As a buying strategy, aggregation of demand to improve buyer’s leverage on pricing can be achieved by establishing consortia of buyers through trade associations, group purchases and cooperatives. Pricing, antitrust and tax laws mandate the manner in which such group purchases can be lawfully achieved.
In the provisioning of services, aggregation of demand for price leverage has faltered as a business practice. While aggregation works effectively for narrowly defined, standardized “utility-type” services, the big question in IT-enabled services is whether such standardization is truly required to achieve the requisite value. Aggregation becomes difficult if there are any economies of scale that require a commingling of confidential data or competitive advantages arising from the group purchase.