The problem is that upper management rarely understands IT, they see it as a necessary but unwanted cost and will try to minimise it. They also rarely see any downside to minimising costs.
And then those who do understand IT are generally not very good at explaining things to those who don't, or they create the wrong image (geeky etc) which causes upper management to disrespect their opinion.
Plus the inherent complexities of the problem...
Someone who is extremely competent will be able to keep a system running on a low budget, but not everyone is so competent and the typical people doing the hiring aren't qualified to judge IT competence, plus while a lot can be done with a small budget and lots of knowledge there is still a limit...
Also its possible to make a lot of extremely poor decisions in IT and simply get lucky... You can do with no redundancy, no DR plan, poor security etc and if your lucky nothing will go wrong and you won't get hacked. A lot of companies are in this boat, basically riding along on luck with a highly risky setup.
Upper management focuses on the bottom line because thats what they understand, it is their core business and they founded the business or were hired into a high position in it specifically because they understand it... They often don't understand other areas of business, and will often trust the wrong people (ie salesmen instead of their own staff) when it comes to matters they themselves don't understand.
Another serious problem is short term thinking... Your existing IT system may be slow, unreliable, clunky, but it limps along and the staff are familiar with it... If you replace it, users will have to get used to the new system, a new way of working and probably a new set of bugs to work around. A new system may cost a lot to implement, may result in a long period of reduced efficiency as staff get used to it etc.
And then you have history, many IT projects promise to deliver all manner of amazing improvements, but the reality when implemented can often be a system which is worse than what it replaced. This happens in a number of ways, external salesmen talk up a product which is nowhere near as good as they claim, the purchasing decision is made by upper management or by IT without any involvement of the people who will actually be expected to use the system.
And on the flip side, those people expected to use the system will often resent and resist change simply because they've had experience with poorly implemented systems in the past.
So you have a lot of hurdles to overcome implementing a new system, and although the end result *can* be a significant improvement, often it's not and in the short term there will often be a negative impact to the bottom line.