IT Application Management Services Category Procurement Intelligence Report

A changing ecosystem within the End User Software and Hardware market also affects the procurement process, cost dynamics and supplier attractiveness for the buyers of IT Application Management Services. New locations and vendors are emerging as cost effective suppliers of IT Application Management Services, offering an opportunity to widen the supplier base and gain further negotiation leverage with incumbent suppliers.

The cut-throat competition in the category is compelling suppliers to go aggressive on their pricing structure and increase their spend on sales and marketing activities. As a result, most suppliers are feeling a pressure on their margins and trying to offer higher margin value added services to have a better control on their profitability.

In a bid to differentiate themselves in an overcrowded technology space, suppliers are now focusing on creating industry-specific specialized products. Buyers see this trend as an opportunity to procure more targeted solutions and are developing internal capabilities to identify and leverage innovations in the supplier base.

IT Application Management Services procurement best practices are moving towards a level of sophistication which is typically seen in traditional procurement categories. Category managers now have an attractive opportunity to adapt the best practices seen within this category as well as those being leveraged in other non-related categories. This report summarizes the best practices picked from across multiple categories that could work well for category managers involved with IT Application Management Services procurement strategy.

For example, Transferring to a new supplier can be often costly and can further get exacerbated by instances of vendor lock-ins. Buyers must scrutinize the offerings of service providers for any possibilities of vendor lock-ins and demand client testimonials from service providers to assess such possibilities. Watch out for products/services that are priced excessively low, as they can often result in costly lock-ins.

Adequate RFP response time should be built in for prospective suppliers to enable them understand the scope and usage patterns properly.

Category managers must explore opportunities to integrate planning and management activities using analytics to gain better control over category spend. This will also allow them to consolidate supply base easily as well as segment service providers depending on requirements and spend on each service provider.

IT Application Management Services procurement managers also need to proactively identify and mitigate potential risks that can arise in the supply chain or contracts for IT Application Management Services procurement. Some examples include: