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Are Your Enterprise Software Purchases Driven By Social Proof?

        posted by , October 05, 2011

Freedom is something that dies unless it's used
~ Hunter S. Thompson

Things have gotten better. For more than 30 years (roughly 1960 - 1990) nobody ever got fired for buying IBM equipment was the axiom of purchasing departments everywhere.

What was the result? IBM was filled with hubris and went into serious decline. In 1993, they suffered a 8.10 billion dollar loss — the biggest corporate loss in history (at the time). They cut around 120,000 employees and almost went out of business.

IBM has since recovered and reached new levels of excellence. However, their near elimination reveals a telling story — decision makers rely on social proof to make software purchases.

Social Proof

Social Proof is a psychological phenomenon in which people assume that people closer to the situation have better knowledge — so they defer to their judgement.

In many situations social proof leads to better decisions. However, it has weaknesses that can trigger irrational decisions. Problems with social proof include:

assuming people are close to the situation when they are not

failing to identify the ulterior motives of the people who are close to the situation

snowballing social proof that leads to irrational (and sometimes dangerous) conformity

Social Proof And Brand

Social proof explains why people tend to prefer popular brands. In some cases, social proof is so strong that people will continue to prefer popular brands after a bad experience with the brand's products.

The New Social Proof: Technology Research Firms

Buy the ticket, take the ride.
~ Hunter S. Thompson

Evaluating enterprise software can be a lot of work — RFIs, RFPs, prototypes and white papers. It is pretty common to hear enterprise architects, IT managers and solution teams saying something like this:

Let's not reinvent the wheel. ~insert top technology research firm here~ has already done the work for us. Let's go with their recommendation. Besides, technology research firms are closer to the situation. What do we know?

This kind of thinking is driving enterprise software choices everywhere. It ignores the potential ulterior motives of technology research firms and drives everyone to the same product (effectively eliminating freedom of choice).

A Different Choice

The reward for conformity was that everyone liked you except yourself.
~Rita Mae Brown

Giving the smaller vendors a chance, doing your own research, thinking out of the box ~ it just feels right. Doesn't it?

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