In this blog we often talk about the subtle and no so subtle changes that cloud computing is introducing into the industry. One emerging phenomenon is the slow elimination of waste that has plagued organizations for decades – namely, Shelfware.
Shelfware – software that was bought, but never used – has plagued the industry for decades
I spent many years consulting on CRM projects. I worked with companies of all sizes, in many different industries. One constant that I encountered was that all of them had wasted tons of money on software that was never used.
Shelfware happens for many reasons. Changing requirements, changes in the staffing, or companies get acquired, making previously purchased systems redundant. Other times it happened when an, shall we say ‘overzealous’ software sales rep was able to convince the customer to purchase things they simply didn’t need.
Shelfware hurts customers (but not vendors)
Regardless of the reason, shelfware hurts customers.
I have seen where some clients had just a few licenses or modules that were not used. Others had entire systems – multi-million dollar systems – that were not used. All of this is money, sometimes serious money, companies wasted that could have been spent somewhere else – generating actual business value.
Cloud computing eliminates shelfware
Cloud computing, where customers rent, not buy software, is eliminating shelfware. Sure, customers may have find that they may initially signup for more licenses than they need. Or they may get modules that they later find they don’t use. Either way, these licenses will only remain on the shelf until the next contract renewal.
Customers won’t pay to renew licenses that sit on the shelf. They will drop unused licenses and then if they need them in the future they will add them back later.
And cloud vendors will feel the pain
All of this sounds great. And it is great. If you are the customer.
It is bad news, really bad news, if you are the vendor.
While vendors would prefer that they systems are used (that way they can up-sell clients on upgrades and more licenses), the vendors still make a lot of money on shelfware. They get the licenses fees for the initial sale. And in many cases, customers continue to pay maintenance contracts on all licenses, even those that are on the shelf. Maintenance fees – especially those that never result in calls to tech support – are great revenue to vendors.
So, cloud vendors beware. If you haven’t yet felt the sting from reductions in shelfware, enjoy it. For these days are numbered.
