Don’t Let Your Software Turn into Shelfware

Enterprise SaaS has never been more abundant—or more inefficient.

Recent analyses from leading SaaS management platforms point to a structural problem hiding in plain sight: a growing share of SaaS spend simply does not translate into business value. According to Zylo’s 2025 SaaS Management Index, enterprises use only 47% of their licensed SaaS seats on average, leaving 53% unused. That inefficiency now translates into an average of $21 million in annual waste per organization across an average of 275 applications. That’s a lot of shelfware. (2025 SaaS Management Index)

Other industry data reinforces the picture. BetterCloud’s 2025 State of SaaS Report finds that 63% of organizations cite unused or underutilized applications as a primary driver of SaaS consolidation, while Flexera estimates that 25–30% of IT budgets are wasted due to redundant tools, unused licenses, and poor visibility—waste that is increasing year over year among advanced SaaS users.  (The big list of 2025 SaaS statistics that you should know | BetterCloud)

All of this should be a wake-up call for SaaS providers because, taken together, these findings reveal more than overspending. They reveal a breakdown in how value is created, tracked, and sustained in the SaaS model.

Why Are We Here?

1. SaaS proliferation during Covid

The pandemic forced enterprises to digitize at speed. Decision-making authority moved closer to individual teams, and buying cycles compressed. SaaS tools were adopted tactically to solve immediate problems—remote collaboration, workflow automation, analytics—often without long-term architectural or economic planning. Those tools rarely left when the crisis ended.

2. Decentralized buying without centralized accountability

Today, lines of business control roughly 70% of SaaS spend, while IT oversees just a fraction. This shift improved agility but diluted ownership. When everyone can buy, no one is truly accountable for usage, outcomes, or the retirement of tools that no longer earn their keep. For them, budget unspent is budget lost.

3. Low marginal cost masked poor value realization

SaaS pricing models made incremental licenses feel cheap. The frictionless nature of seat expansion obscured the difference between access and impact. Organizations accumulated licenses faster than they built the processes, training, and incentives required to generate measurable returns.

4. Rapid AI adoption amplified sprawl

AI-native tools are growing at breakneck speed—often with premium pricing and experimental use cases. Many are purchased opportunistically, layered on top of existing platforms, and never fully operationalized. Because these tools are frequently funded as “experiments,” they often escape the scrutiny applied to traditional SaaS, allowing waste to accumulate faster and with less visibility. The result is AI shelfware joining traditional SaaS shelfware.

A fundamental shift in who owns value

In the era of perpetual software, value creation largely rested with the buyer. Once software was installed, the vendor’s job was effectively done.

SaaS changed that equation.

Because SaaS is subscription-based, value must be continuously delivered and continuously realized. In theory, this creates a shared responsibility between buyer and seller. In practice, many SaaS companies still operate as if adoption equals value. In a subscription model, value realization is not an outcome—it is an operating discipline.

Customer Success functions were meant to bridge this gap, but too often they are measured on activity—QBRs, health scores, usage metrics—rather than outcomes. Usage is not value. Engagement is not ROI. And renewal does not necessarily imply impact, especially in large enterprises where shelfware can hide for years.

Until SaaS vendors fully internalize that value realization is part of the product itself, shelfware will persist- at least until the customer figures out how little real value is being delivered and clears you off the shelf.

How to Avoid the Shelfware Trap

1. Be explicit about the Business Value you are selling

Shelfware is often created by selling capability, not outcomes. Products must be designed around the customer outcomes you mean to achieve: revenue growth, cost reduction, risk mitigation, or time savings. This clarity must show up in both the function of the product and across sales messaging, contracts, success plans, and executive business reviews. Product, Sales, and Customer Success should jointly own this responsibility. If your own teams cannot articulate value in these terms, customers will struggle to defend you at renewal.

2. Shift measurement from adoption metrics to outcome metrics

We tend to manage what is easiest to measure: logins, feature usage, and license consumption. These metrics are necessary, but they are not sufficient. As leaders, we must push product, data, and customer success teams to instrument how your software changes customer outcomes—faster cycles, fewer errors, lower costs, or avoided risks. This typically requires tighter alignment between product analytics, finance, and customer success operations. When outcomes are visible, customers understand value; when they are not, shelfware accumulates unnoticed.

3. Design for sustained value, not just initial adoption

Most SaaS products are designed to win the sale and survive onboarding, yet turn into shelfware months later when usage plateaus or organizational priorities shift. Sustained value requires that solutions be designed from the outset to be deeply embedded in the customer’s workflow, not just a nice-to-have add-on. Executive teams must ensure that products, enablement, and success motions support expansion across teams, roles, and geographies long term. This includes reducing configuration complexity and providing clear paths from “first use” to “enterprise-wide impact.”

4. Align pricing and packaging with value realization

Seat-based pricing can unintentionally incentivize customers to overbuy and underuse, creating future churn risk. You should continuously evaluate whether pricing models reflect how customers actually derive value from the product. Where possible, this means tying pricing to scale of impact, throughput, or outcomes, or at least building flexibility that allows customers to right-size without friction. Healthy pricing reinforces value rather than obscuring it.

5. Treat renewals as value validations, not revenue events

Renewals should not be left solely to sales execution. They are moments of truth about whether the product has delivered what was promised. Executive teams must ensure that renewals are supported by clear value narratives: what outcomes were targeted, what was achieved, where value stalled, and what will improve next. When renewals rely on inertia rather than demonstrated impact, revenue quality deteriorates—and valuation multiples eventually follow. When renewals are driven by impact, shelfware is surfaced early and addressed before it turns into churn.

Bottom line

Shelfware is not a customer failure—it is feedback. It tells you where value was unclear, outcomes were unmeasured, or ownership was diffuse. In a market defined by consolidation, accelerating AI adoption, and tighter capital discipline, SaaS companies that operationalize value will compound trust, retention, and expansion. Those that do not will find that renewals become harder, consolidation accelerates, and growth becomes increasingly fragile.

By Duane Kotsen, Partner