Declining demand and diminishing output increase the pressure for enterprises to reduce their software license maintenance costs. As part of a larger enterprise apps strategy, shelfware reduction provides an area for significant cost savings. However, shelfware reduction is often hard to achieve because many vendors impose:
- Enterprise wide agreements. These “all you can eat” agreements incentivize customers to buy more than they need at a “good” discount. Yet, the end result is the payment of maintenance on non deployed apps (a.k.a. shelfware”).
- Repricing clauses. Many contracts contain language that impose list price recalculations when users choose to return their licenses to the vendor.
- Bundled contracts. Contractual language often prevents clients from unbundling their software as needed. In addition, vendors have initiated focused programs to bundle licenses.
The bottom line – apply three shelfware maintenance fee reduction techniques
Craft a win-win strategy based on your product adoption requirements and overall contract negotiations strategy. Three proven techniques in order of improving win-win shelfware reduction scenarios:
- Return unused licenses. Vendors agree to take back licenses and proportionately reduce maintenance costs. Customers lose future rights to those licenses.
- Park unused licenses. Vendors agree to hold unsued licenses and not charge maintenance. Customers still have rights to the licenses and will pay for maintenance when licenses are deployed
- Apply credit to purchase of new licenses. Vendors agree to assign a value to shelfware. Credit on used licenses will be applied to future purchses. Customers lose rights to the original software but gain rights to new software and functionality.
Having issues with returning shelf ware? Which approach have you tried? Ready to share with us your experiences to date? If you need help with your SAP, Oracle, Infor, Lawson, Microsoft Dynamics, or other enterprise software contract, send me a private mail and we can assist with a contract negotiations strategy that aligns with your apps adoption strategy. You can post here or send me a private email to rwang0 at gmail dot com.
Copyright © 2009 R Wang. All rights reserved.