Enterprise-sized businesses allocate an average of 28 percent of their software budgets to unwanted upgrades, migrations, and licensing changes—expenditures that chief information officers believe reduce performance and business value.
The finding comes from a survey of 2,018 IT leaders at companies with at least 10,000 employees and over $1 billion in annual revenue, commissioned by Origina and conducted by Censuswide. Half of respondents work at U.S.-based companies; the remainder are from the United Kingdom.
Ninety-five percent of respondents reported their organization paid for a vendor-driven upgrade, migration, or licensing change in the past three years that IT leaders believed would reduce performance, reliability, or business value. More than half—53 percent—have paid for such unwanted mandates more than once, indicating a recurring pattern.
The root cause is asymmetric bargaining power. Seventy-six percent of respondents said their organization has very little real leverage in vendor negotiations. Eighty percent said moving away from major vendors would cause considerable disruption, locking them into unwanted changes.
"Accepting an unwanted upgrade is often a rational response when the alternative is losing support for critical systems," said Tomás O'Leary, Origina's CEO. "This market dynamic leaves experienced technology leaders with limited options, impacting budgets, engineering time, and innovation funding."
The capital diversion is measurable. The report found reduced funding for innovation (36 percent of respondents), human resources (32 percent), security (31 percent), and customer-facing investment (31 percent).
James McGlennon, CIO of Liberty Mutual, described the operational cost: "An upgrade cycle can occupy top technical workers for the better part of a year. This represents a recurring drag on capacity, preventing staff from working on initiatives that differentiate the business."
The appetite for regulatory intervention is striking. Ninety-one percent of surveyed IT leaders would support laws providing enterprises with protections comparable to those available to long-term residential tenants. Only 1 percent opposed such legislation.
