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Peter Hughes

Gartner And The Psychology Of Buying Supply Chain Management Software

by Peter Hughes on May 10th, 2019

Gartner is the most dominant IT analyst organisation in the world, taking more than 40% of global IT analyst revenues. On its website it claims to equip “executives across the enterprise to make the right decisions and stay ahead of change” and it claims “to fuel the future of business so that a more successful world takes shape”.

These are bold claims and given its market dominance, it’s not surprising that the famous Gartner Magic Quadrant is often decisive when corporations choose which supply chain technology to buy.

Gartner claims the Magic Quadrant “allows a direct relationship between the vendor strengths and cautions and their positioning in the Magic Quadrant”. For any C-Suite executive looking to make as significant a decision about their supply chain, it’s perfectly reasonable that they should use the Magic Quadrant as a guide. Many do so, often having accepted uncritically the assumption that a decision driven by Gartner will be a good one.

However, this assumption is questionable.

It is safe to assume that most software buyers would be surprised to learn that Gartner’s Magic Quadrant is a poor indicator of the quality of the software they’re buying. Of the fifteen elements define an SCM software vendor’s Ability to Execute and Completeness of Vision, only a minority (between 2 and 6 depending how you interpret Gartner’s criteria and assuming no weighting in the final evaluation) are directly related to the application itself. As Shaun Snapp, Managing Editor of SCM Focus and supply chain specialist wrote in his guide to the Gartner Magic Quadrant, “a large vendor could score well, even if it had very weak software, against a smaller vendor with the best possible rating for its software”.

This scepticism is reinforced by Lora Cecere, former Gartner analyst and CEO of Supply Chain Insights, who wrote, “If you follow the magic quadrant methodology, you have a strong likelihood to but the wrong software product. (As a prior Gartner analyst, I would give this a 95% probability)”.

The Supply Chain Planning Magic Quadrant – but what is it really worth?
“What is lost in the Quadrant are the vendors with agility, responsiveness and close alignment with their customers, needs” (Louis Columbus, Commerce Times)

Why, then, do so many software buyers and C-Suite executives accept Gartner’s recommendations uncritically?

The answer has nothing to do with supply chain technology and everything to do with psychology and decision science. Thanks to the groundbreaking research conducted by Amos Tversky and Daniel Kahneman into the brain systems involved in decision making (rather unimaginatively named System 1 and System 2), we know that we are not ‘rational actors’ and most of our decisions are driven by biases and heuristics, some of which are hardwired into our neural architecture, others we learn.

About 300 of these biases have been identified and, while there are many psychological factors that drive poor SCM software selection, I’ll pick just three:

  • We are not natural sceptics and we avoid thinking wherever possible, which means if we can find a cognitive shortcut to making a difficult decision, we’ll take it, especially when that decision means not having to change our beliefs or behaviour
  • Gartner’s dominant market position feeds into the Availability and Confirmation Biases. This means we tend to make decisions based on readily available information, in this case Gartner’s dominant market position, especially when that information reinforces our existing beliefs
  • We overestimate our own wisdom and, in the case of SCM software, when it turns out we have made the wrong decision, Gartner can always be wheeled out to justify ourselves. As Shaun Snapp says, “Gartner can become a crutch, where the executive essentially gives up their responsibility to perform a thorough software selection and put the work in and instead rely upon Gartner, which provides them with an easy answer…. Gartner is, in many cases, merely purchased for political cover and its actual research value essentially meaningless”.

If more C-Suite executives, software buyers and investors took a more cautious and sceptical approach to Gartner they would be more likely to find more agile and effective software solutions for de-risking their supply chains. Rather than rely on Gartner, buyers should focus more on the software itself rather than extraneous factors such as the vendor’s sales and marketing infrastructure. To paraphrase a famous snowclone, when you want the best software solution for your supply chain, there’s one thing that matters above all others, “It’s the software, stupid!”