Software upgrades eating major chunk of companies' IT budgets: Survey
What's the story
A recent survey by software maintenance provider Origina, has revealed that large US and British companies spend a staggering 28% of their software budgets on vendor-driven upgrades, migrations, and licensing changes. These are costs that businesses wouldn't have actively chosen, adding avoidable expenses and operational risks in the race to adopt AI solutions. The study surveyed over 2,000 companies and highlighted these recurring costs as a "software tax."
Upgrade impact
The 'software tax'
The survey found that a whopping 95% of respondents had paid for a vendor-driven upgrade they thought would worsen outcomes.
Further, 80% of the participants believed that leaving a major software vendor would significantly disrupt their business operations.
Origina CEO Tomas O'Leary explained this dilemma by saying, "When the alternative to an unwanted upgrade is losing support on systems the business runs on, saying yes is often a rational response."
Work allocation
Time diverted from core business activities
The survey also found that 84% of senior engineering staff "always" or "often" devote their time to vendor-mandated software changes instead of focusing on innovation or business-centric development.
This shows how much time as well as resources are being diverted from the core business activities due to these mandatory updates.
Compliance costs
Sacrificing functional hardware
The survey also revealed that 91% of companies had retired fully functional hardware in the last three years to comply with vendors' support deadlines.
On average, these businesses sacrificed 1.65 years of remaining useful life on their hardware due to compliance costs.
O'Leary said this problem was widespread and affected other regions as well, especially older companies with more entrenched technology stacks.
Financial impact
Financial burden on businesses
The report found that the most recent vendor-driven software change had an average annual cost of $12.87 million for the surveyed organizations.
This highlights the financial burden these mandatory updates impose on businesses, further emphasizing the need to address this issue in order to optimize IT budgets and resources effectively.