Enterprises shelving CRM software

Enterprises shelving CRM software

A big chunk of customer relationship management (CRM) software bought by enterprises is currently doing nothing more than collecting dust, according to a recent report.

And that adds up to a lot of shelfware – software that’s been bought but never implemented. The study by Stamford, Conn. research firm Gartner Inc., noted that in 2002, 42 per cent of CRM software licences purchased went unused. Gartner calculates the value at approximately US$1 billion to $1.27 billion.

According to analyst and report author Beth Eisenfeld, organizations likely buy software in bulk believing that they are saving money, but it ultimately costs more. Eisenfeld noted businesses with more CRM software licences than needed spend 20 to 30 per cent more in total cost of ownership compared to businesses that plan their purchases more carefully.

While the billion-dollar CRM applications market has cooled off recently – analysts note that sales will remain slow this year – organizations fell into the trap of buying in bulk.

According to software analyst Warren Shiau at IDC Canada Ltd. in Toronto, “Some vendors seem to be able to convince users to buy more seats than they actually have or need. That’s money wasted.”

Planning CRM software licences correctly involves strategies such as creating a spreadsheet that plots different scenarios, costs and ROI.