95% of Firms Bought Software Upgrades IT Thought Would Backfire

Ninety-five percent of enterprise IT leaders say their organization has paid for a vendor-driven software upgrade, migration or licensing change in the past three years that it believed at the time would hurt performance, reliability or business value, according to a survey of 2,018 chief information officers and senior IT decision-makers reported by Ars Technica.

The survey, commissioned by software-maintenance vendor Origina and conducted by research firm Censuswide, covered respondents at companies with at least 10,000 employees and at least $1 billion in annual revenue. About half, 1,011, work in the United States; the rest are in the United Kingdom.

How Much Of IT Budgets Goes To Unwanted Upgrades?

Enterprises spend an average of 28 percent of their software budgets on upgrades, migrations and licensing changes they did not want, the survey found. Fifty-three percent of respondents said this has happened to their organization more than once in the past three years.

Why Do Companies Say Yes Anyway?

Seventy-six percent of respondents said their organization has very little real negotiating room with vendors, and 80 percent said moving away from major vendors would cause significant disruption, according to the report. Tomás O'Leary, Origina's chief executive and founder and one of the report's authors, said in a statement that the dynamic leaves little choice.

"When the alternative to an unwanted upgrade is losing support on systems the business runs on, saying yes is often a rational response," O'Leary said. "That's exactly the problem. The market has left some of the most experienced technology leaders in the world with little room to refuse, and that cost shows up in budgets, in engineering time, and in innovation that never gets funded."

What Gets Cut When Upgrades Eat The Budget?

The money and staff time absorbed by mandatory upgrades come at the expense of other priorities. Respondents named innovation as the area most squeezed, cited by 36 percent, followed by human resources at 32 percent, security at 31 percent and customer-facing investment also at 31 percent.

Liberty Mutual Chief Information Officer James McGlennon said an upgrade cycle can tie up top technical staff for close to a year. "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," McGlennon said in a statement accompanying the survey's release.

Who Conducted The Survey And Who Paid For It?

Censuswide, a third-party research consultancy, ran the survey for Origina's report, titled "The Software Tax." Origina sells independent maintenance services for enterprise software, a business model that benefits if companies reduce reliance on vendor-mandated upgrade cycles. The report itself points to independent maintenance as a path for IT leaders to regain control over software budgets.

What Are IT Leaders Asking For?

Ninety-one percent of respondents said they would support laws giving enterprises protections comparable to those available to long-term residential tenants, according to the survey. Only 1 percent opposed the idea; the remainder said they neither supported nor opposed it.