Market & Sourcing
IT Sourcing Strategy: Less Risk, More Results
by Jeremy Smith
In 2025, CIOs are under pressure to deliver greater agility, smarter cost control, and stronger vendor performance - often all at once. But without a clear IT sourcing strategy that aligns business goals with IT execution, many end up with cost blowouts, rigid contracts, and limited flexibility.
At Metrics, we’ve supported enterprise leaders across industries through complex sourcing challenges - and here’s what we’ve learned.
Start With Strategy - Not Just Suppliers
Before thinking about vendors, pricing, or contract clauses, organisations need to link three layers:
- Business strategy (What outcomes are we trying to deliver?)
- IT strategy (How does IT support those outcomes?)
- Sourcing activity (Do our sourcing decisions actively support the IT strategy?)
Most organisations skip this chain of logic, resulting in sourcing decisions that are disconnected from business value. If an IT service or contract doesn’t support the IT strategy, and the IT strategy doesn’t directly support the business, it’s time to re-evaluate.
Pricing Models Matter - Especially When Volumes Shift
One of the most common issues we see is rigid pricing that penalises flexibility.
In traditional outsourcing deals, unit prices often spike when volumes drop, but rarely come down when volumes increase. This asymmetry can quietly inflate costs over time - especially with shorter deal cycles becoming the norm (2+1+1 structures are now more common than 10-year contracts).
What we recommend:
- Tiered pricing models, based on capacity units, offer greater flexibility and fairness over time.
- These allow for natural fluctuations without punishing the buyer.
A recent automotive client saw millions in unexpected cost increases after a non-competitive resource unit (storage) proliferated. At the deal's outset, everything looked competitive in aggregate - but over three years, just one mispriced unit turned the entire contract uncompetitive.
Hidden Risks in Cloud and SaaS Deals
There’s a persistent myth that cloud always reduces cost. In reality, cloud works best for peaky workloads - not 24/7 infrastructure. Even with reserved instances, cloud capacity kept on long-term is often more expensive than on-premise infrastructure.
SaaS models create their own risks. Software vendors like Oracle or Broadcom have shifted pricing dramatically in recent years:
- Oracle’s Java licensing change hit customers with per-employee charges overnight
- Broadcom’s acquisition of VMware led to rapid cost increases for existing users
These changes can turn predictable contracts into budget blowouts - unless you’ve built in the right exit clauses or licensing flexibility to prevent vendor lock-in.
We’ve even seen organisations forced to ship physical hard drives between providers because cloud data egress speeds were too slow to complete a migration in under a year.
Think Exit First - Like a Sourcing Prenup
The best sourcing strategies think about the end from the start:
- What happens if we want to change vendors in 2–3 years?
- How easy is it to extract our data?
- Are our licensing models future-proofed against provider changes?
Without clear exit planning, even the best-looking deal can become a trap. We’ve seen clients facing years of migration time or massive switching costs because they didn’t consider these factors upfront.
Real-World Tip: Benchmark the Deal You Like, Not Just the Market
Even if you’ve run a great RFP (Request For Proposal) and chosen your preferred vendor, the work isn’t done. You still need to benchmark their final offer against market data - not just at the total level, but for each resource unit.
That’s how we helped a client avoid overpaying millions on storage services. Everything looked competitive until we isolated that one unit.
Why This Matters Now
Sourcing strategies aren’t just about cost - they’re about control. When vendors negotiate these deals daily and you do it once every few years, it’s easy to get outplayed.
Metrics helps organisations level the playing field with data, benchmarking, and expert guidance.
Want to make sure your 2025 sourcing strategy is working for you - not against you? Let’s talk. We’ll help you stress-test your contracts, assess pricing models, and identify where the hidden risks (and opportunities) really are.
