Enterprise-sized businesses spend an average of 28 percent of their software budgets on vendor-mandated upgrades, migrations, and licensing changes that executives believe reduce performance or business value, according to a new survey.
The findings, from a report commissioned by Origina, surveyed 2,018 CIOs and senior IT decision-makers at companies with at least 10,000 employees and over $1 billion in annual revenue—half from the U.S. half from the United Kingdom.
Ninety-five percent of respondents reported paying for a vendor-driven change in the past three years they believed would diminish performance, reliability, or value. Over half said this happened more than once.
Tomás O'Leary, CEO of Origina, said enterprises accept unwanted upgrades because the alternative is losing vendor support on critical systems. "It's a market failure," O'Leary said. "Technology leaders have no real options."
The dynamic reveals severe vendor leverage. Seventy-six percent of respondents strongly or somewhat agreed their organization has minimal negotiating power with vendors. Eighty percent also agreed that switching away from major platforms would cause significant disruption—a textbook case of lock-in.
The capital diverted to these mandatory changes starves other budgets. Innovation drew the most concern: 36 percent of respondents said forced upgrades reduced innovation funding. Security (31 percent), human resources (32 percent), and customer-facing investment (31 percent) also suffered cuts.
James McGlennon, a former CIO and global executive vice president at Liberty Mutual, said upgrade cycles can occupy senior engineers for nearly a year. "It's a recurring tax on capacity," McGlennon said. "Your best people are locked into maintenance rather than building competitive advantage."
The survey found overwhelming support for regulatory intervention. Ninety-one percent of respondents would back laws providing enterprises protections similar to those granted long-term residential tenants. Only 1 percent opposed such measures.
Origina, which sells independent software maintenance as an alternative to vendor upgrades, commissioned the report. The survey was conducted by Censuswide, a third-party research consultancy.
