Enterprises blow nearly a third of software budgets on upgrades they never asked for

Enterprises say nearly a third of their software budgets goes on upgrades, migrations, and licensing changes they wouldn't have chosen, according to research suggesting that keeping vendors happy has become an expensive business.

The study, conducted by Censuswide for software support provider Origina and published with Thinkers50, surveyed 2,018 senior IT decision-makers in the US and UK. Respondents put the average share at 28 percent.

And customers aren't necessarily getting anything better for their money. Some 95 percent of respondents said they had paid for at least one vendor-driven change in the past three years despite expecting worse reliability, performance, or value.

The most recent vendor-driven change cost respondents' organizations an average of $12.87 million.

Origina calls this the "software tax," but unlike most taxes, it comes with the added pleasure of potentially making your IT systems worse.

The costs don't stop at software either. According to the survey, 91 percent of respondents said their organizations had retired working hardware in the past three years to meet software support deadlines, sacrificing an estimated 1.65 years of remaining useful life on average.

Then there's the small matter of finding people to carry out all these supposedly essential changes. Some 84 percent said experienced engineers were regularly diverted from other projects to handle vendor-driven upgrades and migrations.

That leaves less time for the work businesses actually want done, including the AI projects that software vendors themselves have spent the past few years telling everyone they urgently need. Asked about the last time an AI or data project was delayed, paused, or canceled, 90 percent said vendor-driven costs contributed at least moderately.

While customers might be tempted to tell their suppliers where to stick their next upgrade, many apparently don't feel they have much choice. Some 76 percent said they have little negotiating leverage with their major software vendors.

Origina founder and CEO Tomás O'Leary reckons customers have been backed into a corner.

"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," he said. "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."

The findings also suggest that IT bosses are getting rather fed up with the arrangement. Some 91 percent backed legislation that would give enterprise software customers protections comparable to those enjoyed by long-term residential tenants, while 82 percent supported software maintenance requirements similar to EU hardware repairability rules.

Origina has a commercial interest in the argument: it sells independent support for enterprise software, offering customers an alternative to vendors' own maintenance and upgrade arrangements.

Still, the findings suggest plenty of customers feel they're spending millions following their suppliers' priorities rather than their own. ®