Enterprises Spend 28% of Software Budgets on Unwanted Upgrades

Large enterprises waste approximately 28 percent of their software budgets on upgrades, migrations, and licensing changes they don’t believe will benefit them. A survey of 2,018 IT leaders and decision-makers at companies with at least 10,000 employees and $1 billion in annual revenue—split between the United States and United Kingdom—documented this pattern across major organizations.

The problem reflects a structural power imbalance. Ninety-five percent of respondents reported their organizations paid for vendor-initiated upgrades or licensing changes they believed would reduce performance, reliability, or business value in the past three years, with 53 percent doing so multiple times. Most respondents felt trapped: 76 percent said their organization has minimal negotiating leverage with vendors, and 80 percent indicated that switching away from major vendors would cause significant disruption.

Vendors effectively lock enterprises into upgrades by making exit costs prohibitively high. When the alternative to an unwanted upgrade is losing vendor support for critical systems, IT leaders have little choice but to accept, regardless of the impact on budgets, engineering resources, and postponed innovation initiatives.