Pay Attention To Shelfware Before It Impacts Your Bottomline!

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Calender
June 17, 2024
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Are you worried about shelfware in your organization? If yes, it’s time to take action and optimize your SaaS assets before it's too late.

While managing software assets, one common but often overlooked issue is shelfware—software that an organization purchases but does not use or fully utilize.

Ignoring shelfware can lead to significant financial waste as companies pay for unused subscriptions and licenses, impacting your bottom line more than you might realize.

Shelfware introduces potential security risks, as unmonitored software can create vulnerabilities. It complicates IT asset management, making tracking and maintaining software assets harder.

To maximize your organization's resources and investments, you must identify ways to protect your spending from going to waste. In this article, we'll explore shelfware, how it occurs, and why it is essential to address it before it eats into your budget.

What is shelfware in terms of SaaS management?

In terms of SaaS management, shelfware refers to SaaS apps that have been purchased or subscribed to but remain unused or underutilized within an organization. Shelfware represents a wasted investment, as the organization pays for software that doesn’t deliver value.

This can happen for various reasons, such as:

  • The software does not meet the organization’s needs,
  • Employees are not being trained to use it effectively,
  • The organization simply buys more licenses than necessary.

For example, an organization subscribes to a project management tool for all its departments.

However, only a few teams actively use it, while others stick to their old methods or other preferred tools. As a result, the organization pays for many unused licenses, effectively becoming shelfware.

Shelfware can occur for many reasons, like:

Unused applications: An organization subscribes to multiple tools with the same functionality for different teams. However, some teams prefer other methods or tools, leaving several subscriptions largely unused.

Dormant licenses: A company purchases many licenses for CRM tools like Salesforce. Over time, as some employees leave and others do not fully utilize the tool, many of these licenses remain dormant.

Redundant subscriptions: Different departments independently subscribe to similar tools without coordination. This leads to redundant subscriptions not fully utilized by any single department.

Overestimated needs: An organization might overestimate the licenses or features needed during initial planning. As a result, it might subscribe to a more expensive plan than necessary, leaving many features unused.

Why does shelfware happen in organizations?

Shelfware, or underutilized software, is common in many organizations. It leads to wasted resources and decreased productivity.

Several factors contribute to shelfware:

1. Not paying attention to team needs while purchasing

Shelfware often occurs because software purchases don't align with the specific needs of different teams. Each department, like marketing and sales, has unique requirements. Buying software without understanding these needs can lead to underutilization.

For example, a marketing team might require tools for social media management, content creation, and analytics. In contrast, the sales team might need CRM software, lead generation tools, and sales tracking applications.

If the organization purchases software tailored for the sales team without considering the marketing team's distinct needs, problems can arise. The marketing team might find the tool inadequate for their purposes, leading to underutilization and inefficiencies.

2. Inadequate user onboarding: How poor onboarding can lead to feature underutilization

One key reason for shelfware is inadequate user onboarding. Employees not trained on new SaaS applications often underutilize the software’s features.

Poor employee training: Without thorough training, employees may struggle to understand and effectively use a new SaaS tool's various features. This can lead to frustration and a lack of engagement with the software.

For instance, if a company introduces a new project management tool but only provides minimal training, employees might not fully grasp how to use advanced features like task automation, reporting, or integration with other tools.

Complex learning curve: Some SaaS applications have a steep learning curve, requiring time and effort to master. Employees might find the software too challenging if the onboarding process does not adequately address these complexities.

Shadow IT: When employees are frustrated with inadequate training and the complexity of new software, they may take matters into their own hands. They might seek out and purchase alternative applications without the IT department's approval, leading to shadow IT.

3. Siloed decision-making: How departmental purchases lead to redundant SaaS subscriptions

Siloed decision-making is common in organizations where different departments operate independently. This can lead to redundant SaaS subscriptions, with multiple departments purchasing similar tools without coordination.

Check this table to understand the impact of redundant subscriptions.

Image of a table showing the impact of redundant subscriptions

4. Fear of change: Understanding employee resistance to adopting new SaaS tools

Organizations often face employee resistance to adopting new SaaS tools when implementing changes in their SaaS stack. This resistance stems from various factors, including fear of the unknown, concerns about job security, and reluctance to disrupt established workflows.

Check this table to understand different factors contributing to resistance.

Image of table showing the factors for change management

What are the risks of shelfware?

