Software Vendors Dictate Terms for IT Leaders, Report Finds

A report published October 20, 2026, found that 78% of IT leaders agree their primary vendor dictates the timing and terms of software changes, with 76% reporting little real leverage in negotiations[8][11][12][13][15]. This dynamic compels businesses to spend an average of 28% of their software budgets on upgrades they would not have actively chosen[1][7][8][9][10][11][12][13][14][15].

This pattern, described in the report as a "software tax," diverts substantial financial resources and engineering talent away from innovation[1][7][8][9][10][11][12][13][14][15]. It forces companies to maintain software they did not want, costing millions and sometimes leading to the premature retirement of functional hardware[8][9][10][15].

What the Records Show

The report, titled “The Software Tax: What does it cost, and who benefits?”, was released by software maintenance provider Origina in collaboration with Thinkers50 on October 20, 2026[8][11][12][13][14][15]. Its findings are based on a May survey of 2,018 senior IT decision-makers across the US and UK[8][12][14][15]. The study indicates that large enterprises allocate an average of 28% of their software budgets to upgrades, migrations, and licensing changes they did not select[1][7][8][9][10][11][12][13][14][15]. The most recent vendor-driven change cost the surveyed organizations an average of $12.87 million[8][9][10][12][14][15].

About 95% of IT leaders reported that their organizations had paid for a vendor-driven upgrade in the past three years that they expected to reduce performance, reliability, or business value[7][8][9][10][12][15]. Over half of these respondents, 53%, stated this had occurred more than once[8][12][15]. Furthermore, 80% of those surveyed said that transitioning away from a major software vendor would result in significant business disruption[7][8][9][10][11][12][13][15].

The Financial Imprint

The report details how this spending significantly affects innovation budgets[6][8][12][15]. When questioned about the last time an AI or data program was slowed, paused, or canceled, 34% of respondents cited vendor-driven costs as a major contributing factor to that decision, and 56% identified it as a moderate contribution[6][8][11][12][13][15]. Beyond financial allocations, 84% of senior engineering talent “always” or “often” spends time on vendor-driven upgrades rather than developing future capabilities[8][9][10]. The issue also impacts hardware assets, with 91% of companies scrapping functional hardware in the last three years solely to meet vendor support deadlines, resulting in an average loss of 1.65 years of useful hardware life[8][9][10][15].

Vendor Leadership View

Tomas O'Leary, CEO and Founder of Origina and co-author of "The Software Tax," commented on the situation[7][9][10][11][12][13][14]. He stated, “When the alternative to an unwanted upgrade is losing support on systems the business runs on, saying yes is often a rational response”[7][9][10][11][12][13][14]. O'Leary concluded that businesses are left to weigh the immediate cost of unwanted changes against the potential risk of operating with unsupported software[7][11][12][13][14].

What We Could Not Confirm

We could not confirm specific examples of software vendors or products identified as primary drivers of these vendor-dictated upgrades. The report does not detail the types of hardware that were prematurely retired or the specific AI projects that were delayed or canceled.