Recent Info-Tech research examined cost containment and reduction through careful vendor and outsourcer management. Renegotiating vendor and outsourcer contracts is cited as one of the most popular cost cutting techniques. In fact, changes to vendor contracts, licenses, service levels, and support and maintenance agreements produce anticipated cost reductions in almost eight of ten cases. Moreover, application license, maintenance, and support vendors are among the most frequent – and lucrative – targets for cost reductions.
Despite the high rate of success in reducing costs through app vendor management, this remains a challenging activity. Info-Tech found 35% of organizations take longer than six months to reduce costs, and almost one-third undertake vendor management as an ongoing activity (throughout the life of applications). Indeed, without an ongoing commitment to active vendor management, costs are unlikely to decrease over time.
