U.S. businesses are managing the hidden cost of big tech’s new playbook through smarter IT cost control.
As businesses set their operating budgets for 2026, many are being forced to account for major tech vendors’ sudden and unpredictable changes to software pricing and licensing. Some organizations are now reporting software renewal increases of up to 25 percent or more. These increases often come with little warning and even less justification. As a result, licensing model obfuscation and lack of vendor response and transparency has now become one of IT procurement’s biggest pain points.
Behind the scenes, licensing model complexity, vague pricing metrics, and radio silence from vendors have become common pain points for IT sourcing and procurement teams. But the problem does not end in the IT department. These unpredictable costs can ripple across the enterprise, inflating operating expenses, disrupting long-term planning, and quietly eroding margins.
Why IT Optimization Is Back in Focus
While overall IT investment continues to grow among U.S. businesses – particularly in areas that support agility, automation and reduced hardware ownership – nearly one-third of businesses are working to consolidate and optimize their IT ecosystem to offset budget constraints.
In doing so, there are four key areas of focus that underscore the need for more proactive vendor management, pricing transparency and negotiation intelligence:
- Licensing Model Obfuscation: Identified as the biggest IT sourcing challenge in the “State of Enterprise IT Sourcing” report, complex and ever-changing licensing models make it difficult for companies to accurately assess usage and compliance.
- Renewal Complexity: Vendors are bundling offerings and introducing confusing pricing structures, which obscure value and make cost comparison difficult.
- Increased Audit Pressure: Software audits are increasingly being used as revenue levers rather than compliance checks, catching many organizations off guard.
- Vendor Unresponsiveness: When customers seek clarity, vendors are often slow to respond (or do not respond at all) thereby adding friction and risk to the buying process.
Three Strategies to Regain Control
Given this, how can companies better control costs and right-size their IT investments?
Focus on High-Impact Investments First
Start by targeting the biggest IT spend categories. These areas are typically where optimization delivers the most measurable ROI. A good place to begin is with a software license position assessment across the largest software estates (e.g., Microsoft, Oracle, Salesforce, etc.). This exercise usually reveals significant opportunities for cost and compliance risk reductions. It quickly uncovers unused or underused licenses, identifies misaligned entitlements, and surfaces unnecessary add-ons. Many organizations are surprised to find they’re paying for premium features few employees use, or for licenses that aren’t even assigned.
Tackle Application Sprawl Head-On
The average enterprise now runs more than 60 applications – often double or triple that when counting departmental tools. Without centralized oversight, this sprawl leads to duplicate functionality, missed renewal notices and mounting waste.
What’s more, most companies lack full visibility into their license and subscription inventories. That becomes especially dangerous at renewal time when vendors are at their strongest and internal alignment is weakest. Conducting regular audits of your tech stack can help identify areas for rationalization and negotiation.
Bring Intelligence to the Negotiation Table
Finally, businesses must improve their vendor and contract negotiations in order to secure better terms. Competitive bidding is one strategy to get better pricing, but how can businesses know if they are truly getting a good deal? Technology vendors rarely have fixed rate cards, and they often know what businesses are willing to pay.
Businesses need access to benchmarking intelligence based on real-world negotiations to understand what constitutes a fair price in the market; and they need insight into the terms and conditions to know where tech vendors are likely to negotiate.
IT cost optimization goes well beyond traditional cost-cutting measures and demands a more strategic approach to align IT investments with business objectives. As businesses look toward the new year, those that focus on efficiency, innovation and value creation will be better positioned to achieve truly sustainable cost reductions while driving business outcomes.Discover the latest trends and insights—explore the Business Insights Journal for up-to-date strategies and industry breakthroughs!
