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Grader

Is Your IT Vendor Stack Costing You?

Armorstack 2026 puts the typical mid-market IT stack at $5,000-8,000 monthly in fragmented vendor spend, with unused licenses and overlapping tools commonly accounting for 15-30% of total SaaS spend. Grade your IT vendor sprawl across vendor count, overlap, integration, single-pane management, contract visibility, security-tool fragmentation, spend tracking, support fragmentation, shadow IT, and license utilization to surface consolidation opportunities.

Last updated: May 2026

IT vendor consolidation posture is a graded assessment of how well a business manages its IT vendor and tool sprawl. Grade = Sum(Rule Score x Weight) / 100. Typical mid-market IT vendor count typically target Under 30 with active management.

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What is IT Vendor Consolidation Posture?

IT vendor consolidation posture is a graded assessment of how well a business manages its IT vendor and tool sprawl. It scores rules covering vendor and tool count, overlapping capability rationalization, critical tool-to-tool integrations, single-pane management for related categories, central contract visibility and renewal tracking, security-tool consolidation, IT spend tracking by category, support consolidation across vendors, shadow IT inventory, and license-utilization review with rightsizing at renewal.

The Formula

Grade = Sum(Rule Score x Weight) / 100

Armorstack 2026 puts the typical mid-market IT stack at $5,000-8,000 monthly in fragmented vendor spend; unused licenses and overlapping tools commonly account for 15-30% of total SaaS spend.

Worked Example

A 100-employee business has unmanaged vendor count, no overlap rationalization, missing integrations between ticketing and monitoring, no single-pane management, no central contract tracker, fragmented security tools, no spend tracking by category, fragmented support, unknown shadow IT, no license utilization review.

Vendor count: unmanaged (fail)
Overlap rationalized: no (fail)
Integrations: missing critical (fail)
Single-pane management: no (fail)
Contract visibility: no central tracker (fail)
Security consolidation: fragmented (fail)
Spend tracking: not by category (fail)
Support consolidation: fragmented (fail)
Shadow IT: unknown (fail)
License utilization: no review (fail)

📌 Grade lands in the lower band. Highest-leverage initial fixes in priority order: build vendor inventory plus contract calendar with 90-day renewal reminders (typically saves more in first year than the time to set up), perform a license-utilization review at the next major renewal (typically reclaims 15-30% of SaaS spend), and identify the top 3 overlapping tools for consolidation. A consolidation engagement with an MSP or IT-procurement consultant can typically deliver 20-40% spend reduction in the first 6 months.

Why This Matters

Vendor sprawl quietly compounds cost

Armorstack 2026 research and MSP consolidation practice consistently surface that mid-market businesses without active vendor management routinely accumulate 20-40% recoverable spend in duplication, unused licenses, and overlapping tools. The savings come without losing capability when consolidation is done deliberately.

Shadow IT bypasses both security and procurement

Industry research places shadow IT at 30-40% of total SaaS spend in mid-market businesses; it bypasses security review, vendor due diligence, and procurement leverage. A SaaS discovery tool plus quarterly inventory surfaces it for either governance or replacement.

Common Mistakes

❌ Consolidating without first verifying capability coverage

Aggressive consolidation that eliminates tools the business actually depends on produces operational pain that often exceeds the spend savings. The right sequence is inventory, identify true overlap (versus apparent overlap), then consolidate with capability validation.

❌ Treating consolidation as a one-time exercise

Vendor sprawl regenerates over time as new tools are adopted, contracts renew, and business units add capability. A quarterly vendor review plus annual deep-dive is the operational practice that keeps consolidation gains; one-time consolidation followed by drift is the common pattern.

Industry Benchmarks

Category	Good	Average	Poor
Typical mid-market IT vendor count	Under 30 with active management	30-75 with quarterly review	Over 100 with no central inventory
Recoverable spend from consolidation	Under 10% (well-managed)	15-30%	30-50%+ (heavy sprawl)
Shadow IT as percent of SaaS spend	Under 15% with active discovery	20-30%	Over 35%

Source: Armorstack 2026 IT-stack research, Productiv State of SaaS Management Report, and Zylo SaaS Management Index industry data

Benchmark data sourced from Armorstack 2026 IT-stack research, Productiv State of SaaS Management Report, and Zylo SaaS Management Index industry data.

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One of the most common mistakes we see when working with clients: consolidating without first verifying capability coverage. Aggressive consolidation that eliminates tools the business actually depends on produces operational pain that often exceeds the spend savings. The right sequence is inventory, identify true overlap (versus apparent overlap), then consolidate with capability validation.

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Frequently Asked Questions

How much can IT vendor consolidation typically save?

Industry research and MSP consolidation practice consistently surface 20-40% reduction in IT vendor spend in mid-market businesses where consolidation has never been done deliberately. The savings come from unused-license rightsizing (15-30% of SaaS spend), overlapping-tool elimination, support-contract consolidation, and renegotiation with strategic vendors at higher volume.

What is shadow IT and why does it matter?

Shadow IT is software and tools that business units adopt without going through IT or procurement, often through individual employee credit cards or SaaS free tiers that scale into paid plans. Industry research places shadow IT at 30-40% of total SaaS spend in mid-market businesses; it bypasses security review, vendor due diligence, and procurement leverage, and the business often pays multiple times for the same capability.

How often should a business review IT vendor spend?

Industry practice in mature IT operations is quarterly review of IT spend by category with annual deep-dive on the largest line items, plus 90-day renewal alerts on all multi-year contracts. Without proactive review, auto-renewals routinely lock the business into bad pricing or unwanted tools. A simple spend tracker plus renewal calendar typically saves more in the first year than the time it takes to set up.

When does it make sense to consolidate security tools into a suite?

Security-tool suites (Microsoft 365 Defender, CrowdStrike Falcon, SentinelOne Singularity, Cisco Secure) consolidate endpoint, email, identity, and monitoring at typically 20-40% lower combined cost than equivalent point products plus easier management. The trade-off is reduced best-of-breed flexibility. Suites usually win for mid-market businesses without dedicated security teams; point products often win for mature security operations with specific capability requirements.

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