Why service transformation stalls: the ‘expansion tax’ nobody budgets for

Halo Service Systems is a Business Reporter client

Enterprise transformations stall when pricing models penalise adoption. CIOs need commercial frameworks that reward scale and outcomes.

Many enterprise IT leaders today feel trapped between two unsatisfying choices: absorb rising software costs as the price of progress or restrict adoption to keep spend under control. Either way, the organisation pays the price with slower delivery, fragmented workflows and a transformation agenda that never quite reaches escape velocity.

The uncomfortable truth is that service transformation doesn’t usually stall because the platform can’t scale. It stalls because the commercial model can’t.

Most enterprise licensing still reflects an earlier era of software buying: modular pricing, per-user fees, usage thresholds and add-ons that accumulate as functionality expands. On paper, that approach seems rational. In practice, it creates an “expansion tax” that penalises exactly what modern operating models require, such as cross-functional adoption and rapid replication of successful use cases.

The moment service management moves beyond IT into HR, facilities, finance or security, the economics change. Every new group becomes a procurement event. Every additional workflow becomes a contract conversation. And every automation can trigger questions about entitlement, scope or future uplifts. Transformation slows not because leaders lose conviction, but because scaling starts to feel like taking on a new financial liability.

Commercial constraints don’t stay in contracts. They shape design decisions.

When cost is triggered by users, modules or volume, organisations naturally optimise to minimise exposure. Access is limited, features are rationed and integrations are deferred. Teams build workarounds instead of standardising processes, because standardisation implies expansion, and expansion implies cost.

Over time, what began as a platform strategy becomes a patchwork of partial adoption. The technology may be capable of enabling an enterprise operating model, but the commercial model quietly turns it into a set of bounded deployments. The transformation story shifts from one service experience across the organisation to several tools used by different teams.

This is why the most important licensing question is no longer about what’s included, but what behaviour this model encourages.

If transformation depends on adoption, the commercial framework should reduce friction whenever an organisation decides to scale. It should support multi-year planning without surprise uplifts. It should be aligned with outcomes rather than renegotiation. And it should make accountability real, including the ability to exit if value isn’t delivered.

That shift in thinking matters because it reframes licensing as a strategic lever, not a procurement detail. A commercial model can either accelerate enterprise-wide adoption or turn it into an endless series of approvals.

Some vendors are now experimenting with models built for scale rather than seat counts. Halo’s $1M Forever initiative is one example. Instead of charging per user, module or usage threshold, the model caps the annual contract value at $1 million for the life of the agreement, aiming to remove hidden fees, surprise uplifts and the recurring friction that discourages broader adoption.

The initiative also signals a different kind of partnership. Flexible contracts that allow organisations to leave without penalty shift the centre of gravity from lock-in to performance. The vendor’s success depends on sustained outcomes, not contractual dependence. As Gianmarco Rubino, Product Director at Halo, puts it: “Enterprise organisations should be able to scale without licensing models getting in the way. Predictable pricing, fast deployment and contract flexibility create the conditions for long-term transformation, not short-term compromises.”

Enterprises are operating in conditions that reward adaptability, real-time insight and organisational cohesion. Rigid licensing and protracted rollouts detract from all three. A commercial model that is predictable, transparent and aligned with long-term goals gives IT leaders more freedom to make strategic decisions without constantly reassessing the cost of adoption.

Ultimately, the challenge for CIOs is as much about choosing the right technology as it is to select a commercial framework that supports the organisation’s ability to evolve with confidence.

Explore Halo’s $1M Forever enterprise initiative.