London – As the UK government prioritises economic growth and public sector productivity, new research reveals that restrictive software licensing practices are quietly costing businesses and public services while limiting their ability to modernise digital infrastructure.
New research commissioned by the Computer & Communications Industry Association (CCIA) Research Center shows the scale of restrictive software licenses as a hidden tax on the UK economy, and their hindrance on digital transformation efforts. It asks UK technology leaders in the public and private sectors how they view legacy software licensing restrictions.
J L Partners surveyed 512 UK IT decision-makers and found that a sizable majority (67%) think that restrictive legacy software licenses often make it harder for them or their organisation to make decisions that would drive productivity in the UK. This rises to 68% amongst senior main decision-makers.
The impact varies by sector, but the constraints are universal. Private sector leaders see clear benefits if restrictions were lifted: 54% say their businesses could work more productively, while 45% report that they could adapt software to new or specific needs more easily, grow more easily, and reduce costs. As one technology leader stated: “Abolishing restrictive licensing should make the UK more attractive… If the UK can be an outlier, they may be able to lead other countries and attract more foreign investment. Also [it] will contribute to faster growth.”
For public services, the stakes are equally high. Nearly half (47%) of public sector IT decision-makers say removing legacy software licence restrictions would allow public sector organisations to improve security and better enable partnering with additional software vendors, whilst 42% say it would allow partnerships with additional cloud infrastructure vendors.
The research reveals how much weight Microsoft’s licensing terms carry in procurement decisions, although awareness of its constraints vary:
- 74% are aware of the constraints legacy software licenses create for customers looking to use other cloud platforms, but there is a substantial minority that are not. In the public sector, that minority unaware of Microsoft’s restrictive licensing terms reaches 38%.
- This significantly impacts buying decisions. The vast majority reported that licensing terms and pricing structures had a significant effect on their IT infrastructure choices, with only 4% reporting that it does not influence their decisions at all.
- Similarly, 92% reported that equal rights for Microsoft software across all IT providers would change their procurement decisions, with 70% reporting a moderate or strong impact.
- One commercial decision-maker told the researchers: “It gives you the option to be able to consider other providers with the knowledge that you would be paying the same price for these Microsoft products.”
- A public sector decision-maker said: “If I’ve purchased software, it should mean I’m the owner, and if it means that I need to go to the cloud with that…, of course, I shouldn’t have to pay more for that.”
- The practical challenges are tangible. When running Microsoft software on non-Azure clouds, common challenges cited include increased costs (60%), reduced functionality (50%) and lower support levels (28%)
- These barriers have real consequences for cloud adoption. Nearly 70% reported that the extra costs associated with using on-premises software specifically had influenced their cloud adoption choices for some workloads, including 44% who reported that it affected which cloud provider they chose and 25% who kept some workloads on-premises instead.
- Meanwhile, 85% of main decision makers would be more willing to switch providers or adopt multi-cloud strategies if their organisation could transfer existing software licenses across clouds without additional costs.
The following can be attributed to CCIA Senior Director and head of CCIA’s London office Matthew Sinclair:
“This new research provides fresh evidence that restrictive software licensing is raising costs for British businesses and public services and undermining the flexibility that cloud infrastructure should provide for those customers. This is an unnecessary obstacle to the improvements in economic growth and public service delivery that the Government has rightly promised to deliver. The CMA can and should act quickly to address this practical barrier to customer choice.”
