Shelfware: SAP’s myCRM Issues

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Table of Contents

Shelfware
Why is it so
What we can do
References

Shelfware

Shelfware is software, which bought by an individual or company ultimately, ends up on the shelf and is not used regularly. For example, many of the Customer Relationship Management or CRM, like SAP’s myCRM, software that organizations purchase is almost never used and gradually they become Shelfware. However, it cannot be termed as scandal or can be termed as breaking news nor nuisance as it has numerous legitimate reasons for its existence. The existence of Shelfware has been since people started charging for software.

It can be related to inflation in market shares and we can question the significance of on hand license contracts of customers. According to Gartner, most of SAP’s CRM software finally ended on the buyer’s shelf. The problem is that due to this the effectiveness of the CRM software can be questioned since the organizations boast of CRM as one, which helps companies increase customer loyalty and save money.

However, if these software makers themselves invest a lot of money into a technology, which they never use, then they is the much looser since they have to go on paying an annual maintenance fee for it. Thus, we can consider Shelfwares to be a major problem for these enterprises. Shelfwares, like CRM, became widely used in business application market but its sales have been declining due to depressed economy.

Estimates show that almost 33% of the SAP with CRM licenses is not used after sales. Thousands of customers of SAP have bought CRM but only about a third of them have been fully deployed almost half of the ERP are not even installed are completely unused. (Wainewright, 2006)

Why is it so

Shelfware has become a problem for the enterprises for a number of reasons. The main reason is the aggressive practice of discounting that takes place in our software industry. Most of the software companies encourage their customers to buy extra licenses, which are more than what they actually need at a large volume of discount, sometimes even going up to 90%. Some buyers think that even if they do not use all of the software they purchased, they still got it at a lower price. Nevertheless, they forget about the high maintenance fee, which almost costs them one fourth of the cost of a license. Another reason for a large number of Shelfwares could be resistance to organizational change and to the usage of modern technology by the employees.

In addition, decreasing technology budgets of many organizations have made it difficult for them to fund upgrades and for consulting services required for the installation of CRM. CMR consulting is five times costlier than software licenses and in recent times, this can be impossible for the companies to afford. Some off the organizations are also undergoing lay offs and thus, it is possible that they have very little employees to work with those softwares. Thus, it is better for them not to use the software and keep it on the shelf than pay the high consulting fees for using it. (Wainewright, 2006)

What we can do

The best way to prevent the problems caused by Shelfware, mainly SAP’s CRM, is that they should launch an on-demand application product instead of on-premises product so that the vendors get paid for only live seats. This means that the customers who have bought the licenses for the application will pay only when they can get started with CRM. This will stop the vendors from selling licenses no matter what as now they will have to make sure that the software has productive usage for the users. Organizations should be more careful and not sign contracts, which require them to keep on paying the annual maintenance fee for a Shelfware, which they will never use. They should only buy that software, which they require and not the conventional softwares, which are not required by them and are difficult to implement.

The organizations should also avoid buying additional seat licenses, which are given as part of the enterprise sale since they will probably never even use it. The organizations can also first try using the trial version of the application before buying it. If it is suitable for them and return a value equivalent to its cost then they should buy a certain number of licenses from the vendor. In addition, if possible they can use a return policy for the software. This means that they should only purchase the software with a plan of being able to return it in case it does not work. (Wood, 2006)

They can also go for a contract based on performance, which normally requires that the software purchase and consultations required for the software to work have to be properly fulfilled before the payment is made. This is similar to on-demand purchases. Finally, but most importantly, the companies need to look internally to find the appropriate software, which matches their needs and not only the price issue. One they have clarified and understood their goals they should look for vendors who have served similar companies facing similar problems.

References

Wainewright, Phil; (2006); The scandal of SAP’s idle CRM seats: Software as services; Web.

Wainewright, Phil; (2006); Why pay SAP for software you don’t use Software as services; Web.

Wood, Jason; (2006); Memo to Phil Wainewright…Shelfware isn’t Scandalous; The Ponderings of Woodrow (blog); Web.

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Shelfware: SAP’s myCRM Issues

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