Tech Journal IT Vendor Consolidation: Essential for Today’s Businesses

By Insight Editor / 18 Jun 2020 / Topics: Procurement Software IT optimization

A strategic approach to procurement and vendor management isn’t only possible — it’s a necessity in today’s business landscape. And consolidation into a smaller list of trusted IT partners is the first step.

With many businesses juggling upwards of a dozen IT vendors, it’s no wonder employees don’t have time to focus on digital transformation initiatives. It’s time for companies to consider consolidation.

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IT Vendor Consolidation: An Essential Initiative for Today’s Businesses

A strategic approach to procurement and vendor management isn’t only possible — it’s a necessity in today’s business landscape.

What is IT vendor consolidation?

In the simplest terms, it’s reducing the number of vendors you procure products and services from. But really, IT vendor consolidation is a strategic business decision that can position the enterprise for growth. It ensures businesses have selected the right partners for the future.

How big is too big?

Today, large enterprises have sophisticated, sprawling IT ecosystems. Though necessary to achieve digital transformation, these environments often include a large vendor portfolio that only gets bigger as new IT initiatives are undertaken. Suddenly, you’ve got something that’s expensive to maintain and inefficient to operate. 47% of enterprises are managing more than 10 vendor relationships.

Why consolidate?

The benefits of vendor consolidation are twofold: It optimizes daily operations and primes the business for growth. Fewer vendors means fewer moving parts in the supply chain and an easier time gaining a holistic view of the environment, compliance and vendor performance. It also creates more robust relationships with those vendors, making them more strategic.

By 2023, 40% of midsize enterprises will have a center of excellence for IT procurement and vendor management.

What makes a good partner?

The right vendor is one with expertise and capabilities that span the entire IT ecosystem. When evaluating vendors, decision-makers should ask themselves:

Can this partner help us determine our strategic goals and build a roadmap to them?
Does this partner have the expertise and/or end-to-end solutions we need?
How can this partner help us automate and standardize our IT purchasing processes?
Can we outsource key procurement and sourcing functions to this partner?
Can this partner help us improve our reporting to support our decision-making?
What kind of preferential treatment will we receive in exchange for consolidating with this partner?

It’s unrealistic to expect businesses to consolidate down to a single vendor, simply because there’s no one partner that could do it all. But the benefits of IT vendor consolidation are too great for enterprises to ignore.