Corporate buyers of IT goods haven’t had it so good in a long time. Technology vendors, feeling the pinch after two years of sluggish sales, are discounting their products—sometimes heavily—to book new revenues. In many companies, managers are crowing about the price breaks they have won from technology sellers, particularly on purchases of hardware products.

But companies may still be paying more than they should for IT goods such as software, telecommunications services—and hardware. The price breaks won so far are just the tip of the iceberg; many companies could actually strike better deals, particularly on terms and conditions that, over time, will add costs to technology contracts. Furthermore, many companies still buy more IT than they need, primarily because they have an inaccurate picture of their requirements. Vendors, happy to take advantage of this lack of clear thinking, pocket the excess.

Reversing the tide can save a bundle. During the 1990s, as technology became more essential to running a business, companies spent more and more on IT goods; IT purchasing accounted for 4.11 percent of corporate operating expenses in 2001. While companies in many sectors have capped further growth during the past 18 months, the cost remains quite...