Companies are spending nearly a third of IT budgets on software upgrades
- Enterprises are being forced into software upgrades that they can’t really get out of, report finds
- 91% have upgraded hardware in the past three years just to maintain software
- Enterprise protection legislation and software support obligations could be the answer
Legacy tech has become something of a hot topic in recent years with AI, but while hardware and data foundations have been core to the discussion around artificial intelligence, a new Origina report has revealed that around one-third of enterprise IT budgets are being earmarked for software upgrades.
The report found that 28% of large enterprise IT budgets are being spent on vendor-driven changes that they would not have otherwise chosen in a trend the company’s calling a ‘software tax’.
But more than just consuming budgets, software changes are also impacting worker time and leading to potentially lost productivity as a result.
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“That’s not a one-off cost, it’s a recurring drag on capacity, and every year it repeats is a year those people aren’t working on the initiatives that actually differentiate the business,” former Liberty Mutual CIO James McGlennon and Origina board member James McGlennon explained.
More than four in five (84%) report that senior engineering staff always or often spend time dealing with vendor-driven software changes, taking them away from more meaningful work that they’re employed to do. A similar number (80%) also reported that leaving a major software vendor could lead to widespread disruption within their business, ultimately forcing them to stay with that software vendor and enforcing vendor lock-in – with exit costs and migration technicalities to blame.
More than three-quarters now agree their software vendor dictates the timing and terms of changes, not them (78%), and that they have very little negotiating power (76%).
In many instances, enterprise customers don’t even feel that an upgrade was totally necessary. Nearly all (91%) had retired fully functional hardware within the past three years just to comply with software vendor support deadlines. While Origina doesn’t specifically state it, Windows 10’s end of support is likely a large factor in this statistic.
Looking ahead, most (91%) support legislation to provider greater protection for enterprise customers, and four in five (82%) support software support obligations similar to what the EU has introduced for hardware repairability.
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