Are research software sales due for an increase?
Editor’s note: Tim Macer is managing director and Sheila Wilson is an associate at meaning ltd., the U.K.-based research software consultancy which carried out the research on which this article is based on behalf of Confirmit. The authors wish to express their gratitude to Confirmit for its permission to publish these results in this article. Part II will appear next month.
Quality rather than the bottom line is the current concern of many market researchers. This general finding emerged from the responses to several questions in the 2007 Confirmit Annual Market Research Software Survey, carried out by meaning ltd.
Though all software packages should help save time and money, improving quality is an altogether more complex goal to achieve through technology and is a challenge the market research (MR) industry can rightly lay at the door of the software vendors.
The results of this survey, now in its fourth year, give software developers plenty to chew on. In addition to quality issues, the findings pose questions such as: Why are so many market research agencies using bespoke software? Even for CATI. And, given the effort involved, why are so many MR firms planning to change their software? And why has this churn rate increased since 2006?
We introduced several new questions into the survey for 2007, including some about continuous research. It’s an area not at all well-supported by most software, resulting in many ad hoc and poorly-automated processes for research and fieldwork companies alike. We are astonished to note a level of satisfaction in the status quo bordering on complacency - we are convinced both technology and practice could be so much better in this area.
The 2007 sample represents 233 companies, balanced by region, company size and level of responsibility. The survey was translated into French, German and Japanese. All participants are actively involved in or responsible for IT within their companies, and 70 percent are IT managers, directors or business owners. We are most grateful to every one of them for participating.
North America is the only region in the world where Web research represents over half of total revenues. Figure 1 shows the percentage of total revenue from quantitative work generated by each research mode. Web dwarfs its rivals; CATI, the next biggest, brings under a quarter of revenues, so you could say that in North America Web has more than double the importance of CATI.
CATI and paper are the only other modes that currently have any real volumes when measured by revenues in North America. All others are well below 5 percent; Web, CATI and paper together account for 92 percent of business in North America. In Europe and Asia, it is slightly less concentrated, with 84 percent and 85 percent respectively coming from the big three.
Asia-Pacific is the only place where CAPI on mobile phones has achieved as much as a 5 percent foothold (it is included in the CAPI figure in Figure 1). In North America it languishes at a mere 1 percent and in Europe is just 2 percent. Paper is far more important in the Asia-Pacific region than CATI. It is a region of great contrasts, with both highly developed urban areas and undeveloped rural hinterlands in many countries, where conventional paper may be the only way to reach respondents reliably.
One area where we might anticipate a change in the future is mixed-mode. Two-fifths of companies are kitted out to offer mixed-mode research, but a mere 6 percent of revenues currently come from mixed-methodology surveys.
Industry challenges
MR professionals across the world consider falling response rates to be the No. 1 challenge facing the industry. So-called professional respondents and availability of sample to conduct research are problems two and three, respectively. All of the nominated top three sit squarely on the respondent-facing side of the research triangle, revealing an industry concerned about its raw material above all else.
Time and cost - classic business issues - are rated highly in the overall mix (we asked respondents to select up to three challenges) but come well down the list of No. 1 worries. These are issues more within the control of the research companies themselves. Ten percent of respondents consider turnaround time (from fieldwork to delivery) the top issue, but 37 percent have it as one of their top three concerns, just one point behind professional respondents and availability of sample as overall concerns.
Globally, the contrast in priorities is very revealing, as can be seen in the table of the top four challenges in each region.
Response rates and professional respondents are very much North American preoccupations, it seems. Europe shares concerns over response rates and also client expectations on project turnaround time, but a fifth are concerned with the inaccessibility of research results to decision makers, once the research is done; in Asia-Pacific, there is less unanimity about concerns, and costs rank alongside competitive fears and response rate woes.
Outside of Asia-Pacific, encroachment from consulting companies and other data providers does not seem to be generating much unease. We captured only 8 percent looking over their shoulders at this concern in Europe and 6 percent in North America.
Packaged or in-house software
We are truly puzzled at the extent to which research companies are relying on home-built tools (Figure 3). Why is a fifth of market research companies’ software developed and maintained in-house? Are the IT specialists within the market research industry suffering “not invented here” delusions, or can it really be that the MR software industry is just not doing what MR companies need at a price they can afford?
And what about mCAPI? On the one hand, the industry is hardly making any money out of it: a mere 1.8 percent of qualitative revenues in 2007 were attributed to mCAPI. On the other hand, it appears that market research companies have been willing to invest in developing their own mCAPI software. Is this a sign that mCAPI as a research channel is going to expand greatly over the next few years? Since this is a newer area, there are fewer off-the-shelf products to choose from, but the ones we have reviewed seem to offer much better value and certainty into the future in this technically-challenging and constantly changing area. We suspect that with mCAPI, as with the other data collection methods, too many research companies are succumbing to the siren call that their work and their clients’ needs are so special that the only answer is to develop from scratch - with all of the long-term liability for maintenance and upgrades that this also brings.
The analysis part of the chart in Figure 3 seems less surprising; some 10 percent of agencies use mainly own-developed software. Firstly, this is by far the smallest figure on the chart, and secondly, it is surely in the area of results analysis and interpretation where MR companies can really differentiate themselves, so having a non-standard tool might just give the edge.
Plans to change software
Software market shares look set for a shake-up in 2008 (Figure 4). Well under a half of respondents are planning to keep the software they currently have. Over a third are planning to change within the next two years, with the rest being undecided. We have seen a marked shift in the numbers since the 2006 study, where nearly a half of the industry looked set to keep the same software and only a quarter had definite plans to look for new tools.
Among our three worldwide regions, North America seems the most stable since more companies plan to stay loyal to their current technologies. Although, even there, only half say that they have no plans to change; the other half are either planning a change or are undecided. The picture is broadly similar in Europe, but with far fewer firms planning to stick with the same software. However in Asia-Pacific only 29 percent - less than one in three - are planning to keep the same software.
Big companies are the most likely to change their software, and with the largest software contracts to award they have the greatest influence on the marketplace. Nearly half (47 percent) of them, as opposed to around a third of small and medium-sized companies, plan to acquire new software over the next two years. A mere third (32 percent) of large companies think they will keep their existing software, compared with 50 percent of small businesses and 43 percent of medium firms. We predict a turbulent 2008 for some software manufacturers.
Reasons to change software
Reasons for changing software seem mainly related to product features and integrating with other tools (Figure 5). Four reasons stood out: seek more flexibility, more capabilities or better functionality; consolidate all activities on a single integrated platform; move to a more modern platform; and achieve efficiency improvements through increased automation.
Yet, despite an apparent unhappiness with software evident here and elsewhere, “dissatisfaction with existing tool” is rarely mentioned explicitly. Nobody cited it as their main reason and only 11 percent mention it as one of their reasons. Cost saving is also low on the list. It seems that although those who are planning to change their software are not unhappy with what they have, nonetheless they see opportunities to increase quality and decrease turnaround times. This should be good news for those suppliers with newer, slicker products.
With the spate of mergers and acquisitions among research companies over recent years, “consolidate on single platform” seems to indicate that these enlarged research enterprises are seeking to eliminate the plethora of products that they have inherited.
Next month: Requirements for mixed-mode capabilities; sample source utilization trends; and future wishes for analysis and reporting.