Enterprises Spend 28% of Software Budgets on Unwanted Upgrades, IT Leaders Report

Significant Spending on Unwanted Software Changes

Large enterprises allocate an average of 28% of their software budgets to upgrades, migrations, and licensing changes that their IT leadership often perceives as detrimental. This data comes from a survey commissioned by Origina, detailed in its 'The Software Tax' report.

IT Concerns Over Performance and Value

The survey, which included 2,018 CIOs and senior IT decision-makers from companies with over 10,000 employees and $1 billion in annual revenue, revealed that 95% of respondents had paid for a vendor-driven change in the past three years that they believed would reduce performance, reliability, or business value. Over half (53%) reported doing so more than once.

Limited Leverage in Vendor Negotiations

A significant majority of respondents indicated a lack of control in these situations. 76% stated their organization has very little real leverage in negotiations with software vendors, and 80% believe that moving away from major vendors would cause significant disruption to their operations.

Market Dynamics and IT's Dilemma

Tomás O’Leary, CEO of Origina and a report author, noted that IT leaders often accept unwanted upgrades because the alternative is losing support for critical business systems. This market dynamic forces organizations into decisions that impact budgets, engineering time, and the funding of new innovations.

Survey Methodology and Potential Bias

The survey was conducted by third-party research consultancy Censuswide. Origina, which provides independent software maintenance, commissioned the report. The report suggests independent software maintenance as a solution for IT leaders to manage software budgets, indicating a potential bias in its recommendations.