Here's how to navigate the perfect storm of cost pressure and application sprawl.

Boston Consulting Group (BCG)'s latest research surveying 300+ C-level leaders and 600+ IT buyers highlights that companies plan net consolidation in 6 out of 8 software application categories.

The only growth areas? AI/ML with +35% net expansion and cloud services growing steady. Everything else faces net cuts – from CRM (-27%) to collaboration tools (-34%) in a massive budget migration.

3 pressure points creating this shift:

1. The math doesn't add up

IT budgets grew just 3% annually post-pandemic – below inflation – while application spending stayed at 30% of total IT spend for a decade. With 75% of decision-makers citing cost as their top concern, something has to give.

2. Complexity hit a breaking point

The average enterprise runs 1,000+ applications with only 29% data integrated. This fragmentation creates massive hidden costs in maintenance, security, and lost productivity. Result? 63% plan to consolidate vendors in the next 5 years.

3. AI changed the value equation.

Companies are reshaping their tech stacks. While planning to cut traditional apps, 50% are extending the use of AI; also investing in cloud and data.

Why this matters for alliance leaders:

Your customers are making hard choices. But they're not anti-spend; they're pro-ROI.

They seek to reduce complexity and expand in AI and cloud (+7% vs 2024) while cutting collaboration (- 19% vs 2024) and other tools.

5 moves to consider making:

1. Lead with AI capabilities

Don't just add AI features. Highlight how your AI capabilities can replace other point solutions.

1. Prioritize cloud marketplaces and co-sell

With cloud services expanding and companies shifting to cloud-based or SaaS solutions, marketplace presence and co-sell with hyperscalers becomes critical for distribution

1. Solve the integration crisis

With 71% of applications still siloed, integration is your competitive moat. Emphasize seamless data flows, unified experiences, being part of cloud stack and single marketplace bill.

1. Align with cloud commitments

Enterprises have billions locked in cloud commits. Make it easy to draw down these budgets via cloud marketplace transactions and cloud-native architectures.

1. Highlight cost-to-value math

If you're asking for budget while others face cuts, you need strong and clear value propositions

The reshaping of the tech stacks wave is real, but it creates opportunities for those who understand the shift.

Companies aren't just looking for more new tools – they want fewer, AI-enabled, cloud-native solutions that justify their place in a streamlined stack.

What's your take on navigating this?

Research source BCG