Across more than two thousand large enterprises in the United States and Britain, a quiet but consequential transfer of power has been documented: software vendors, by controlling the lifecycle of the systems businesses depend on, effectively compel their customers to spend nearly a third of their technology budgets on changes they would not otherwise choose. Released Tuesday by Origina, the findings illuminate a structural dependency that functions less like a market relationship and more like a toll — one that grows steeper as companies race to adopt artificial intelligence. The deeper quest
Software 'Tax' Drains 28% of IT Budgets as Vendors Force Upgrades
When the alternative is losing support, saying yes is often rational.
Mark
So 28 percent of software budgets just vanishes into upgrades nobody wanted. That's a real number from a real survey?
Mimi
Yes—Origina surveyed over two thousand large companies in the US and UK. The 28 percent figure is the average they found across those respondents.
Luke
But we should note: this is one firm's survey. We don't have independent verification of the methodology or sample composition. It's credible reporting, but it's one source's data.
Mark
Fair. But the underlying problem—vendor lock-in—that's real, right? Companies can't actually leave?
Mimi
They can, but the cost is severe. Eighty percent said leaving a major vendor would significantly disrupt their business. So it's not that they can't leave; it's that the switching cost is so high it's often cheaper to just pay.
Luke
And we should be precise about what "significantly disrupt" means. The survey asked people to say yes or no. We don't know the range of disruption they were imagining—could be weeks of downtime, could be months.
Mark
What about the hardware thing? Ninety-one percent retiring functional equipment?
Mimi
Yes. They're throwing out machines that still work because vendors won't support older systems. On average, those machines had 1.65 years of useful life left.
Luke
That's a striking number, but it's an average. Some machines probably had five years left, others maybe six months. The 1.65 is the mean across all respondents, which smooths out the variation.
Mark
And the $12.87 million per company—is that the total cost of one upgrade, or annual?
Mimi
Annual cost of the most recent vendor-driven change, according to the survey.
Luke
Which means it's self-reported. We're taking companies' word for what they spent. That's not unreasonable, but it's worth knowing the source.
Mark
So the real story is that companies are trapped.
Mimi
Trapped is one word. Dependent is another. They need the software to run their business, vendors control the terms, and the cost of leaving is prohibitive.
Luke
And the timing matters. This is happening while companies are trying to adopt AI. So they're under pressure to modernize, which gives vendors even more leverage.
Mark
Because if you don't upgrade, you can't get the new AI features.
Mimi
Exactly. The modernization push becomes a lever for vendors to force changes companies wouldn't otherwise make.
Il Polso
- Nearly every company surveyed has paid for a vendor-imposed upgrade it expected to make things worse — a near-universal capitulation driven not by choice but by the fear of losing support on systems the business cannot live without.
- Eighty percent of enterprises say switching a major vendor would cause significant operational disruption, a dependency that vendors understand and that effectively removes the threat of departure from the negotiating table.
- Senior engineers — the people best positioned to build new capabilities — are routinely pulled away from innovation to manage compliance with vendor mandates, redirecting human talent toward maintenance rather than creation.
- Fully functional hardware is being discarded an average of 1.65 years before the end of its useful life simply to meet vendor support deadlines, turning operational necessity into material waste at a cost averaging $12.87 million per organization annually.
- As AI adoption accelerates, the pressure to upgrade legacy systems will intensify, threatening to widen the gap between companies that can afford modernization on vendor terms and those quietly falling behind.
Across more than two thousand large enterprises in the United States and Britain, a quiet but consequential transfer of power has been documented: software vendors, by controlling the lifecycle of the systems businesses depend on, effectively compel their customers to spend nearly a third of their technology budgets on changes they would not otherwise choose. Released Tuesday by Origina, the findings illuminate a structural dependency that functions less like a market relationship and more like a toll — one that grows steeper as companies race to adopt artificial intelligence. The deeper question the data raises is not merely financial, but about who truly governs the pace and direction of technological change inside modern organizations.
A survey of more than two thousand large companies in the United States and Britain, released Tuesday by software maintenance provider Origina, has put a number on something many technology leaders have long felt but rarely quantified: 28 percent of enterprise software budgets — nearly a third — flows toward upgrades, migrations, and licensing changes that companies did not choose and would not have initiated on their own. Origina frames this as a "software tax," a recurring levy extracted not through legislation but through the architecture of dependency.
The mechanism is not subtle. When a vendor ends support for an older system, the company faces a binary choice: pay for the upgrade or risk losing access to infrastructure the business runs on. Ninety-five percent of respondents had paid for a vendor-driven upgrade they expected would make things worse. Tomas O'Leary, Origina's chief executive, acknowledged the logic plainly — when the alternative is losing support on critical systems, compliance is often the rational response. Vendors, the data implies, understand this calculus well.
The costs extend well beyond the invoice. Eighty-four percent of companies reported that senior engineering staff devoted time "always" or "often" to vendor-mandated changes rather than to work the business actually wanted done. Meanwhile, 91 percent had retired fully functional hardware in the past three years solely to meet vendor support deadlines — equipment with an average of 1.65 years of useful life still remaining. The most recent vendor-driven change cost organizations an average of $12.87 million annually.
O'Leary noted that older companies with deeply entrenched technology stacks face the steepest burden, though the problem is broadly universal. As enterprises accelerate their push into artificial intelligence, the pressure to upgrade — and the lock-in costs attached to it — is expected to intensify, leaving many organizations to navigate an increasingly narrow corridor between modernization and operational survival.
A survey of more than two thousand large companies in the United States and Britain has found that nearly a third of their software budgets—28 percent on average—goes toward upgrades, migrations, and licensing changes imposed by vendors rather than chosen by the companies themselves. The research, released Tuesday by Origina, a software maintenance provider, frames these recurring costs as a "software tax" that drains resources while adding operational risk at a moment when enterprises are racing to adopt artificial intelligence solutions.
The bind is straightforward but difficult to escape. When a vendor stops supporting an older system, companies face a choice: pay for the upgrade or lose access to critical infrastructure their business depends on. Tomas O'Leary, Origina's chief executive, put it plainly: "When the alternative to an unwanted upgrade is losing support on systems the business runs on, saying yes is often a rational response." The survey found that 95 percent of respondents had paid for a vendor-driven upgrade they expected would make things worse. Eighty percent said that leaving a major software vendor would cause significant disruption to their operations—a dependency that vendors understand and exploit.
The human cost is substantial. Eighty-four percent of companies reported that their senior engineering staff devoted time "always" or "often" to vendor-mandated software changes rather than to innovation or work that would directly benefit the business. This is time not spent building new capabilities, improving products, or solving problems the company actually wants to solve. Instead, it flows toward compliance with vendor requirements.
The waste extends to hardware as well. Ninety-one percent of surveyed companies said they had retired fully functional equipment in the past three years simply to meet vendors' support deadlines. On average, these machines had 1.65 years of useful life remaining when they were discarded. The most recent vendor-driven software change resulted in an average annual cost of $12.87 million per organization in the survey.
O'Leary noted that the problem is largely universal across regions, though older companies with deeply entrenched technology stacks face the steepest challenges. As enterprises accelerate their push into artificial intelligence, the pressure to upgrade systems—and the vendor lock-in costs that come with it—is likely to intensify. Companies will face a narrowing choice: modernize on the vendors' terms, or fall further behind in the race to adopt new technology. The survey suggests that many have already accepted this trade-off as the cost of staying operational.
Citazioni salienti
When the alternative to an unwanted upgrade is losing support on systems the business runs on, saying yes is often a rational response.— Tomas O'Leary, CEO of Origina
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