Shelfware poses significant risks to organizations, impacting their financial health, operational efficiency, and data security: including:

1. The cost of unutilized potential

Investing in unused or underutilized software licenses represents a waste of financial resources. This is particularly true, as the money spent on licensing fees and maintenance is not yielding any return.

Moreover, the software's potential benefits and improvements to business processes remain untapped.

2. Productivity loss

Unused software leads to productivity loss. When employees have access to numerous tools, some of which they don't use, it causes confusion and inefficiency.

They waste time searching for the right tools and learning unused ones, distracting them from their core tasks. This decreases productivity as valuable time and effort are spent on non-essential activities.

3. Security vulnerabilities

When applications remain idle, they often fail to receive crucial updates and patches, rendering them outdated and vulnerable to security breaches.

Additionally, the absence of regular updates renders antivirus software ineffective, leaving the organization susceptible to malware and ransomware attacks.

The presence of unused applications expands the attack surface, providing cybercriminals with additional entry points.

Consequently, this increases the likelihood of unauthorized access to sensitive data, potential compliance issues, and breaches of contractual obligations, which pose severe risks to the organization's security and reputation.

4. Reduced ROI

Paying for something without using it leads to wasted spending and no ROI. Software's ROI depends on effective utilization to achieve business objectives.

When software remains idle, ROI diminishes because costs for purchasing and maintaining the software fail to generate tangible business value.

5. Data inconsistencies

Different departments using various tools for the same purpose can scatter data across multiple formats and locations. This makes it hard to consolidate and analyze data accurately, leading to errors in reporting and decision-making and affecting the quality of business insights.

How to mitigate the risks and overcome shelfware?

It's not easy to mitigate the risks associated with shelfware and overcome its challenges. However, you can take steps to optimize your software investments and improve operational efficiency.

Let's explore how to tackle the risks of shelfware and ensure better utilization of software resources.

1. Get complete visibility of your SaaS portfolio

Gaining complete visibility of your SaaS portfolio is crucial to effectively eliminating shelfware. This involves conducting a comprehensive audit of all your organization's SaaS applications.

By managing your software assets actively and gaining complete visibility, you can reduce shelfware and make your organization more productive and profitable.

Here's how you can do it:

  • Begin by identifying all the software tools used across different departments and teams. This includes officially sanctioned tools and any shadow IT that might be used.
  • Next, assess the usage of each application. Determine which tools are actively utilized, which ones are partially used, and which ones are completely unused or underutilized.
  • Consider using SaaS management platforms like CloudEagle, which can automate the discovery process and provide real-time visibility into your SaaS portfolio. These platforms can help you track usage metrics, identify redundant subscriptions, and optimize your SaaS investments.

Once you understand your SaaS portfolio, you can formulate strategies to address shelfware. This involves renegotiating contracts, consolidating subscriptions, or providing additional training for proper software tool utilization.

2. Purchase the right apps by considering team needs

Organizations can minimize shelfware and maximize SaaS investments by aligning purchases with team needs. Consider team needs before purchasing new SaaS apps to avoid unnecessary costs.

Here's how you can do it:

  • Evaluate requirements: Engage stakeholders to understand team needs. This may involve surveys or meetings.
  • Align with goals: Choose applications that align with team goals. For example, the marketing team should prioritize email marketing tools with design templates and automation features.
  • Minimize risk: Carefully consider team needs to avoid shelfware. Avoid impulse purchases and invest in solutions that truly meet requirements.
  • Utilize resources: Use industry reports, vendor demos, and peer recommendations to inform purchasing decisions.

3. Track app usage, licenses, and contracts using software

Switching from manual methods like spreadsheets to SaaS management platforms (SMPs) for tracking app usage, licenses, and contracts brings many benefits to organizations.

With software tools, you get:

Automated tracking: SMPs automate the process of tracking app usage, licenses, and contracts, eliminating the need for manual data entry and updating spreadsheets.

This means organizations can gather real-time data on software utilization without relying on outdated or incomplete information.

Usage analytics: By using SMPs, organizations can access detailed usage analytics for each SaaS application. These analytics offer insights into how often and intensely applications are used across different departments and teams.

For instance, organizations can track user logins, active sessions, and feature usage to identify patterns and trends in software utilization.

License management: This software helps automate different aspects of license management. It tracks license allocations, usage levels, and renewals, ensuring optimal utilization of software licenses.

Image of CloudEagle's license management module

These tools help identify unused or underutilized licenses, reclaim them through license reclamation workflows, and harvest them for later usage. These licenses can then be reassigned to new users when needed, allowing organizations to reallocate them efficiently.

