Organisations are sticking with Microsoft Azure largely due to the risk of financial penalties rather than merit, according to a new survey.

A poll conducted by the Coalition for Fair Software Licensing (CFSL) has concluded that Microsoft’s software licensing practices are a widespread barrier to competition and choice.

More than three-quarters (83%) of software and cloud decision-makers said Microsoft’s rules meaningfully limit which cloud providers they can realistically consider.

61% that shopped around said they chose Azure to avoid fees, not because it was the better product. Nearly all reported at least one concrete harm from Microsoft’s licensing practices, with 65% reporting three or more.

Notably, if cost wasn’t a factor, eight-in-ten said they would migrate workloads away from Azure if Microsoft’s licensing restrictions were lifted.

These concerns have led nearly two-thirds of organisations to keep a workload on their own servers, rather than migrating to the cloud, according to the CFSL.

Three-quarters of corporate board members expect AI to deliver productivity gains and cut costs, yet only three percent of organisations have hit their targets, according to researchers at Gartner.

The figures came out of the analyst’s HR Symposium, where it also reported that 38 percent of companies are over budget on AI spending, and 85 percent still plan to spend even more next year.

“Ultimately, organisations will not generate cost savings from AI at this point,” said CV Viverito, senior director analyst for Gartner’s HR practice. “The greater opportunity is to use AI to do things that weren’t possible before, such as shifting employee time into new capabilities, outcomes, and sources of growth.”

Gartner claims that at least 75 percent of biz leaders are out of step with the broader organisation on where AI creates value, which stalls transformation efforts and muddies how to position the workforce and bag those returns.

Organisations should concentrate AI on the work that matters most to the business, with HR helping execs to agree on the top bets based on strategy, Gartner advises. Companies should also spread existing AI expertise across the business rather than wait to hire scarce specialists, and give managers room to redesign the work around the technology, it adds.

Only about one in five employees’ time is freed-up by AI, letting them redirect toward more innovative work, the HR Symposium heard.

“There isn’t a struggle to create capacity, that’s happening already as organisations redesign work,” claimed Viverito. “What organisations are struggling with is how to make that capacity usable and redirecting it to what is valuable.”

That starts – or so we’re told – by giving employees the skills to take on higher-value, AI-enabled work, which, of course, means spending more on training.

The takeaway is that getting a return on AI projects is harder than expected, and companies are going to have to stick with it and be prepared to institute changes in the way they and their staff work before they see any tangible benefits.

A recent Forrester report concluded that AI will likely account for 20 percent of all business technology spend next year, yet more than half of CIOs are likely to miss their ROI targets for the technology

Another piece of research from KPMG earlier this year found that most UK business leaders aim to keep AI at the top of their spending priorities even if it isn’t working, with 65 percent planning to maintain investment whether they see immediate measurable returns or not.

How long that resolve lasts is an open question. Private equity giant Apollo Global Management is the latest to raise doubts, noting this week that the “Magnificent Seven” tech giants are reaping the rewards of all that AI spending, while the rest of the S&P 500 has seen no sign of AI boosting productivity growth.

Proxmox appears to have won the race to woo British supermarket giant and vocal VMware detractor Tesco.

A job listing for a head of software development role at the want-away firm reveals its apparent choice, with stated role responsibilities including “modernising Tesco’s edge virtualisation estate through the migration from VMware to Proxmox.”

An India-based development lead is wanted by Tesco, with the successful candidate tasked with defining architecture, migration patterns, and repeatable build configurations across networking and storage and wider workloads.

What looks to be an initial dip into the open-source alternative to VMware, Tesco wants someone to lead design, engineering, and production validation “before progressive rollout across the retail estate.”

Tesco’s desire for a “safe and predictable migration from VMware to Proxmox” comes as the retailer has been among the most vocal detractors of VMware’s post-acquisition shake-up. It filed a breach of contract lawsuit in late 2025, contending Broadcom failed to honour perpetual licenses it bought in 2021 for vSphere Foundation, VMware Cloud Foundation (VCF), and Tanzu. The jump to Proxmox comes amid previous reports suggesting Tesco was racing to get some 40,000 servers off VMware.

Neither Tesco nor Proxmox has officially commented on the move across, but should the potential migration come to fruition, the retailer would find itself working with a VMware alternative priding itself on open source.

Its virtualisation offerings, like its Datacenter Manager, provide relatively basic management for virtual machines (VMs) and containers, but crucially it doesn’t force users to pay for unwanted or unused software features.

A RunZero report dated last November suggested that want-away VMware users were jumping to Proxmox in droves, with Version 1.0 of its flagship Datacenter Manager offering featuring the ability for live migration of VMs between different clusters, similar to VMware’s vMotion but without the need for a wider Broadcom-esque license.

