Large enterprises spend 28 percent of their software budgets on unwanted upgrades and licensing changes that IT leaders believe degrade performance. A report by software provider Origina reveals that ninety-five percent of surveyed decision-makers paid for vendor-driven changes despite expecting worse reliability.
Technology leaders at large companies find themselves trapped in an expensive cycle where major vendors dictate the timeline and cost of software maintenance. Those results are according to a survey of 2,018 chief information officers and senior IT decision-makers at companies with at least 10,000 employees that Origina commissioned for its report, The Software Tax.
About half of the respondents (1,011) are from the US, and the rest are from the United Kingdom.
The findings point to an enterprise software model where customers absorb continuous financial strain. According to the report titled The Software Tax
, organizations spend an average of 28 percent of their total software budgets on upgrades, migrations, and licensing changes they did not request and often view as detrimental to their operations.
Negotiation Disadvantages and Vendor Pressure at Enterprises
The financial impact of vendor-driven changes reaches deep into corporate ledgers. Survey respondents reported that their most recent vendor-driven upgrade cost an average of $12.87 million. Rather than choosing these updates to capture new capabilities, businesses often accept them simply to maintain vendor support for core systems. Fifty-three percent of respondents have done so more than once,
the report notes.
More than three-quarters of respondents noted that their primary software vendor sets the timing and terms of change. This imbalance leaves technology executives with few practical options.
When the alternative to an unwanted upgrade is losing support on systems the business runs on, saying yes is often a rational response. That’s exactly the problem. The market has left some of the most experienced technology leaders in the world with little room to refuse, and that cost shows up in budgets, in engineering time, and in innovation that never gets funded.
Tomás O’Leary, CEO and founder of Origina
When faced with vendor demands, 76 percent of IT leaders state they have very little power to negotiate. Furthermore, 80 percent report that moving away from major software vendors would cause significant disruption to their daily business operations.
Operational Costs and Impact on Hardware and Engineering Talent
The burden of unwanted software upgrades extends past direct financial expenditures into hardware longevity and engineering productivity. According to the survey findings, 91 percent of organizations retired working hardware over a three-year period solely to meet software support deadlines, sacrificing an average of 1.65 years of remaining useful life.
Engineering teams also bear the brunt of these mandatory upgrade cycles. Survey data indicates that 84 percent of senior engineers frequently spend their time handling vendor-driven migrations and upgrades rather than focusing on building future business capabilities.
These diverted resources directly affect broader strategic initiatives, particularly enterprise artificial intelligence adoption. Among surveyed organizations, 90 percent reported that vendor-driven software costs contributed at least moderately to delays, pauses, or outright cancellations of planned AI and data projects.
IT Leaders Back Legislation for Software Protections
Frustrated by rising fees and limited flexibility, IT decision-makers expressed strong support for regulatory intervention. Ninety-one percent of respondents backed legislation that would grant enterprise software customers protections comparable to those enjoyed by residential tenants on long-term leases.
Additionally, 82 percent of participants voiced support for software maintenance requirements similar to European Union hardware repairability rules. Proponents of independent support models argue that alternative maintenance providers offer a pathway for organizations to break free from vendor-controlled upgrade cycles and regain control over internal technology budgets.