Contract tracking: These tools help organizations track their SaaS contracts efficiently. They centralize all contract documents and key terms for easy access.

You can also set up automated alerts for renewals and license terminations to ensure timely actions and prevent unnecessary costs or penalties.

4. Implement proper onboarding and training for employees

Ensuring employees get thorough onboarding and training with new SaaS apps is crucial. Proper training helps them understand the software's features, boosting engagement and preventing underutilization.

For instance, workshops and online tutorials can educate employees on the software's features, equipping them with skills to maximize its benefits and reduce the likelihood of it being unused.

Automating onboarding and offboarding is crucial. It ensures swift access for new employees and prompt access revocation for those leaving or changing roles.

Streamlining onboarding can be accomplished by using automation for efficiency instead of manual SaaS access provisioning and revocation. Automated workflows through SMPs can facilitate this process.

Image of CloudEagle's user provisioning module

This automation ensures new employees gain immediate access to SaaS tools while departing employees lose access swiftly, reducing security risks and maintaining data integrity.

IT managers can efficiently initiate and execute user access management tasks without frequent manual intervention by automating these processes.

Check out this testimonial from Alice Park at Remediant to understand how CloudEagle helped them increase efficiency during onboarding and offboarding.

5. Use a SaaS management software

Investing in dedicated SaaS management software is crucial for organizations looking to optimize their processes, accurately track usage insights, and mitigate the risks associated with shelfware.

SaaS management software helps find and manage unused software licenses, saving money by cutting unnecessary costs. It provides a single view of all the organization's SaaS applications, making monitoring and controlling software usage easier.

Dashboards provide key metrics like license usage, spending, and contract details, helping stakeholders monitor the SaaS stack. Accurate tracking also helps identify security risks and underused licenses early, enabling proactive management.

6. Consolidate duplicate features or applications

Consolidating duplicate SaaS applications means identifying and merging tools with similar features to streamline operations and save costs.

This process requires a comparative analysis to assess the effectiveness of each tool and determine if there are opportunities to streamline operations and reduce costs.

Let's say two teams in a company use different project management tools, each with similar features. The organization compares these tools, looking at user experience, collaboration, integration, and cost.

They decide to standardize on one tool, like Tool X, because it's user-friendly, feature-rich, and cost-effective. This simplifies management and boosts efficiency for both teams.

The organization benefits by consolidating duplicate project management tools into a single platform.

  • It helps reduce overall spending on SaaS applications, leading to significant cost savings for the organization.
  • Standardizing on a single platform simplifies workflow processes and promotes team consistency, enhancing collaboration and productivity throughout the organization.
  • Using a unified project management tool streamlines resource sharing, progress tracking, and communication, resulting in improved efficiency in project execution and delivery.
  • By eliminating duplicate applications, the organization mitigates the risk of shelfware and ensures that software investments are maximized, delivering tangible business value and ROI.

Here's how CloudEagle helped RingCentral consolidate a SaaS management and procurement platform using a full-stack solution. This customer story will show the extensive capabilities of CloudEagle and why a full-stack platform is better than a best-in-class solution.

7. Renegotiate and cut down on spending

Renegotiating vendor contracts is crucial for managing SaaS subscriptions and controlling costs. By reviewing and improving contract terms, organizations can save money, optimize software use, and reduce the risk of paying for unused software.

To do this, identify all shelfware using an SMP, analyze the contracts, and set up renegotiation calls with vendors.

If you need the applications, keep them; otherwise, if they have been unused for a long period, renegotiate to the right-size those redundancies and save on costs.

Conclusion

Addressing shelfware is crucial for financial health and maximizing SaaS investments. An effective software asset management strategy ensures all licenses are fully utilized, optimizing costs and operational efficiency.

Don’t let shelfware drain your budget—proactively manage SaaS assets for smooth operations. Prioritize managing your SaaS subscription, prevent any wastage that could lead to financial waste, and maximize software tool value.

To optimize organization aspects without impacting the bottom line, consider CloudEagle, an SMP tool. The tool offers a suite of automation features, including renewal workflows, license reclamation workflows, procurement workflows, auto-provisioning, and deprovisioning.

Moreover, CloudEagle provides detailed analytics that enables informed decisions regarding SaaS usage and cost optimization. By leveraging CloudEagle's comprehensive functionalities, organizations can achieve optimal operational efficiency while safeguarding their bottom line.

Schedule a free demo today and experience effortless yet efficient shelfware management.

Written by
Raja Adhikary
Content Writer
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