The Modern Mandate: Rewiring IT Sourcing and Vendor Management for Agility, Value and Resilience.
- Sedha Consulting
- Apr 11
- 5 min read
Summary
Urgent for CIOs, IT Sourcing and Procurement Leaders, and Vendor Managers: Navigate today's IT challenges with strategic insights and actionable recommendations. This article offers a modern framework for sustainable, outcome-driven vendor engagement. Transform your IT sourcing and vendor management practices now!
Key Findings
Procurement’s Strategic Role Is Under Pressure
Vendor Sprawl and Shadow IT Are Diluting Governance
Contract and Commercial Models Are Not Fit-for-Purpose
The Talent Gap in Procurement Is Widening
Vendor Performance Management Is Misaligned with Agile Delivery
Recommendations
Reposition IT Procurement as a Strategic Business Enabler
Rationalise and Prioritise the Vendor Portfolio
Modernise Contracting and Commercial Governance
Invest in Procurement Talent and Tooling
Establish Adaptive Vendor Management Frameworks for Agile Programs
Background
The insights in this paper stem from Sedha Consulting’s engagements with IT leaders across enterprise and government sectors in Australia and Southeast Asia. Through conversations with CIOs, technology leaders, vendor managers, and procurement teams, a clear narrative has emerged: the traditional sourcing and vendor management model is being outpaced by the demands of digital, agile, and cloud-first programs.
Modern delivery models require an ecosystem of partners, fast onboarding, co-investment, and flexibility in delivery. Meanwhile, IT procurement is under pressure to control spend, mitigate risk, and ensure compliance—all while enabling transformation. These tensions require a step-change in how sourcing and vendor management is positioned, structured, and measured.
Vendor management, in particular, has become harder to govern. Many organisations are navigating performance expectations that evolve sprint by sprint, shifting commercial scopes, and rapidly maturing delivery teams. This dynamic context has rendered conventional KPIs, SLAs, and governance frameworks insufficient—leading to misalignment, strained relationships, and missed outcomes.
This paper provides a framework for IT sourcing, procurement, and vendor leaders to modernise their operating models for a more agile, value-centric future.
Analysis
1. Procurement’s Strategic Role Is Under Pressure
Many procurement functions remain on the periphery of digital and transformation efforts. Often brought in late, they are perceived as blockers rather than strategic partners. This limits their influence and sidelines their ability to enable commercial innovation.
Recommendations:
Co-locate sourcing advisors in digital programs or agile PMOs.
Shift the focus from compliance to value, using KPIs like cycle time, commercial innovation, and ESG integration.
Create category-aligned commercial advisors to embed procurement early in solution development.
Example in Practice: A financial services client restructured its procurement team into domain-aligned cells—each embedded in digital squads. Within three months, sourcing cycle times dropped by 28% and vendor satisfaction improved through clearer engagement.
2. Vendor Sprawl and Shadow IT Are Diluting Governance
Decentralised IT budgets and the demand for quick wins have led to uncontrolled vendor onboarding. Most organisations underestimate the scale of their vendor ecosystem, often discovering dozens of redundant or unmanaged relationships during reviews.
Recommendations:
Complete a baseline assessment of your vendor portfolio to identify duplicates and fragmented spend.
Classify vendors into Strategic, Operational, and Niche tiers with tier-specific governance rules.
Implement central review boards for onboarding and rationalisation.
Example in Practice: A health services group reduced vendor count by 35% and redirected $2.3M to critical programs after a rationalisation project exposed shadow tools and inactive licences.
3. Contract and Commercial Models Are Not Fit-for-Purpose
Traditional contract frameworks assume certainty—fixed deliverables, timelines, and pricing. In contrast, cloud, SaaS, and agile models thrive on iteration, modularity, and rolling change. As a result, legacy contract terms often fail to protect or enable delivery.
Recommendations:
Design flexible, modular contracts that include milestone billing, rolling scopes, and agile-friendly clauses.
Include governance within contracts: joint performance reviews, change request SLAs, and escalation workflows.
Use industry panels or templates to fast-track contracting for known service categories.
Example in Practice: A local council moved to a “Commercial-by-Design” model, rewriting contracts to reflect agile delivery. This reduced change request friction by 40% and improved vendor responsiveness in an ERP program.
4. The Talent Gap in Procurement Is Widening
Technology is evolving faster than procurement’s capability to keep pace. While tools like FinOps, AI, and ML platforms enter organisations, procurement teams often lack the technical fluency or commercial models to engage vendors effectively.
Recommendations:
Introduce structured upskilling programs on cloud economics, licensing, and security frameworks.
Encourage cross-functional roles between IT, commercial, and legal.
Deploy digital tools (SaaS monitoring, vendor risk engines) to augment team capacity.
Example in Practice: A technology retailer used internal rotations to build hybrid procurement-IT specialists. These staff shortened complex contract reviews by 50% and accelerated onboarding of AI partners.
5. Vendor Performance Management Is Misaligned with Agile Delivery
Vendor management still depends on lagging indicators (e.g. SLA breaches, support tickets) rather than forward-looking business outcomes. Agile delivery requires dynamic, trust-based partnerships, but legacy performance frameworks don’t support this.
Recommendations:
Develop new performance indicators: collaboration quality, innovation contribution, business outcome linkage.
Conduct quarterly strategic reviews with Tier 1 vendors—bringing in business, IT, and commercial leaders.
Co-create contribution roadmaps to align vendor investment with business vision.
Example in Practice: One enterprise redefined vendor scorecards to include customer impact metrics and quarterly collaboration reviews. This built mutual accountability and surfaced two underperforming vendors that were quietly eroding platform resilience.
Conclusion and Next Steps
Sourcing and vendor functions must break free of legacy constraints. The old mandate—procure, control, manage—is no longer enough. Today’s leaders must co-create, enable, and evolve.
To lead this change, organisations should:
Reframe procurement as a partner to business and digital teams.
Reduce complexity by streamlining vendor portfolios and engagement models.
Modernise contracts, KPIs, and performance frameworks to reflect agility.
Build and invest in procurement talent that speaks both business and technology.
Next Steps:
Conduct a strategic sourcing and vendor health check.
Define a modernisation roadmap with priorities over 6–18 months.
Pilot new vendor governance and contracting models in one program.
Institutionalise successful practices through playbooks and tooling.
About Sedha Consulting
Led by former Gartner analyst Guriq Sedha, Sedha Consulting specialises in seamlessly integrating technology and strategy to drive business success. Our advisory and consulting practice is dedicated to guiding organisations through the complexities of IT sourcing and vendor management.
With deep industry expertise and a commitment to delivering actionable insights, we help organisations cut costs, lower risks, and maximise the value of their IT investments.
Get in touch with us today to learn how we can support your strategic goals and drive sustainable success. Visit www.sedhaconsulting.com for more information.
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