IT procurement has entered a new phase
What was once a support function has become one of the largest, and least controlled, areas of enterprise spend. With global IT spend forecast to exceed $6 trillion and software costs accelerating faster than inflation, organisations are facing a structural challenge: vendors now hold the commercial advantage.
This article explores what’s driving that shift, and how leading organisations are responding with a fundamentally different approach to IT procurement.
The Hidden Crisis in IT Spend
Most organisations don’t realise how quickly IT procurement has changed.
- The average enterprise now manages hundreds of SaaS applications
- Software spend per employee continues to rise year-on-year
- SaaS price inflation is significantly outpacing general inflation
At the same time, vendor behaviour has shifted.
Companies like Microsoft and Broadcom have restructured pricing models, reduced discounting and introduced subscription-first strategies that reset commercial baselines, often upward.
Meanwhile, research from Gartner and Zylo shows that:
- A significant portion of SaaS licences go unused
- Shadow IT accounts for up to 40% of spend
- SaaS management remains fragmented in most organisations
The result? Rising costs, reduced leverage and limited visibility.
The Four Structural Failures in IT Procurement
Across industries, the same four issues are emerging:
1. Vendor-Driven Price Increases
Suppliers are no longer competing aggressively on new business but expanding revenue from existing customers.
For example, analysis highlighted by Salesforce shows that a large share of growth now comes from price increases rather than new customers.
2. SaaS Sprawl and Licence Waste
Organisations accumulate overlapping tools and unused licences, often without realising it until renewal.
3. Shadow IT Expansion
Business units and employees increasingly purchase tools independently, especially AI tools, bypassing procurement entirely.
4. Legacy Lock-In
Core systems (ERP, infrastructure, cloud) create switching barriers that vendors can exploit commercially.
Why Traditional Procurement Models Are Failing
Most procurement teams are still operating reactively:
- Engaging vendors too close to renewal
- Relying on spend data instead of usage data
- Lacking visibility into future demand
This creates a fundamental imbalance.
Vendors enter negotiations with deep insight into:
- Product usage
- Contract timelines
- Customer dependency
Buyers, in contrast, often lack that same intelligence.
This is not a capability gap but one of information.
The Shift: From Buying Better to Governing Better
Leading organisations are not solving this by negotiating harder, but by changing the operating model.
Instead of treating procurement, IT and finance as separate functions, they are building a unified governance model that connects:
- Procurement (commercial strategy)
- Software Asset Management (usage and optimisation)
- Enterprise Architecture (future demand and roadmap)
- Security and compliance (risk and regulation)
This shift enables something critical:
Procurement enters negotiations with the same, or better, information than the vendor.
What a Modern IT Procurement Strategy Delivers
When this model is in place, the outcomes are measurable:
- Earlier engagement in renewals (typically 90+ days)
- Lower long-term cost through price protection clauses
- Significant reduction in unused licences
- Stronger negotiation leverage through credible alternatives
It also changes how organisations approach contracts.
Instead of reacting to vendor terms at renewal, they:
- Shape pricing structures upfront
- Embed protections at signature
- Align contracts with future demand
This is particularly important in fast-moving categories like AI, where today’s contract becomes tomorrow’s cost baseline.
A Practical Maturity Pathway
For most organisations, transformation doesn’t require a full overhaul.
It follows a structured progression:
- Baseline – Map contracts, spend, and renewals
- Govern – Establish ownership and a renewal calendar
- Consolidate – Eliminate redundancy and reduce waste
- Integrate – Connect usage data and demand planning
- Optimise – Strengthen negotiation and pricing models
- Sustain – Build continuous governance
Each stage builds on the last, gradually closing the information gap that vendors rely on.
Why This Matters Now
The urgency is increasing.
- AI tools are being adopted rapidly, often without procurement oversight
- Pricing models are becoming more complex and less transparent
- Regulatory and data risks are rising alongside spend
Organisations that fail to adapt will continue to face:
- Compounding cost increases
- Reduced negotiating power
- Growing compliance exposure
Those that act early will build a structural commercial advantage.
Want the Full Report?
This article only scratches the surface.
The full report breaks down:
- The complete IT cost optimisation framework
- Detailed governance model and stakeholder roles
- Real negotiation strategies used in 2026
- A step-by-step roadmap to implementation
