Enterprise-sized businesses spend an average of 28 percent of their software budgets on unwanted upgrades, migrations and licensing changes that IT leaders often view as detrimental to operations.
The findings come from a survey of 2,018 chief information officers and senior IT decision-makers at companies with at least 10,000 employees and $1 billion in annual revenue. Censuswide, a research consultancy, conducted the survey for Origina, a software cost management firm. About half of respondents were based in the U.S. the rest in the United Kingdom.
Ninety-five percent of IT leaders said their organization paid for a vendor-driven upgrade, migration or licensing change in the past three years they believed would reduce performance, reliability or business value. More than half reported doing so more than once.
The root cause: vendor lock-in. Seventy-six percent of respondents said their organization has minimal leverage in negotiations. Eighty percent stated that moving away from major software vendors would cause significant operational disruption.
Tomás O'Leary, CEO and founder of Origina, said saying yes to an unwanted upgrade is often rational when the alternative is losing support for critical business systems. "The market structure leaves experienced technology leaders with little room to refuse, resulting in costs that impact budgets, engineering time, and unfunded innovation," O'Leary said.
The opportunity cost is substantial. Thirty-six percent of respondents cited less funding for innovation, 32 percent for human resources, 31 percent for security and 31 percent for customer-facing investment.
James McGlennon, a former CIO and global executive vice president at Liberty Mutual, noted that an upgrade cycle can consume top technical workers for months or longer. "This represents a recurring drag on capacity, preventing those employees from working on initiatives that differentiate the business," McGlennon said.
IT leaders want regulatory intervention. Ninety-one percent of surveyed CIOs said they would support laws providing enterprises with protections similar to those available to long-term residential tenants. Only 1 percent opposed such legislation.
