Shelfware is software that organizations purchase but never use, leading to wasted investment and missed opportunities for value realization. This phenomenon is prevalent in ERP (Enterprise Resource Planning) implementations. Shelfware can occur for various reasons:
Unnecessary Purchases: Organizations may buy modules or extra seats they don't need.
Implementation Failures: Software is purchased but not effectively deployed.
Employee Adoption: Employees may not use the software due to inadequate training or resistance to change.
Understanding these causes is crucial to addressing and preventing shelfware.
The Trap of Sales Incentives
Sales representatives often offer significant discounts, especially at the end of fiscal periods, to meet their sales targets. While these discounts may appear beneficial, they can lead to premature purchases and shelfware. Organizations should be cautious and consider the following:
Internal Alignment: Ensure that all stakeholders are on the same page regarding the purchase and deployment of the software.
Team Readiness: Assess whether the team has the necessary skills and resources to implement and use the software effectively.
Deployment Plans: Develop a clear and realistic timeline for deploying the software.
Avoiding the pressure of time-based sales incentives allows organizations to make informed decisions based on actual needs and readiness.
Phased Implementation Approach
ERP implementations are typically phased, with different modules or functionalities being deployed at different times. Buying all the software upfront for future phases can result in shelfware. To avoid this, organizations should:
Align Purchases with Implementation Timeline: Purchase software in line with the implementation phases. This ensures that the organization only invests in what is needed for the current phase.
Spread Out Cash Outlays: By aligning purchases with the timeline, organizations can manage their cash flow more effectively.
Reduce Risk: Phased purchases minimize the risk of buying software that might never be used due to changes in business needs or priorities.
This approach ensures that investments are made based on immediate needs and available resources, reducing the likelihood of shelfware.
Negotiation and Contract Management
Effective negotiation and contract management are crucial in preventing shelfware. Organizations should:
Lock in Current Pricing: Negotiate terms that lock in current pricing for future purchases. This allows the organization to benefit from discounts without committing to immediate purchases.
Flexible Payment Terms: Seek flexible payment terms that allow for phased payments aligned with the implementation timeline.
Clear Usage Commitments: Ensure that the contract includes clear commitments on the part of the vendor regarding software usage and support.
By negotiating favorable terms, organizations can reduce the risk of over-investment and manage their budgets more effectively.
Evaluating Organizational Readiness
Before purchasing software, it is essential to assess the organization’s readiness to use it. This includes:
Resource Availability: Ensure that the necessary resources, including personnel and infrastructure, are available for implementation and usage.
Business Process Maturity: Evaluate the maturity of existing business processes and identify areas that may need improvement before deploying new software.
Adoption Readiness: Assess the organization’s readiness to adopt new technologies, including training programs and change management initiatives.
Prioritizing basic functionalities that address immediate needs and gradually incorporating advanced features as the organization builds the necessary capabilities ensures that investments deliver value and avoid becoming shelfware.
Acting as the Customer
Organizations must remember their role as the customer and take control of the decision-making process. This involves:
Setting the Pace: Establishing a timeline for software purchases and deployments based on the organization’s specific needs and readiness.
Maintaining Control: Resisting external pressures from sales representatives and vendors to make premature purchases.
Making Informed Decisions: Ensuring that decisions are based on a thorough understanding of the organization’s needs, readiness, and implementation plans.
By acting as informed and proactive customers, organizations can ensure that their software investments deliver real value and avoid becoming expensive, unused shelfware.
Conclusion
Avoiding shelfware requires a strategic approach to software purchasing and implementation. Organizations should be cautious of sales incentives, adopt a phased implementation approach, negotiate favorable contract terms, and evaluate their readiness before making investments. By acting as informed and proactive customers, organizations can ensure that their software investments deliver real value and avoid becoming expensive, unused shelfware.
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Eric is known globally as a thought leader in the ERP consulting space. He has helped hundreds of high-profile enterprises worldwide with their technology initiatives, including Nucor Steel, Fisher and Paykel Healthcare, Kodak, Coors, Boeing, and Duke Energy. He has helped manage ERP implementations and reengineer global supply chains across the world.
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