Vendor-Driven Changes Consume 28% of Enterprise Software Budgets

A report finds that vendor-driven software changes consume a substantial share of large enterprises’ software budgets.

By Career Ahead AI — AI-assisted, fact-verified against cited sources. Readers should verify key facts.

Vendor-driven changes take a large share of software budgets

Vendor-driven software upgrades, migrations and licensing changes consume an average of 28 per cent of large enterprises’ software budgets, according to a report published by Origina in collaboration with Thinkers50. The finding puts changes initiated by software vendors among the substantial costs competing for enterprise software spending.¹

The report links those costs to decisions about AI and data work. For 34 per cent of respondents, vendor-driven costs made a major contribution to decisions to slow, pause or cancel AI or data programmes. A further 56 per cent said the costs made a moderate contribution to those decisions.¹

The report links those costs to decisions about AI and data work.

Most respondents reported paying for changes they thought would harm value

The survey covered two thousand and eighteen senior IT decision-makers in the United States and the United Kingdom. Within that group, 95 per cent said their organisations had paid in the past three years for a vendor-driven upgrade, migration or licensing change they believed would reduce performance, reliability or business value.¹

More than half, or 53 per cent, said such a payment had happened more than once. The most recent vendor-driven change cost respondents’ organisations an average of USD 12.87 million. Innovation was the budget most often identified as affected by these costs, followed by hiring and security.¹

IT leaders say vendors control the timing and terms

Tomás O’Leary said organisations often had little practical choice but to accept unwanted upgrades when rejecting them could mean losing support for business-critical systems. In the survey, 78 per cent of IT leaders believed their primary software vendor, rather than their organisation, determined the timing and terms of changes; 76 per cent reported little negotiating leverage with major vendors.¹

Vendor-driven work also drew senior engineering time away from developing future capabilities: around 84 per cent of respondents said this happened always or often. In addition, 91 per cent said their organisations had scrapped functional hardware in the past three years solely to meet a software vendor’s support deadline. Respondents’ organisations lost an average of 1.65 years of useful hardware life as a result.¹

Respondents back protections for enterprise software customers

Marshall Van Alstyne said organisations should negotiate exit options before entering vendor relationships, arguing that the ability to leave could strengthen their negotiating position even if they chose to stay. The report also found support for legislation giving enterprise software customers protections comparable to those in long-term residential rental relationships: 91 per cent of respondents favoured such legislation.¹

Price vendor control into career choices

If you are weighing enterprise software procurement or vendor management, treat negotiation as a practical skill, not paperwork: seventy-eight per cent of IT leaders said their primary software vendor set the timing and terms, and seventy-six per cent reported little leverage. Ask in interviews whether the team negotiates exit options before entering vendor relationships and how it handles support deadlines; rejecting an upgrade can mean losing support for critical systems. That pressure makes vendor and contract risk questions central to the role.¹

Vendor-driven work also drew senior engineering time away from developing future capabilities: around 84 per cent of respondents said this happened always or often.

For a technical path, build capability in upgrade and migration planning, licensing trade-offs and hardware lifecycle decisions: around eighty-four per cent said senior engineering talent always or often spent time on vendor-driven upgrades rather than future capabilities, and ninety-one per cent said functional hardware had been scrapped to meet support deadlines. In interviews, ask how much of the role is upgrade work versus developing future capabilities, and whether support deadlines shape hardware decisions. These costs also affect innovation, hiring and security budgets.¹