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Companies are investing heavily in software systems designed to increase efficiency. Nearly half (44 percent) of businesses recently surveyed said their software budgets will increase over the next 18 to 24 months. But a significant portion of that new tech investment is being wasted, the survey found.
But the increase in software budgets has resulted in a problem: unused software, or shelfware, according to the survey, conducted jointly by IDC, a research organization, and Flexera Software, a provider of software licensing management, software compliance and other software services. Executives and managers at 334 software vendors, intelligent-device manufacturers and enterprises participated in the survey.
More than half (56 percent) of respondents said 11 percent or more of their software spending is associated with shelfware, up from only 49 percent a year ago. This is nothing to sneeze at, IDC said. The market for packaged software was about $325 billion in 2011, which suggests the global overspend on shelfware could be staggering.
"Corporations adjust quickly to economic realities, and in this economic downturn, they've become expert in leveraging software to offset leaner staff," said Steve Schmidt, vice president of corporate development at Flexera. "But they've developed a blind spot — investing heavily in efficiency-creating technologies like software, without really understanding how to ensure this critical asset is being optimally used. Consequently, an unacceptable proportion of that expenditure is wasted."
Companies know they are bloated with expensive shelfware. One-third of all respondents indicated they are either dissatisfied or very dissatisfied with their current method for managing software licenses and usage. (Almost half of large companies with more than $1 billion in revenues reported dissatisfaction in that area.)
Moreover, respondents admitted they do not have the systems in place to ensure optimized use of their software. For example, due to the complexity of software licenses and tracking license usage, simply understanding the number of licenses purchased and used is insufficient. Product-use rights contained in the software contract define how software licenses can be used, by whom, in what circumstances and on what devices.
Almost one-third of survey respondents said they do not apply product-use rights to optimize their software use, which results in significant shelfware problems.
"The lesson is clear: Leveraging high-tech assets, like software, in order to drive efficiencies and cut costs is critical for any company," Schmidt said. "But software is a complex asset to maintain, and organizations have to be smart about it. If they're not up to the task of implementing the processes and technology to optimize their software use, they likely will be wasting much of the efficiency gains software enables by creating shelfware bloat."
Reach BusinessNewsDaily senior writer Ned Smith at firstname.lastname@example.org. Follow him on Twitter @nedbsmith.Follow us @BNDarticles, Facebook or Google +.