Posted July 20, 2023

The 5 main reasons why software consolidation is top of mind for CIOs (and how to approach it yourself)

7 min read time

Economic uncertainty and game-changing technologies like Generative AI (Gen AI) appear to have propelled IT and technology consolidation towards the top of business to-do lists worldwide. Yet in truth, organizations—read Chief Information Officers—are constantly seeking ways to streamline operations and improve efficiency. 

Best of breed v Consolidation first

That said, when it comes to the technology stack the pendulum swings between ‘best of breed’ and ‘consolidation first’. In previous years, business leaders and CIOs have seen a significant growth in the adoption of specialized ‘best in breed’ software to manage different aspects of a business. Single point solutions flourished in a marketplace that accepted a single capability justifying a purchase of a software platform.

But now the pendulum is heading the other way, with economic uncertainty and technological innovation adding to the momentum. CIOs are increasingly consolidating their software providers to a few key players not just to save costs, but also to remain competitive by keeping up with transformative innovations like Gen AI. And those key players must enable businesses to quickly innovate and show proof-of-value as soon as possible.

Explore the latest trend in digital transformation

In this article, we will explore five main reasons why a CIO would want to consolidate software providers, then go through the decision-making involved in evaluating those providers. Bottom line? Consolidation is nothing to fear, offering new opportunities to create efficiencies and fast-track innovation.

Reason to consolidate #1: Cost savings

They say: “a penny saved is a penny earned”. And by cutting down on vendors, an organization can often negotiate better prices and volume discounts with those that remain. This offers the potential to generate significant savings on costs such as software fees, maintenance costs, and support services.

Beyond general cost increases from multi-vendor engagement, the less obvious rationale is that by reducing the number of software providers, an organization also reduces the complexity – and therefore the costs - of managing them.

Reason to consolidate #2: Streamlined support and vendor management

That leads us to the fact that managing multiple software providers can be a logistical nightmare for CIOs, IT teams, and business system owners. Each vendor tends to follow its own support processes, SLAs, and escalation procedures, making it difficult to manage issues and resolve problems efficiently.

Consolidating software providers streamlines the number of touchpoints and simplifies communications. With fewer vendors to manage, organizations can build stronger relationships with their key providers, leading to more responsive support and faster resolutions. This not only improves the overall user experience, but also helps minimize downtime and maintain business continuity.

Reason to consolidate #3: Improved integration and interoperability

The greater the number of software solutions, the more complex and time-consuming it can become to seamlessly integrate systems. By consolidating software providers, CIOs can simplify the integration process and improve interoperability between systems. Key providers are more likely to offer purpose-built APIs and pre-built integrations that allow their software to communicate with other systems. This reduces the time and effort required to integrate systems, while also helping to make sure that data flows smoothly to improve organizational efficiency.

Reason to consolidate #4: Gain more control over security and compliance

Multi-integration points can exacerbate concerns around security and compliance—a daunting task for any organization. Different software providers follow their own security protocols and compliance requirements, making it difficult for CIOs to ensure their data and systems remain fully secure and comply with industry regulations.

Consolidation helps CIOs to win back control. Smaller numbers are easier to manage. And key providers are more likely to offer both robust security measures and familiarity with the relevant industry compliance requirements. This makes it easier to implement consistent security policies and procedures, while ensuring the organization remains compliant.

Reason to consolidate #5: Greater focus on innovation and strategic initiatives

Finally, with fewer vendors to manage, CIOs free up valuable time and resources that can be redirected towards long-term strategic projects, new technologies, and new opportunities for innovation. Selecting vendors that deliver future-forward capabilities like Gen AI will only serve to bolster your own innovation objectives, scale, and growth, helping organizations to stay ahead of the competition and drive long-term success.

  • Last modified: 4/28/2025 2:50:19 PM