From budgeting to buyer’s regret, see how manufacturers manage buying software.
The stakes for software purchases are high as today’s businesses can't survive without technology. And while the number of different types of software, vendors, and the variety of available options is overwhelming, business leaders can use a thoughtful approach to avoid choosing the wrong software.
To understand how manufacturers are managing all this, we surveyed 481 manufacturing businesses to ask about their plans for technology spend in 2024 and about their experiences with researching and purchasing software.*
Based on our survey results, we identified three trends:
1. Manufacturers are increasing tech budgets: More than half of manufacturers plan to increase tech spend by at least 10% in 2024 with business intelligence software being the most common recent purchase.
2. Choosing the right software that is also compatible are top challenges: 47% say identifying the right tech is the most difficult when planning investments in new software.
3. Unfortunately, software purchase regret is prevalent: 48% of manufacturers have regret for at least one of the technologies they purchased in the past 12 to 18 months.
54% of manufacturers plan to increase tech spend by at least 10% in 2024
Despite the economic troubles we’re all experiencing, the majority of manufacturers are choosing to increase their investment in technology. In fact, only 11% have plans to reduce their tech budgets for 2024.
But increasing spending doesn’t necessarily mean you’ll be at a loss for long. The top most recent software purchase for manufacturers was business intelligence and data analytics software, and 79% of businesses expect a positive return on investment (ROI) within 18 months of purchasing this type of tool.
So how much are your competitors paying for software? Let’s take a look at how much businesses based in the U.S. plan to spend on the five types of software reported to be their most recent purchase.
Based on this industry trend, you should also be increasing your planned tech spend—but by how much will depend on your specific circumstances. Businesses in growth mode should plan to increase spending by at least 10%, whereas if you’re in optimization or cost reduction mode, you’ll likely increase only a couple of percentage points. How businesses decide to balance their budget to accommodate this increase differs vastly, from reducing headcount to aggressive marketing campaigns.
Although, budgeting for the new tech isn’t a top concern. In fact, when asked what challenges businesses face when planning investments in new software, only 27% report that funding the investment is a top one. Instead, the top challenge is identifying the right technology (47%).
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The software selection process is fraught with concerns and issues for many manufacturers
For nearly half of manufacturers (47%), identifying the right tech is the most difficult when planning investments in new software, followed by compatibility with their existing systems (44%).
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 and, of those, 87% have five or fewer vendors on it. Although, nearly 80% actively engage with only three vendors (i.e., get pricing, attend demos, start a trial, or similar).
Here are three tips for how to effectively pick the right software for your business.
1. Define your needs and goals: Clearly outline your specific requirements and objectives. Include not only the software features you want, but other needs such as cybersecurity and the vendor’s reliability/reputation too.
Be sure to get alignment of needed features from all your key stakeholders.
2. Research extensively: Create a potential vendor list. Read customer reviews and research the best features for you to ensure the software aligns with your requirements.
Seventy-five percent of manufacturers say they’ve recently used Google to learn about software—35% report using ChatGPT.
3. Test before committing: The majority of software vendors will provide you with demos and likely also a trial version—be sure to ask for both. Assess usability, compatibility, and whether it meets your expectations before making a purchase decision.
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48% of manufacturers have buyer’s regret from a recent tech purchase
The process of selecting and implementing new software for your business can be a risky one and, unfortunately, nearly half of the manufacturers surveyed have had some regret in their decision.
These top reasons for buyer’s regret can be avoided with a thorough vetting process. From knowing what questions to ask the vendor and when to probe for more detailed information, taking the time to do a comprehensive evaluation of your choices is key to not wasting time and money on a poor software match.
We’ve got the resources and guidance you need to make the right choice, all at no charge. So whether you’re replacing an existing tool you now regret or looking to avoid buyer’s remorse in your next purchase, we’ve got you covered.
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From collaboration to cybersecurity, tech has never been more important to small businesses competing for market share against large corporations.
Here’s a quick recap of the recommendations we shared throughout this report to help you make smart software choices and get the most out of your tech investments.
Avoid buyer’s regret with a thorough vetting process when picking new software.
If possible, plan to increase your planned tech spend by at least 10% for next year.
Create a potential vendor list with about five options, comparing pricing, features, security, and the total cost of ownership.
Capterra’s 2024 SMB Tech Trends Annual State of Software Adoption Reports capture global trends across industries and reveal how small to midsize business leaders are adopting technologies to embrace change, optimize efficiency, and accelerate growth. Our reports are designed to support decision-makers with the insights they need to embrace the right technology and services.
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