Forget the ‘economic downturn' or ‘September 11'. A growing number of software and services executives are forsaking tired excuses for the sector's woes and are admitting, for the first time, that poor sales techniques, inadequate understanding of customer needs and over-reliance on a handful of clients have contributed to the problems.

The refreshing dose of realism comes courtesy of a March 2002 survey of 50 technology vendors, conducted by consultancy KPMG and UK industry body the Computer Software and Services Association (CSSA).

More than half of respondents say that current sales processes are not up to scratch in dealing with the demands thrown up by today's economic climate. In particular, suppliers have failed to react to the pronounced shift in market power to the customer. Increasingly, the report says, tech-savvy clients now demand a compelling business case and proven return on investment before committing to new information technology projects. But, after years of neglecting the customer, the technology sector is floundering in its attempts to deliver this, the survey says.

The CSSA has called for the industry to overhaul its outdated sales strategies. "A disturbingly wide sales gap is developing between what clients want and what businesses are trying to give them," says director-general John Higgins. "This survey underlines the fact that the time for a new sales strategy is long overdue."

One of the main consequences of this is that vendors are struggling to find new customers. According to the report, 18% of customers provide half of total revenues; and repeat business accounts for 64% of total revenues.

Nick Talbot, head of KPMG's software and services practice, believes there is a solution. "The software and services industry would be much more successful if it were to market and sell itself better," he argues.

Yet vendors are prepared to go only so far in winning over new customers. The majority of respondents still said they did not feel under pressure to reduce licence fees.