In brief
A survey of IT leaders in the US and UK found that vendor-driven upgrades, migrations and licensing changes consume an average of 28% of software budgets. Respondents also reported pressure on hardware lifecycles and engineering resources, raising questions about how businesses plan software spending [1].
What happened
Research conducted by Censuswide for Origina surveyed 2,018 senior IT decision-makers in the US and UK, revealing that enterprises allocate an average of 28% of their software budgets to upgrades, migrations, and licensing changes imposed by vendors rather than chosen by the businesses themselves [1].
Some 95% of respondents said they had paid for at least one vendor-driven change in the past three years despite expecting worse reliability, performance or value. This describes respondents’ expectations, rather than measured outcomes from every upgrade [1].
The financial impact is substantial, with the most recent vendor-driven change costing organisations an average of $12.87 million. Beyond software costs, 91% of organisations have retired functioning hardware prematurely to comply with software support requirements, losing an estimated 1.65 years of hardware lifespan on average [1].
Some 84% said experienced engineers were regularly diverted from other projects to handle vendor-driven upgrades and migrations. Asked about the last time an AI or data project was delayed, paused or cancelled, 90% said vendor-driven costs contributed at least moderately [1].
Our view
Our view is that Malaysian SMEs and enterprises should carefully assess the total cost of vendor-imposed software upgrades, including hidden costs such as hardware replacement and diverted IT personnel. These factors can significantly impact operational budgets and delay critical digital transformation projects, including AI adoption.
The lack of negotiating power reported by 76% of surveyed organisations suggests that many businesses feel compelled to accept vendor demands to maintain system support. This dynamic can reduce IT agility and increase dependency on specific vendors, which may not align with strategic business priorities. [1]
For managed IT service providers and software developers, there is an opportunity to offer alternative support models or more flexible upgrade paths that prioritise client needs and minimise disruption. This could help Malaysian businesses optimise their IT investments and maintain focus on innovation.
In conclusion, Malaysian enterprises should be vigilant about vendor-driven software changes and seek strategies to mitigate unnecessary costs and resource diversion. This includes evaluating independent support options and advocating for clearer vendor agreements that align with business goals.
What to do
- Review current software vendor contracts to identify mandatory upgrade clauses and assess their impact on budgets and operations.
- Consider independent software support providers as alternatives to vendor maintenance to gain more control over upgrade timing and costs.
- Allocate dedicated IT resources to monitor and plan for necessary upgrades while protecting innovation projects from disruption.
AI-assisted briefing reviewed by Fortune Bit Solutions Sdn Bhd. Source [1] is credited in the Source box.