Tesco’s move to Proxmox would be a blow to Nutanix, which has quickly and repeatedly emerged as the go-to for want-away VMware users. Perpetual license changes and subscription shifts have caused as many as 90% of some 270 surveyed IT leaders to admit they’re considering unsticking from VMware.

Of course, VMware remains unfazed, with CEO Hock Tan previously touting that more than 90% of its 10,000 largest customers signed up to VCF in its first year alone. But that hasn’t stopped it from making it slightly harder for folks to jump ship, having recently culled a software kit used by many of its rivals to migrate VMs to a different virtualisation platform.

Warwickshire County Council’s Reform-run cabinet has approved the procurement of a three-year Microsoft 365 licence renewal worth about £9m. The move was dubbed “blackmail” by its former leader as the approval went through.

The decision report – introduced by Reform councillor Michael Bannister – commits the council to a renewal agreement that runs from June 2027 to May 2030. The cost is roughly £3m a year, and that’s about £375,000, or 15%, more than the council pays currently. Bannister attributed the rise principally to Microsoft’s pricing changes across the public sector, after the previous renewal had deferred increases by continuing existing national pricing arrangements.

Warwickshire County Council – which rolled out Microsoft cloud in 2019 – buys through the government’s Microsoft aggregation route, which uses collective public sector buying power to secure pricing. Confirmation of the award is subject to a licence count review of active users, allocations and optional products.

The report prepared for council cabinet approval describes the licences as “business critical”, in that they underpin “core productivity, collaboration, information management, security and analytics capabilities”, as well as cyber security, data protection and the groundwork for automation and artificial intelligence. Around 900 licences are to be charged to the relevant business areas, with further optional products potentially pushing the cost higher.

Green councillor Keith Kondakor, who represents Weddington, framed the decision as paying Microsoft for software the council would not own. Holding up a floppy disk he bought more than 40 years ago, he said: “When we bought Microsoft products in 1983, we owned them. You couldn’t get trapped, because once you bought your DOS, you got your DOS.”

His point was to draw a contrast with today’s subscription licensing. “The problem now is that we’re getting trapped into paying licence fees. We licence for a year or three years and then Microsoft can whack the price up,” he said.

He noted the French government is moving away from Microsoft, and warned: “If you are beholden to an American corporation, things can change.”

Rob Howard, Reform UK’s former council leader now serving as portfolio holder for economy, replied. He did not dispute the framing. “You’ve echoed what we were talking about in our pre-meeting,” he said. “I think we are all shocked about the amount of money this is going to cost us. We have no choice on this occasion, I’m afraid.”

His reasoning was that there was too little time to stand up an alternative before the May 2027 expiry. But he accepted the longer-term risk. “You’re right, we don’t want to be held with this sort of blackmail over the next 10 years. It is going to be more next time round,” he said.

The exchange came as the Competition and Markets Authority (CMA) considers designating Microsoft’s business software ecosystem with strategic market status, while Microsoft contests the premise of the investigation.

The report warned that failing to approve the procurement risked “poorer commercial outcomes and disruption to essential digital services”. It also flagged that the agreement may overlap with local government reorganisation, with licence numbers, transfers and potential duplicate costs to be resolved before award.

The decision approves the procurement in principle. Any actual award rests with the executive director for resources, subject to affordability, completion of procurement and legal and financial assurance, while the extra £375,000 a year still has to be found within the budget.

Splunk’s State of Observability 2026 report has claimed AI costs are actually becoming less predictable for businesses as vendors shift toward consumption-based models.

All of this comes against a backdrop of rising agentic AI adoption, where agents can work independently and consume huge variances in tokens depending on the task, complexity and model choice.

More than half (55%) of the organisations surveyed say they can’t effectively control their AI costs, with as many (57%) now worried their telemetry costs are higher than the actual infrastructure they’re monitoring.

But while there are clear challenges surrounding cost observability, artificial intelligence has led to one clear benefit – four in five (81%) now say monitoring AI workloads has increased collaboration between observability and security teams, and 73% can accurately trace problems to their underlying security causes (up from 65% last year).

Companies are also seeing more data sharing between the two teams. “This report shows that observability and security data are converging, and that teams need to collaborate more than ever,” Cisco Chief Product Officer Jeetu Patel explained.

The report also highlights the relevance of observability teams within the broader AI strategy – an overwhelming 91% of observability leaders say they can accurately attribute AI costs to particular agents, models and workloads (compared with 69% of non-leaders), making this an important consideration for AI ROI concerns.

