# Software Vendors Dictate Terms for IT Leaders, Report Finds

> A new report reveals that most IT leaders feel their primary software vendors control upgrade terms, leading to significant unwanted spending.

By PrimaryBrief newsroom · Published 2026-10-21T22:32:46.452256Z
Canonical: https://primarybrief.com/article/software-vendors-dictate-terms-for-it-leaders-report-finds-9c4d9f4d

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.

## Evidence cited
1. Enterprises keep buying software upgrades that IT thinks will make things worse (arstechnica.com) — https://arstechnica.com/information-technology/2026/10/survey-enterprises-waste-28-percent-of-software-budgets-on-unwanted-upgrades/
2. An AI-cloned free tool could spell the end of expensive software (www.abc.net.au) — https://www.abc.net.au/news/science/2026-10-22/reverse-engineer-anything-ai-software-cloning/107271480
3. NSA warns on ‘critical’ cyber vulnerabilities detected using AI (www.ft.com) — https://www.ft.com/content/245778d9-597b-492d-b5b6-a2967c77e853?syn-25a6b1a6=1
4. OpenAI says GPT-6.1 Sol is dramatically better at migrating legacy code (www.bleepingcomputer.com) — https://www.bleepingcomputer.com/news/artificial-intelligence/openai-says-gpt-61-sol-is-dramatically-better-at-migrating-legacy-code/
5. AI Agents Bring New Headaches to Online Sellers (www.wsj.com) — https://www.wsj.com/business/ai-agents-bring-new-headaches-to-online-sellers-d2dc84b4?mod=rss_markets_main
6. itpro.com — https://itpro.com/
7. analyticsinsight.net — https://analyticsinsight.net/
8. msp-channel.com (msp-channel.com) — https://msp-channel.com/
9. marketscreener.com — https://marketscreener.com/
10. economictimes.com — https://economictimes.com/
11. Origina Research: Enterprises Spend Big on Unchosen Software Changes (Origina) — https://origina.com/
12. New Research Reveals Hidden Costs and Lack of Control in Enterprise Software (Digit.fyi) — https://digit.fyi/
13. Large Enterprises Spend 28% of Software Budgets on Unwanted Upgrades, Research Finds (PRNewswire) — https://prnewswire.com/
14. substack.com — https://substack.com/
15. Large Enterprises Spend 28% of Software Budgets on Unwanted Upgrades, Research Finds (PRNewswire) — https://prnewswire.co.uk/
16. IT suppliers hold the reins on software change, research shows (Computer Weekly) — https://computerweekly.com/
17. The Software Tax: Enterprises Pay for Unwanted Changes, New Survey Finds (The Stack) — https://thestack.technology/