Why Your BI Vendor Wants to Sell You Shelfware

Ann All

Back in October 2007, during an interview with AMR Research analyst Robert Bois, I asked him about his company's findings that 25 percent of CRM software licenses typically go unused at companies. His take was that users simply didn't derive enough incremental value from many CRM applications. They "often complain that CRM or SFA is just an administrative burden, and does little more than prove to their boss that they are doing their job" and resume using familiar tools like spreadsheets or even Rolodexes, Bois told me.


Business intelligence analyst Nigel Pendse, author of an annual BI Survey that he bills as the largest independent survey of BI and performance-management users, shared a more provocative view on the issue of "shelfware," or unused licenses, in our interview earlier this month. Shelfware is a vendor's "most profitable product," he says, which is why many vendors market new features that many users don't want or need, such as real-time BI capabilities. He said:


If they can sell shelfware, they never have to go back in and see the customer or worry about ongoing support. Most of their marketing campaigns are aimed at selling the most profitable product, the shelfware.


Because their growth rates often lag behind expectations, BI vendors "jump on every passing bandwagon and make noise about it." Said Pendse:


... In the planning tool market, the vendors are always frustrated that they've come up with these nice tools that only a small percentage of people in an organization use. They can't make money on applications that have only a handful of users. So they try and come up with arguments for high-participation planning and things like that, where you might do planning once a month instead of once a year. That sounds great, but you try to get every manager in the company to revise their plans every month. Balanced scorecard people have this idea that you'll have everybody in the corporation running off balanced scorecard system, but that means a complete change of human attitude, just for the benefit of a BI vendor to sell more licenses.


Yet shelfware isn't necessarily bad. Pendse believes the number of unused BI licenses currently stands at about 20 percent. Caveat: A move toward server licensing rather than individual seats makes it difficult for him to come up with an accurate estimate. In his opinion, up to 25 percent of unused licenses is a reasonable, even desirable, number. After all, a lack ofunused licenses means a vendor isn't making any new sales, a possible sign of a not-so-innovative vendor or one that doesn't provide enough onoging support. Said Pendse:


The ones with very low shelfware rates also had very aged sites. They weren't selling much anymore. Existing customers were using the licenses but not coming back for more.


Pendse's opinion on shelfware is part of a wide-ranging, very interesting (and sorry, long) discussion on the current state of BI. Other highlights: the focus on BI features when performance is what users really care about; the flat rate of BI penetration among business users; the difficulty in involving business users in BI planning; the performance of BI specialists vs. platform-oriented vendors; and how to determine BI's payoff with a focus on "hard" benefits such as a reduction in headcount increases.


Another of Pendse's opinions that diverges from those of many other analysts, including Gartner: Focus on BI's tactical, rather than strategic benefits. He said:


... The median age of all of the apps we looked at is less than 2 1/2 years. For one reason or another, within five years the typical BI app is no longer in use. The problem's gone away, or people are unhappy with the vendor, or the users changed their minds, or you got acquired and the new owner wants you to do something different. It's not like an ERP system, where you really would expect to use it for many years. The whole idea here is go for quick, simple wins and quick payback. If you're lucky, it'll last for a long time. If you're not lucky, at least you've got your payback.

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May 6, 2009 5:35 AM Dashboards Dashboards  says:

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