Often when talking to customers I find the conversation of licensing focused solely on ensuring compliance – that is to say, making sure that their customers don’t run afoul of their license agreement. That’s like buying a Ferrari and never getting out of 1st gear. Business intelligence is one of many over looked major benefits of a properly configured licensing and entitlement management system. Most would agree that reports from ERP systems are generally not flexible enough nor tailored enough to give Product Managers the information necessary to make intelligent decisions around the future of their product roadmap and packaging strategies. To fully realize the potential of your licensing system it is important to remember the business benefits of tracking the customer use of the license. At a basic level, as a product manager, I want a licensing system to provide me the necessary information to make these decisions:
For many years I sold a Software as a Service (SaaS) only application. When selling to organizations there was kind of an unwritten rule. Small to medium size businesses would be resourced strapped and culturally more open to the idea of a SaaS application. Larger organizations would have dedicated IT resources and potentially feel threatened by outsourced applications. The conclusion was simple – the SMB market was much more fertile while when selling to larger organizations never forecast above 50% no matter what unless you heard from the CIO him/herself that they would be ok with a SaaS application.
Frequently I have the opportunity to discuss “software licensing costs” with ISV’s and device manufacturers in our industry. I always find it to be an intriguing discussion, and almost universally it seems that these companies view licensing as a necessary evil, not as an investment (let alone a strategic investment!). While there are multiple reasons why this could be (think of purchasing organizations and how they are measured), part of the equation undoubtedly has to do with the lack of concrete ROI metrics that are available around this technology, and the management of licenses and entitlements.
How do you know how much you are losing? How much is due to piracy? How much is due to unintentional piracy by organizations that want to be compliant, but aren’t due to a lack of enforcement? All of these metrics seem to be based in the psychology of perceived loss, as opposed to perceived opportunity.