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The Changing Landscape of Enterprise IT Sourcing in 2025

In a rapidly evolving world, enterprise IT procurement is undergoing a significant transformation, driven by major factors like vendor consolidation, the acceleration of artificial intelligence (AI), and the increasing costs associated with software and services. A benchmark study titled "The State of Enterprise IT Sourcing in 2025" provides substantial insights into how organizations are navigating these challenges and opportunities.

A New Era for IT Procurement

Conducted by NPI, this comprehensive research captures the perspectives of IT sourcing leaders from enterprises generating over $5 billion in annual revenue. According to Ken Male, the Founder of CXO Nexus, the landscape of IT procurement is being redefined in real-time. The pressures of maintaining cost containment while managing complex vendor relationships have never been more pronounced.

Large enterprises are facing a paradox; while a significant proportion of IT spending is funneled into a few major vendors, the phenomenon of vendor sprawl remains evident. The study reveals that even though 66% of enterprises allocate 80% of their IT budgets to just 25 vendors, more than 80% are actively seeking to reduce their supplier lists to simplify procurement processes and decrease unnecessary overhead.

Vendor Challenges and Opportunities

Microsoft and AWS are perceived as the most manageable vendors, while companies like Broadcom and VMware are identified as increasingly vulnerable to losing business commitments. Furthermore, software vendors have emerged as the primary pain point for procurement teams. The report highlights problematic licensing complexities and inconsistent vendor responsiveness, leading many organizations to encounter renewal rate hikes between 6% to 25%, often with insufficient justification.

Interestingly, direct purchasing from vendors dominates, accounting for 83% of IT spend. However, distinctions between resellers and cloud marketplaces are blurring, further complicating procurement strategies.

The Rise of ProcureTech

In this evolving procurement landscape, enterprises are heavily investing in ProcureTech solutions to manage their increasingly complex supplier ecosystems. The NPI's ProcureTech Heat Index™ ranks technologies poised for adoption, showing SaaS Management and IT Asset Management leading the way. Price Benchmarking is identified as the most widely utilized tool providing substantial returns on investment (ROI).

AI-driven automation is set to revolutionize procurement workflows, especially in areas such as contract management, bonus appraisals, and onboarding processes. Many experts anticipate that AI could automate a staggering 80% of onboarding tasks, enabling procurement teams to shift their focus toward more strategic initiatives.

Growth in Software and Cloud Investments

The study indicates a strong inclination towards increasing investments in software and cloud services, with over 70% of respondents planning to hike their application spending. Contrarily, 63% expect to scale back their data center investments in the wake of a more aggressive cloud migration strategy. It's worth noting that a significant 83% of total IT expenditures are tied to existing vendor renewals, illustrating the persistent reliance on established partnerships.

Evolving Staffing Models

As businesses adapt to these trends, the composition of IT procurement teams is also changing. The research indicates that 40% of organizations are utilizing nearshore or offshore talent to bolster their procurement capabilities, with Mexico and India being the primary sourcing locations. The motivation here extends beyond mere cost-saving strategies; access to specialized skills is a driving factor in these decisions.

More than half of the organizations interviewed reported favoring centralized, category-driven sourcing structures, creating stronger alignment with line-of-business stakeholders. This development reflects a broader shift towards collaboration in enterprise sourcing operations, fostering a more integrated approach to procurement.

Leveraging Community Insights

The insights shared in "The State of Enterprise IT Sourcing in 2025" are part of NPI's continuous efforts to empower IT procurement leaders with peer-driven intelligence. Through partnerships with external resources, NPI captures unbiased insights from sourcing executives that address the complexities of ProcureTech, vendor consolidation, and the broader shift in sourcing strategies and practices.

Jon Winsett, CEO of NPI, articulates the importance of adapting in the current landscape, stating, "This research highlights a critical inflection point for enterprise IT sourcing. Procurement leaders must utilize peer insights, leverage smarter tools, and develop more robust negotiation strategies to maintain an edge."

In conclusion, as the enterprise IT sourcing landscape continues to evolve in 2025, procurement leaders must remain agile and proactive in their approaches to effectively manage the intertwined forces of technology and vendor relationships.

Download the full report here.