Is technology knowledge more important than price when choosing an IT service provider?

I have been blogging about the findings of research from Computer weekly parent company Techtarget.

Part one looked at how IT services budgets will change next year. See it here. 

Part two revealed what the drivers for I service budget increases and decreases are. See it here. 

Part three revealed the main influences on supplier selection in Europe. See it here.

Part four revealed which technologies European businesses are planning to outsource.. See it here.

Today I am providing some interesting insights into why businesses chose particular suppliers. When you ask most people in the industry why service providers are chosen they usually say, “price, price, price.” The results confirm the importance of price for overall selection (see table below) but less important than deep technology knowledge would appear more important.

According to the Computer Weekly/Techtarget study looking at specialist technology areas it appears that deep technology knowledge is more important. While existing relationships with suppliers is the most common influence on a supplier choice it appears that deep technology is more important than price in most cases.

Here is the overall result on reasons for selecting suppliers.

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When selecting an IT Service Provider for your firm, which are the most important properties for that firm to have? (select up to 3 responses)    
     
Price   62.80%
Vendor has deep expertise in the technology or application   71.50%
Vendor with whom we already have an existing relationship   32.90%
Top Tier Provider with a global reputation   14.60%
Local / Lives in my community   11.00%
Independent – not from the hardware or software vendor   3.70%
Is authorized and / or certified by hardware vendor to support or implement product.   24.80%
Is well known / recognized in my firm’s industry   17.50%
Is the vendor that sold us the product being serviced   3.70%
Other   2.20%

Here are the price/deep knowledge comparisons for each technology.

Networking:

Price: 33.7%
Vendor has deep expertise in the technology or application: 58.7%

Cloud;

Price: 21.9%
Vendor has deep expertise in the technology or application: 41.10%

Server deployment, virtualization or license/asset management projects
:

Price: 29.5%
Vendor has deep expertise in the technology or application: 57.7%

Storage/Back-up:

Price: 39.1%
Vendor has deep expertise in the technology or application: 54%

Enterprise application selection, customisation, deployment or upgrade projects:

Price: 29.4%
Vendor has deep expertise in the technology or application: 63.2%

Security
:

Price: 40.7%
Vendor has deep expertise in the technology or application: 47.5%

BPO:

Price: 47%
Vendor has deep expertise in the technology or application: 38%

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It is an old trick, employed by IT providers and clients. The IT providers try to provide as little as possible for as much as possible, while the clients try to word their contracts to include as much as possible for as little as possible. The client wants the contract worded to be as enforceable as possible, the supplier wants it to be as flexible as possible but guaranteeing they get paid, usually in advance. Unfortuneatly, the outcome of the game is poor delivery performance, unhappy clients and unemployment for many Brit IT employees. A lot of money is pocketed, deals done and bribes given. Business and the workers are the big losers.

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