The club finished a disappointing eighth in the table last season, only six points ahead of relegated Bristol, and have been busy in the transfer market since.
But despite their spending spree, Shelford and his coaching team will not be around for the next campaign, as he, his brother Darrell, Tim Wright and Pat Fox all depart.
"We are today [Thursday] confirming that following a review of the season and the team's performance, we are now seeking a new coaching set up for next season," said Saracens chief executive Mark Sinderberry in a statement.
Since finishing as narrow runners-up to Newcastle in 1998, Saracens' league position has almost constantly declined.
They ended 1999 in third position, and then went on a run of fourth, fifth, tenth and eighth in the following years, although they did claim the 1998 Tetley's Bitter Cup at Twickenham.
The club have not stated yet who will replace the departing coaches, although Australian centre Rod Kafer would be a good bet to form part of any team after his arrival from Leicester Tigers, where he was backs coach as well as an important member of the playing side.
Shelford took over the reins at Saracens this season after a long search following the departure of South African Francois Pienaar midway through the 2001/2 season, with former Fiji and Wallaby coach Greg Smith taking over briefly in the interim, before sadly passing away after leaving the club.
As a player, Shelford won a total of 22 All Black caps between 1986-90. One of the most dominant No.8s in the world at the time, he was an automatic choice for the 1987 World Cup side, and played in five of the six matches in New Zealand's World Cup-winning campaign.
He then took over from David Kirk as captain and led the All Blacks on one of their greatest periods of domination, going unbeaten from 1987 to 1990, with only a drawn Test against Australia in 1988 to mar the perfect record.
Shelford made his 22nd and final All Black appearance in 1990 against Scotland, dropped in favour of the emerging Zinzan Brooke, leading to a cult 'Bring Back Buck' campaign by many fans, some of whom sensed an Auckland-led selection conspiracy.
However, it was not to be and he finally retired at the end of 1991 before moving to Northampton in England, who he later coached successfully. He returned home to New Zealand in 1997 to continue his coaching career at North Harbour, before leaving for British shores with his Saracens appointment.
The Saracens side he leaves, despite their recent mediocrity in the league, boast a talented squad, with England stars Richard Hill and Kyran Bracken both key members.
New arrivals on the playing front this season have included France hooker Raphael Ibanez, England 'A' lock Alex Codling, Fiji lock Simon Raiwalui, Argentinian prop Emiliano Bergamaschi and Wasps prop Andy Kershaw.
The club have also announced that 22-year-old hooker James Parkes has signed a two-year deal to stay at the club which helped him through the academy.
But despite their new signings, Saracens have to get over the loss of some key players, with former Wallaby Tim Horan heading back home, while French duo Abdel Benazzi and Christian Califano have joined Wales centre Tom Shanklin and England 'A' hooker Matt Cairns in leaving the club.
Reports in New Zealand have claimed that All Black No.8 Taine Randell could be one of the incoming faces at Saracens, should he be left out of the World Cup squad, although just who his prospective coach would be remains to be seen, with a number of high-profile names set to crop up.
By Mark Smith