The Cost of Shelfware

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Shelfware, software licenses which a company has purchased but not yet deployed, seemed to me like an innocuous problem related to timing, the licenses will be used some day, perhaps some year. Shelfware has become more topical, as we at Actian have been talking to many customers, prospects and industry pundits about the “New Economics of IT,” that is the difference between the economics of lock-in with proprietary vendors as compared to the economics of open source.
Some of the information I have garnered from my anecdotal conversations is that shelfware runs about 15% to 30% for larger companies, depending on the type of software. More painful was the discussion on the maintenance fees for shelfware. Ouch! I can understand a purchase of software licenses which will be used, some day we think, but the concept of paying a fee every year to “maintain” that license is an economically painful one. I emphasize the pain as I had one prospective customer explain that he had to renew the maintenance on his shelfware. When I do the math on the added maintenance of shelfware over a five year period, these fees are much more than the 15% that some people believe is their shelfware expense, it can easily double.
I would like to see more discussion on the cost of shelfware and how companies escape the practice, especially when it comes to renewing the shelfware.

About Fred Gallagher

Fred Gallagher is responsible for managing the business activities related to strategic accounts and partners for the Actian Analytics Platform and for Actian Corporate Development. He previously served as General Manager of Actian Vector. Prior to joining Actian, Fred worked for Qlusters, where he was responsible for worldwide sales, marketing, and business development. At Qlusters, he successfully launched the industry's first open source systems management project. Prior to that, he worked at VMWare, where he was responsible for worldwide software alliances, and where he established 15 successful strategic alliances during a high-growth period. Previously, he was at Seagate Technology, where he was Vice President of Worldwide Channels and Business Development for Seagate's XIOtech subsidiary. Fred holds a B.A. and an M.B.A. from Stanford University.

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