The technology procurement landscape is undergoing a fundamental transformation. In fact, “The State of Enterprise IT Sourcing in 2025” report from NPI reveals a sector caught between consolidation pressures, explosive technology adoption, and shifting supplier dynamics.
“The findings of our research on reveal an IT procurement function at a pivotal moment. Sourcing teams are facing increased vendor complexity, rising software costs, and greater demands to deliver value with limited resources. But alongside these challenges lies opportunity,” the report says. “Enterprises that actively pursue vendor consolidation, reevaluate software publisher relationships, and modernize their technology stacks are gaining control over cost and complexity. Several clear trends are reshaping the landscape. Software and cloud continue to drive IT investment, while spend on legacy infrastructure declines. AI is emerging as a powerful enabler, particularly for automating routine procurement tasks and improving decision-making. And organizationally, centralized category management structures – supported by global talent models and closer alignment with business stakeholders – are helping procurement scale more effectively. Success in this environment requires a strategic and proactive approach. That includes developing stronger negotiation strategies for Tier 1 software publishers, improving category-level visibility, and investing in scalable procurement technologies. The organizations that do so will not only contain costs, they’ll turn procurement into a source of long-term competitive advantage.”
Key takeaways:
· 68% of organizations transact with 250-1,000 vendors annually, yet 66% of IT sourcing leaders report 25 or fewer vendors account for 80% of their annual IT spend. The volume of tail spend vendors is driving 82% of organizations to actively pursue supplier reduction.
· Software vendors have become IT procurement’s biggest pain point, with “licensing model obfuscation combined with lack of vendor response” as the top challenge. Organizations report renewal increases of 6-25% with little justification.
· Spending shifts are dramatic and directional, reflecting modernization and transformation across the enterprise IT ecosystem. Software and cloud lead 2025 investment priorities, with 63% cutting data center spending as cloud migration accelerates.
· The potential for AI-driven transformation in procurement is enormous. “Automation of the sourcing/P2P process, including onboarding” ranks as AI’s most anticipated impact. Anecdotally, many respondents feel like AI can automate 80% of onboarding tasks with procurement staff needed to complete the final 20%.
· Study participants shared their adoption status and vendor choices across 14 IT sourcing, vendor, and spend management technologies. Solutions primed for net-new implementation over the next 24 months are SaaS management and IT asset management tied for No. 1; and price benchmarking leads as the most widely deployed technology with strong ROI repeatedly cited as a key outcome.
· 40% report using nearshore/offshore talent to augment IT sourcing teams, with Mexico and India leading deployment. The primary drivers are access to skills, not just cost savings. Just over 50% of respondents favor centralized, category-based sourcing structures, especially at the macro level.
· Large enterprises are investing in ways to level up IT sourcing effectiveness, guided by common mandates such as master vendor consolidation while maintaining innovation access; develop new negotiation playbooks for software publishers who’ve altered power dynamics; and invest in ProcureTech that scales with complexity and prepares for AI integration.
