How IT Vendor Management Changes by Growth Stage
- Matt LeBaron
- Apr 3
- 3 min read
Almost all companies today rely on IT vendors. But based on our experience at Pocketbook, not all companies should approach IT vendor management in the same way. The opportunities available to high-growth startups are different than those available to a company experiencing stagnation or decline.
Understanding these differences can help businesses secure better pricing and ensure they have the right IT infrastructure in place at every stage.
High-Growth Companies: Locking in Discounts for the Future
The fast-growing companies we work with are often experiencing a rapid increase in users, whether it’s employees needing access to software or customers interacting with digital services. Growth may be occurring organically or through acquisitions.
Because of this expansion, these businesses have unique IT vendor management opportunities:
As user counts grow, locking in multi-year agreements with predictable pricing can prevent unexpected cost spikes.
Many vendors offer incentives such as volume discounts, rebates, or additional services when committing to longer terms and increased user count. Startups may not have had access to these favorable terms prior to their recent or expected growth.
Instead of paying a flat fee per user, high-growth companies should negotiate tiered or consumption-based pricing structures that allow costs to scale in a way that aligns with revenue growth.
Strategically choosing growth-supportive vendors with the capability to serve global expansion, increasing workloads, and integration with evolving tech stacks ensures companies won’t need to switch providers as they scale.
Mature Companies: Optimizing Costs and Performance
Established businesses with stable or moderate growth should focus on efficiency, ensuring that their vendor contracts align with actual usage and deliver maximum value.
Key strategies include:
Periodic reviews of IT spend or always-on monitoring can help identify underutilized software licenses, redundant tools, and potential areas for cost reduction.
Vendors may be willing to negotiate (adjust terms, reduce costs, or offer improved service levels) to retain long-standing customers. Businesses should proactively seek better deals rather than letting contracts auto-renew. This is especially important in a rapidly changing technology landscape driven by AI improvements.
Reducing the number of IT vendors can streamline management, improve pricing leverage, and minimize administrative overhead.
Companies in Decline: Maximizing Cost Savings
Organizations facing a declining user base (whether due to layoffs, market downturns, or industry shifts) need to manage IT vendor relationships carefully to avoid overpaying for services they no longer need.
They do this by:
Locking in volume pricing before usage drops. If a company anticipates a decline, negotiating long-term pricing agreements based on current usage can help maintain lower costs for as long as possible.
Eliminating redundant tools and combining contracts under fewer vendors, which can lead to significant cost savings.
Prioritizing flexibility. Instead of being locked into multi-year agreements, companies in decline should prioritize flexibility, ensuring they can scale down services as needed without penalties.
The Right Strategy at the Right Time
Effective IT vendor management isn’t just about cutting costs; it’s about aligning vendor relationships with a company’s current and future needs. High-growth companies should focus on securing scalable, long-term pricing, while mature businesses should optimize vendor performance and eliminate inefficiencies. Companies in decline, on the other hand, must be proactive in consolidating vendors and maintaining favorable pricing structures before their negotiating power diminishes.
By understanding these shifting priorities, businesses can make smarter IT vendor decisions that support their financial health and operational success at every stage of growth.
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