Large companies in the United States and the United Kingdom are spending nearly a third of their software budgets on upgrades, migrations, and licensing changes they did not necessarily want. The findings come from a survey of more than 2,000 organizations conducted by software maintenance provider Origina.
The report found that these vendor-driven changes account for an average of 28% of software budgets. Beyond the direct expense, companies also face operational disruption and project delays, including efforts to adopt AI.
Origina described these recurring costs as a “software tax”, arguing that businesses often have little choice when software vendors change their products or support policies.
Companies Pay for Upgrades They Did Not Want
The survey highlighted how difficult it can be for businesses to avoid software changes. Many organizations depend on established systems to run essential operations, making it risky to reject an upgrade if doing so could mean losing vendor support.
According to the findings, 95% of respondents said their organizations had paid for a vendor-driven upgrade they expected to produce worse outcomes. Meanwhile, 80% said switching away from a major software vendor would significantly disrupt their business.
Origina CEO Tomas O’Leary said accepting an unwanted upgrade can be a rational decision when the alternative threatens systems that a company relies on. This leaves businesses balancing the cost of change against the risk of continuing with unsupported software.
IT Teams Lose Time that Could Go to Innovation
The financial burden is only part of the problem. Software changes can also take skilled employees away from projects that could improve products, services, or business operations.
The survey found that 84% of respondents said senior engineering staff always or often spent time dealing with vendor-driven software changes instead of innovation or business-focused development.
This creates a difficult trade-off for technology teams. Instead of focusing on new capabilities, engineers may have to spend time testing upgrades, managing migrations, and fixing compatibility issues.
The pressure could grow as companies try to expand their use of AI. Unexpected software expenses and the resources needed to implement changes can leave organizations with less time and money for new technology projects.
Companies Retire Working Hardware to Meet Deadlines
The survey also highlighted how software support policies affect hardware spending. Some businesses have replaced equipment that was still functioning because vendors' support deadlines required them to make changes.
Around 91% of respondents said their organizations had retired fully functional hardware in the previous three years to comply with vendor support deadlines. On average, companies gave up 1.65 years of the equipment's remaining useful life.
The study found that the latest vendor-driven software change reported by participating organizations carried an average annual cost of USD 12.87 million.
These findings suggest that software decisions can cost more than license fees and upgrade charges, including equipment replacement and the time employees spend managing transitions.
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Businesses Face Tough Choices as AI Spending Grows
The survey raises questions about how much control companies have over their technology budgets. Organizations may want to direct more resources towards AI and other new capabilities, but recurring vendor-driven changes can limit their flexibility.
Older companies with complex technology systems may face particular challenges because their software and hardware are deeply connected to existing operations. O’Leary said the issue was not limited to one market and could affect businesses in other regions as well.