Still, shifts to pricing models and in how agents consume tokens continue to cause a headache for the finance department, with three in five saying that unexpected spikes in their AI bills cause more strain than a consistently high baseline cost, implying they’d much prefer to budget for flatter seat-based models over consumption models.

Large enterprises say they spend an average of 28% of their software budgets on upgrades, migrations and licensing changes they would not have actively chosen, according to new research from Origina published in a report with Thinkers50.

The research also found that 95% of IT leaders say their organisation has paid for a vendor-driven upgrade in the past three years that it believed would reduce performance, reliability or business value, and more than half (53%) have done so more than once.

The Software Tax, What does it cost, and who benefits?, the report built on the survey, links this pattern to how little practical ability these leaders have to refuse upgrades and changes once a system is embedded in the business.

The most recent of these vendor-driven changes cost respondents’ organisations an average of $12.87 million, and the impact reaches well beyond the IT budget. Innovation was the budget respondents most often said was hit, with hiring and security close behind.

When asked about the last time an AI or data program was slowed, paused or cancelled, 34% of respondents said vendor-driven costs had a major contribution to that decision; 56% said it had a moderate one.

The survey of 2,018 senior IT decision-makers in the US and UK, conducted by Censuswide, shows how little room buyers have.

Nearly eight in ten (78%) agree that their primary vendor, rather than their own organisation, sets the timing and terms of change.

About three quarters (76%) say they have very little real leverage in negotiations with major vendors.

Eighty per cent (80%) say moving away from a major software vendor would cause significant business disruption.

Tomás O’Leary, CEO and Founder of Origina and co-author of The Software Tax, said, “When the alternative to an unwanted upgrade is losing support of any systems the business runs on, saying yes is often a rational response. That’s exactly the problem.

“The market has left some of the most experienced technology leaders in the world with little room to refuse, and that cost shows up in budgets, in engineering time and in innovation that never gets funded. We want to make that cost visible so customers can
start to take back control of it.”

People and hardware are affected too, according to respondents. Some 84% say senior engineering talent “always” or “often” spends time on vendor-driven upgrades rather than building future capability.

Ninety-one percent report they have scrapped functional hardware in the past three years purely to meet a software vendor’s support deadline, losing an average of 1.65 years of useful hardware life.

“At the scale we were operating, a single upgrade cycle could occupy some of our strongest technical people for the better part of a year,” noted James McGlennon, former CIO of Liberty Mutual and a member of Origina’s board.

“That’s not a one-off cost, it’s a recurring drag on capacity, and every year it repeats is a year those people aren’t working on the initiatives that actually differentiate the business.”

IT leaders surveyed also back changes to the rules. More than nine in ten (91%) would support legislation giving enterprise software customers protections comparable with those in long-term residential rental relationships.

And 82% support software-support requirements similar to those placed on hardware manufacturers under EU rules on hardware repairability.

Microsoft has failed to win permission to appeal to the UK Supreme Court in the long-running legal spat with ValueLicensing after the Court of Appeal refused its application.

The US megacorp was challenging a November 2025 ruling in ValueLicensing’s favour that VL may resell pre-owned software licenses. That judgement was unambiguous, but Microsoft said at the time that it would seek permission to appeal.

That request was rejected last week in blunt terms. No reasons were given for the refusal, just the words “It is ordered that the application is refused.”

It isn’t quite the end of the road. Microsoft could apply to the Supreme Court itself, but it would need to file within 28 days and show a compelling reason why the Court of Appeal was wrong to refuse its appeal.

Things are looking dicey for Microsoft in the case that started in 2021 when ValueLicensing sued Microsoft for £270 million over claims that the Windows maker choked off the supply of surplus Office licenses. Microsoft denied any wrongdoing and Instead attempted to reframe the case as a copyright dispute. The UK’s Competition Appeal Tribunal rejected Microsoft’s arguments and a subsequent appeal.

A recently published Consent Order adds to the pressure. It demands documents from past and present Microsoft bosses, including a potentially explosive internal deck titled “Second-Hand Software Presentation” (SHS).

The contents of the file are unknown, but the Consent Order refers to it as a “Known Adverse Document.” It dates back to 2013, a few years after Office 365 was launched. The order also asks why Microsoft waited until the end of 2025 to disclose the document’s existence, a few years after Office 365 launched.

To add a little more spice, Alexander Wolfson is listed as an intervener on the appeal refusal. He is the proposed class representative in a separate claim filed on behalf of millions of UK customers seeking between £1.3 billion to £3.5 billion in compensation from Microsoft over its conduct regarding pre-owned licenses.

ValueLicensing and Microsoft declined to comment on the latest development.

Appeals aside, the next stage will be a Witness Statement from Microsoft explaining who knew what and when, followed by further disclosure.