Nearly two-thirds of U.S. businesses will increase software spending in 2024, creating urgency to correct flaws in the buying journey
Fifty-eight percent of U.S. businesses regret at least one software purchase they made in the last 12 to 18 months, according to Capterra’s Tech Trends Report. This global survey of over 3,400 businesses reveals how organizations are approaching software investments and the factors that lead to regretful purchases. As 65% of U.S. businesses say they’ll be spending more on software in 2024, it’s imperative that companies rethink how they buy software.
Over half (56%) of businesses with regretful software purchases describe the financial impact of their decision as “significant” or “monumental.” Beyond the financial burden, these businesses also experience other consequences—both internally and externally. In fact, 41% of U.S. businesses say their bad software purchase made them less competitive and 38% say it led to productivity loss.
The report reveals key factors that can help businesses reduce purchase regret:
- Shorter decision timelines: Companies take five months on average to evaluate software options and make a purchase decision, but can minimize purchase regret if they do it in three months or less. While there’s value in taking time to fully weigh the options, companies that take decisive action on a software purchase are the least likely to experience regret.
- Social proof: Businesses that gather information from vendor social media posts (77%) or Google Search (67%) experience the most purchase regret. Information sourced from product comparison websites or through consultations with industry experts are least likely to lead to purchase regret. Having more objective information sources provides businesses with social proof to evaluate tools that best fit their needs.
- Better understanding of total cost of ownership: The top driver of product-related purchase regret is the software being more expensive than expected. Beyond the cost of the software license, companies should keep in mind add-on fees such as setup, data migration, user training, and customer support.
- Clearly defined goals: Businesses that experienced regret say the top changes they would make on future purchases are ensuring alignment among the stakeholder group about evaluation/selection criteria (38%), and clarifying desired goals and outcomes (37%).
- Mix of IT and non-IT decision-makers: Compared to businesses that have only non-IT staff (67%) or only IT staff (61%) on their purchasing team, those that have a mix of IT and non-IT staff have a lower amount of purchase regret (54%). With a well-rounded selection committee, IT members can help evaluate technical details while non-IT staff can review the product’s features and user experience.
“‘The way we do things,’ including when buying software, can be hard to change in any organization,” says Brian Westfall, principal analyst at Capterra. “However, the fact that most U.S. businesses are making regretful purchases points to flaws in how they find and evaluate software. Software investment is going up in most cases in 2024, and this creates an opportunity to right past wrongs.”
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