Enterprise Software Vendors Pocket 28% of IT Budgets

Enterprise Software Vendors Pocket 28% of IT Budgets via Forced Upgrades

A survey of 2,000-plus IT leaders at billion-dollar companies shows vendors exploit thin switching costs to extract nearly a third of software spending on unwanted migrations and licensing changes.

The Technology Desk

Gokhshtein Media

November 4, 2026

3 min read

Enterprise-sized businesses allocate an average of 28 percent of their software budgets to upgrades, migrations, and licensing changes that IT leaders consider unwanted and value-destructive.

The finding comes from "The Software Tax," a report commissioned by Origina, an independent software maintenance provider. Origina surveyed 2,018 chief information officers and senior IT decision-makers at companies with at least 10,000 employees and annual revenues exceeding $1 billion. About half were based in the U.S.; the rest in the United Kingdom.

The economics reveal a classic supplier leverage problem. Ninety-five percent of respondents said their organization paid for a vendor-driven upgrade, migration, or licensing change in the past three years that they believed would reduce performance or business value. Fifty-three percent said they've endured such a mandate more than once.

The constraint is switching cost, not choice. Seventy-six percent of respondents feel their organization has very little real leverage in negotiations with major software vendors. Eighty percent believe moving away would cause significant operational disruption.

Tomás O'Leary, CEO of Origina, framed this as a market failure: "Accepting unwanted upgrades becomes rational when the alternative is losing support for critical systems. It leaves experienced technology leaders with minimal choice and drains budgets, engineering capacity, and unfunded innovation."

The capital diversion is measurable. Thirty-six percent of respondents cited reduced funding for innovation, 32 percent for headcount, 31 percent for security, and 31 percent for customer-facing investments as direct consequences.

James McGlennon, a former CIO and global executive vice president at Liberty Mutual, described the operational cost: "An upgrade cycle can occupy top technical workers for the better part of a year. It's a recurring drain on capacity—time teams can't spend on initiatives that actually differentiate the business."

The frustration has triggered appetite for regulation. Ninety-one percent of respondents said they would support laws providing enterprises with protections comparable to those afforded to long-term residential tenants. Only 1 percent opposed such measures.

Enterprise-sized businesses allocate an average of 28 percent of their software budgets to upgrades, migrations, and licensing changes that IT leaders consider unwanted and value-destructive.