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How AI Influences B2B Software Procurement

Change is constant in the business technology arena. In an era where innovation evolves at breakneck speed, Artificial Intelligence (AI) stands out as a transformative force reshaping various commercial processes.

One of the most significant impacts of Generative AI (GenAI) is in the software technology sector, particularly in how it influences the behavior of today's software buyers and the procurement process.

The 2024 Buyer Behavior Report by G2 provides an in-depth analysis of these changes, revealing critical insights into spending expectations, buyer trust, and the evolving dynamics of software procurement.

The New Landscape of Software Procurement

The software procurement landscape is undergoing a seismic shift, driven by the rapid adoption and integration of AI technologies. According to the report, 52 percent of software buyers expect their spending on software and technology to increase in the upcoming year, with AI playing a pivotal role in these budget expansions.

This surge in AI investment is not merely about jumping on the AI bandwagon; buyers are looking for tangible returns on their investments. In fact, 83 percent of organizations that purchased an AI platform within the last three months reported seeing a positive return on investment (ROI).

Increased Spending and Expectations

  • Budget Increases: Over half of the surveyed buyers anticipate an increase in their software and technology spending in 2025 compared to 2024. This optimism is tempered by the fact that spending expectations have slightly decreased from previous years, reflecting broader economic uncertainties.
  • AI Investment: AI functionality is now a critical component of software purchases across various domains, including marketing, sales/CRM, customer service, and data analytics. Buyers are not just looking for standalone AI platforms but also expect AI capabilities to be integrated into other software solutions.

Changing Software Buyer Behavior

  • Shorter Shortlists: The number of products considered by buyers has decreased significantly. In 2024, 49 percent of buyers had only 1 to 3 products on their shortlist, up from 33 percent in 2023. This indicates a more focused and selective approach to software procurement.
  • Longer Buying Cycles: The buying process has become more prolonged, with 49 percent of buyers taking four months or more to make a purchase decision on software costing $20,000 or more, up from 41 percent last year. This extended cycle is due to stricter vetting processes and heightened scrutiny from executive leadership.

Trust and Executive Decision-Making

  • Executive Involvement: The role of the C-suite, particularly the CFO, in the decision-making process has become more pronounced. 41 percent of buyers identified a C-suite employee or the CFO as the ultimate decision-maker for software purchases. This shift underscores the need for vendors to demonstrate clear ROI and strategic value to top executives.
  • Self-Service Preference: Consistent with previous years, buyers prefer self-service at most stages of the buying process. A significant majority (69 percent) engage with a salesperson only after they have made their decision.

The AI Role in Reshaping Procurement

AI is not just influencing what software buyers purchase but also how they approach the procurement process. The report highlights several ways AI is reshaping buyer behavior:

  • Efficiency and Productivity: AI buyers prioritize solutions that enhance employee productivity and deliver cost savings. These factors are the primary measures of ROI for AI investments, with 44 percent of buyers citing productivity improvements and 42 percent citing cost savings as key benefits.
  • Use Cases Across Business Sizes: The importance of AI varies by business size. Small businesses focus on marketing, mid-market businesses on generating assets, and enterprise users on surfacing data insights automatically. Despite these differences, improving overall efficiency and customer support are universally important use cases.
  • Legal and Compliance Hurdles: Advanced AI users report that legal teams frequently slow down the procurement process. This challenge is more pronounced for AI Power-Users, with 61 percent stating that legal issues always or frequently impede software purchases.

Recommendations for Software Vendors

Given the evolving landscape, software vendors must adapt to meet the new expectations and behaviors of AI-influenced buyers. The report offers several recommendations:

  1. Demonstrate Clear ROI: Vendors must provide compelling evidence of the ROI their solutions can deliver, particularly in terms of productivity and cost savings. Quick wins and early value realization are crucial to satisfy buyers' heightened expectations.
  2. Engage the C-Suite: With executive leaders playing a more significant role in purchase decisions, vendors need to tailor their messaging and value propositions to resonate with the strategic priorities of the C-suite.
  3. Leverage Peer Trust: Buyers heavily rely on peer reviews and trusted sources to inform their decisions. Vendors should actively manage their reputation and encourage satisfied customers to share their positive experiences.
  4. Streamline the Buying Process: Simplifying the procurement process and addressing legal and compliance concerns proactively can help accelerate deal velocity and reduce friction for buyers.

Conclusion: Your Call to Action

The 2024 Buyer Behavior Report by G2 underscores the profound impact AI is having on the software procurement process. As AI continues to drive budget increases and reshape buyer expectations, software vendors must adapt to this new reality.

By demonstrating clear value creation via business outcomes, engaging with executive decision-makers, leveraging peer trust, and streamlining the buying process, vendors can navigate the challenges of this dynamic landscape and achieve sustainable growth.

AI is not just a technological advancement; it is a catalyst for transforming how businesses approach software procurement, making it more strategic, data-driven, and outcome-focused. The savvy B2B software vendors will now adapt their go-to-market approach.

Based on these new insights, regional and industry-specific custom tailoring of go-to-market approaches is very important for software vendors to increase their chances of closing deals with customers in the age of AI-influenced software procurement. We can show you how.

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