a dedicated salesperson or team, and almost certainly will have a vertical-specialized sales contact if they don’t. So far, so good.
One interesting change is that today, the most trusted network vendor has influence they didn’t have in the early years. This reflects two things. First, the data center now has its own network, and that network is seen as a strategic asset almost to the same extent as the computing resources. Second, the network projects the value of IT, and since it’s delivered information that counts and not stored information, that’s key.
The last point may be critical in our understanding of the barriers to new technology. There are no specific influential publications any longer. In fact, media influence on buyers has declined from third place in 1989 to 10th place in 2021. Analyst firms had no specific placement in 1989, but in 2021 they ranked 7th.
CFOs had some insight into why neither media nor analysts got big influence scores. In the case of the media, the relevant comment was “Do you think anyone would be more likely to approve a technology product because it got written up in the media?” As far as analysts are concerned, they hit their high point in influence about five years ago, with a placement of fifth, just out of my top four. They’ve declined because of a growing feeling among the buyers that both analysts and the media are influenced too much by vendors. The “approval” comment is a reflection that neither media nor analysts are seen as a useful source of product insight, but that analysts still have some value as a “validator” when a particular technology is reviewed, or more likely when a specific vendor is selected.
The validation angle is important in understanding technology shifts, meaning the introduction of something new. My buyer research has consistently shown that new technologies tend to come to the attention of buyers because of media buzz. The buyer will, at that point, attempt to gain an understanding of the technology in general, and in particular the specific ways that the technology could help their business. Usually they’ll try to do some research before contacting vendors, but buyers tell me that it’s become more difficult to do that. Websites today rarely provide what they need, the media doesn’t really run educational stories, and so there’s little quality educational material out there.
Vendor data is, of course, manipulative. Educational selling is inefficient, and sales organizations will push back against it unless there’s some compensation for their time. Smaller vendors are at a particular disadvantage when new technologies are introduced because they usually can’t afford to spend time educating the market, especially when educated buyers then usually take something out for bids and they may not get the benefit of their efforts.
The final issue that limits new technology success is fragmentation. For over a decade, we’ve heard phrases like “god-box” and “boil the ocean”, which suggest that taking too big a bite of an opportunity can lengthen the sales cycle, raise more objections, introduce more dissenting views, and otherwise do bad things to the bottom line. There’s an element of reality behind this, and CFOs admit that if you make a “revolutionary” change, you’re likely to displace something that’s already installed and not yet fully depreciated. That raises the cost of the project without raising the benefit, and that makes approval less likely. But often revolutionary technologies only deliver their benefits if they’re adopted in a revolutionary way.
Some of the issues that hold back new technologies can be addressed, but we’re addressing them wrong. The overwhelming response to these problems is to hype, meaning to aggressively position something against any provable set of facts. We see that in nearly everything today. It rarely helps, and it often hurts by focusing vendors on things that, in the end, aren’t going to change anything. Sometimes all that does is delay things, but I believe that we’ve seen technologies killed by obsolescence before they ever got a shot. That may make good copy, but it doesn’t help us advance our computing and networking position.