Software upgrades eat nearly a third of companies' IT budgets, survey finds

(Specifies wording in 2nd bullet point to say to "vendor-driven" instead of "vendor-mandated")

By Anastasiia Kozlova

Oct 20 (Reuters) - Large US and British companies spend 28% of their software budgets on average to pay for vendor-driven upgrades, migration and licensing changes they would not have actively chosen, adding avoidable costs and operational risks in the race to adopt AI solutions, a survey by software maintenance provider Origina showed on Tuesday.

These hard-to-avoid recurring costs and operational disruption were described as a "software tax" in the study that surveyed more than 2,000 companies. "When the alternative to an unwanted upgrade is losing support on systems the business runs on, saying yes is often a rational response," Origina CEO Tomas O'Leary said.

• 95% of respondents said they had paid for a vendor-driven upgrade they expected to worsen outcomes, while 80% said leaving a major software vendor would significantly disrupt their business

• 84% said senior engineering staff "always" or "often" devoted time to vendor-driven software changes rather than innovation or business-focused development

• 91% said they had retired fully functional hardware in the past three years to comply with vendors' support deadlines, sacrificing 1.65 years of remaining useful life on average

• O'Leary said the issue was largely universal and also applied to other regions, with older companies with more entrenched technology stacks facing the biggest challenges

• According to the report, the most recent vendor-driven software change resulted in an average annual cost of $12.87 million for the surveyed organizations

(Reporting by Anastasiia Kozlova in Gdansk, editing by Milla Nissi-Prussak)