Vendor consolidation has emerged as the dominant priority for CIOs in 2025, driven by mounting pressure to reduce complexity, control costs, and maximize the full potential of AI – while creating greater mechanisms for resiliency.

Research from multiple industry sources indicates that this isn’t just an emerging trend — the emphasis on consolidation is growing at an unrelenting pace.

According to ADAPT’s CIO Edge research, a comprehensive study of more than 140 CIOs, 68 percent of technology leaders are planning to consolidate their vendor landscape.

This trend is not just about making minor adjustments to meet market demands; a majority of organizations are targeting a 20 percent reduction in vendor count, which represents a significant and fundamental shift in how enterprises approach their technology ecosystems.

The urgency for CIOs to transform their vendor landscape is palpable across all sectors and industries. A survey of more than 1,000 technology professionals revealed that 90 percent of IT professionals identified software consolidation as a priority, with 73 percent predicting their organizations will continue growing software investments while simultaneously consolidating vendors.

This paradox — expanding capabilities while reducing complexity — defines the modern CIO’s challenge.

The false promise of best-of-breed

This vendor consolidation trend contrasts with movements like the MACH alliance, which  promotes a pure “best-of-breed” approach. While its underlying architectural approaches (Microservices, API-first, Cloud-native, Headless) are sound and arguably have become table stakes in the SaaS world, MACH created unexpected challenges for enterprises.

Initially lauded for its flexibility and agility, MACH ended up creating significant complexity — more than most enterprises can handle — at a time when they are looking for simplicity more than ever.

The economic reality is stark: fully MACH implementations usually require more money upfront compared to a unified solution that is pre-configured. Companies must consider not only the purchasing of multiple services, but also the cost and time required for employee training and adoption. Running MACH architecture requires people with highly specialized skills in cloud infrastructure, APIs, microservices, and tools designed to streamline development of the user-facing part of a website or web application. The job market for that talent is uber-competitive, even in the age of AI, meaning you’ll need to have the resources to pay them well or else your competitors will.

The hidden costs of fragmentation

Research reveals several critical drawbacks to the fragmented fully best-of-breed  approach:

• Increased complexity: Managing hundreds of microservices becomes exponentially daunting and expensive rather quickly, with system issues potentially impacting multiple services simultaneously. The management and expertise required to oversee such architectures can be daunting — and expensive. Once system issues are discovered, they could impact numerous services, which requires deep knowledge coordinated across multiple areas of expertise for troubleshooting and debugging. This can make resolution complicated and cost prohibitive.
• Integration challenges: Trying to make connections between services and systems that were not designed to work together requires additional development expertise, which is expensive.  Incompatibilities between functions like search, customer service, catalog management, and OMS can lead to degraded customer experience and loss of loyalty.
• Security concerns: The beauty of MACH architecture is also the beast: all of the composable microservices, APIs, and cloud offerings represent security risks. Comprehensive security requires consistent implementation across all components, which can be challenging when using solutions from different vendors. Businesses must develop robust security frameworks and governance models to ensure protection across their entire MACH ecosystem.
• Vendor management complexity: Best-of-breed usually means working with dozens of vendors rather than a few, which can add vast complexity to development and customer support depending on the long-term viability of each vendor, which must provide critical functionality for services or tools that could be discontinued or significantly changed in the future.

The strategic advantage of unified platforms

As CIOs prioritize vendor consolidation, SAP’s approach to “Suite as a Service” or “best of breed as a suite” offers a pragmatic solution that addresses the fundamental challenges of fragmented architectures. Rather than forcing organizations to choose between flexibility and integration, the SAP Customer Experience (SAP CX) portfolio provides both through a unified yet composable business suite that spans front and back-office operations, in conjunction with a pre-integrated and certified rich ISV ecosystem that allows businesses to compose with intention, wherever this makes sense business-wise.

The flywheel effect: applications, data, AI

The true power of consolidated platforms lies in what SAP calls the “flywheel effect.” In this model, applications generate data, data trains AI, and AI optimizes applications. This creates a virtuous cycle where:

• Better data feeds better AI
• Better AI feeds better applications
• Better applications generate better data

This integrated approach is only possible when organizations move beyond siloed point solutions to embrace unified platforms that can leverage the full spectrum of business data. Companies already invested in SAP technologies have discovered that a unified data strategy provides a proven path to the data architecture that AI requires.

Quantified benefits: the economic case for consolidation

Enterprise Strategy Group’s economic analysis of SAP CX solutions reveals compelling evidence for the vendor consolidation approach:

• Operational Efficiency Gains
  • Faster time to value: Organizations can fully connect and integrate their CX and ERP data in as few as six months
  • Reduced implementation time: Companies avoid roughly 25 to 50 percent of the time and effort required to build integrations from scratch
  • Improved productivity: Depending on job function, customers report 10 to 300 percent improvement in daily productivity
• Cost Optimization
  • Lower total solution costs: While individual solutions may appear cheaper, the holistic end-to-end solution approach is far more cost-effective
  • Reduced maintenance overhead: Organizations can eliminate up to 70 percent of the time required to manage and maintain systems
  • Resource optimization: Companies avoid having to grow teams by up to 2x to support custom development and integrations
• Strategic Advantages
  • Enhanced customer experience: Seamless connectivity between customer and operational data enables superior customer service
  • Faster innovation: End-to-end visibility enables quicker, more informed decisions leading to faster product launches
  • Reduced operational risk: Standard iFlows provide more reliable connections with fewer potential connectivity issues

The AI-driven imperative

AI is driving the consolidation trend as much as the need to reduce costs. AI models demand high-quality, accurate data to be useful. When organizations maintain data silos — often the result of disconnected digital tools — AI efforts fall short of expectations or stall entirely.

SAP’s unified approach addresses this challenge directly. By providing harmonized SLAs, UX, data models, and provisioning across the stack, along with embedded AI via SAP Business AI and a unified and semantically rich data layer via SAP Business Data Cloud, organizations can fully leverage AI capabilities across domains without the complexity of integrating multiple disparate systems.

The consolidation acceleration

The trend toward vendor consolidation is accelerating across multiple dimensions:

• Seventy-five percent of organizations pursued vendor consolidation in 2022, up from 29 percent in 2020, according to Capgemini research
• Gartner predicts that by 2027, 70 percent of organizations will optimize cloud-native application vendors to a maximum of three
• For midsize companies, the average number of SaaS tools decreased 18 percent in the last two years

The path forward: strategic consolidation

The evidence is clear: 2025 marks a pivotal moment for CIOs. Organizations that embrace strategic vendor consolidation and choose unified platforms over fragmented point solutions will gain significant competitive advantages in operational efficiency, cost management, and AI readiness.

SAP CX represents the future of customer experience technology — not as a collection of disparate tools, but as a unified, intelligent platform that can adapt and evolve with business needs. As CIOs navigate the challenges of 2025, the choice between complexity and consolidation will define their success.

The question isn’t whether to consolidate; it’s whether to lead the trend or be left behind.

With 68 percent of CIOs already planning consolidation initiatives, organizations that act decisively on vendor consolidation will be best positioned to win when it comes to the future of enterprise technology.

Geert Leeman is chief revenue officer of SAP Customer Experience.