For the last several years, the software licensing experts at SafeNet have helped software as a service (SaaS) vendors sell their stuff based on what features their customers use and …
In the last 10 years we have witnessed a shift from hardware-driven (60-70%) sales cycle where software was provided for free, to manufacturers seeking to leverage the software assets embedded within their devices in various ways, including monetization as well as using software to protect and control the feature set delivered to their customers.
When technical entrepreneurs build their companies, they don’t really know how to make money from their invention, and they invest more time on building their product without thinking of optimizing revenues. In the last couple of years, I’ve been engaged with some startup companies that have a great and existing product but no clear business model of how to actually monetize their software.
Cloud applications and services are not a trend anymore, and most of the new startup companies build their product in the cloud in order to minimize time to market and expand distribution. But, without a real business model, even the most helpful product on the market can have problems when it comes to software monetization.
You ever have those moments when it hits you that sometimes hype becomes reality? After the mind-numbing amount of times that “cloud” has been used in almost every business meeting, marketing message, and corporate strategy document has been published over the past 18 months, I was starting to wonder why so few of the companies I speak to had actually starting to offer their software as a service. There were hints of it being adopted here and there, and sure, some companies were reporting their wins in the space, but the mainstream didn’t seem like it had really “gone cloud”.
The notion of keeping valuable information, such as licensing and trade secrets, hidden while operating in a fully transparent environment poses various challenges. How do I encrypt or decrypt content without directly revealing any portion of the key or the data? How do I perform strong encryption knowing that hackers can observe and/or alter the code during execution?
White box cryptography is an alternative approach to traditional security models. As opposed to implementations where the attacker only had access to a Black box, i.e. access to inputs and outputs and possibly knowledge of the cryptographic algorithm under attack and assumed zero visibility into internal workings, white box allows full visibility of the attacker but still keeps security intact.
Frequently I hear software companies talk about how they really want to be enable an “as a Service” offering, but they don’t believe they can change the buying culture of their customers to accept such an offering. Certainly, in some cases, this is true. But before just accepting that axiom, most companies would be well served to ask a few questions about the context. Below is a list of a few of those questions, and why they are relevant in this scenario:
It seems that almost every small company dreams of becoming a larger one, with the self evident corollary that with size comes resources, and with resources, mountains become molehills.
There is a constant struggle between “lowest cost possible” and “simplicity of business model” that must be balanced between both ISV’s and CIO’s. Recently, I read a post on Computer Weekly titled “The Five Software Licensing Tricks CIO’s Hate” based on a Forrester report on unfair licensing practices. The title suggests that ISV’s as a category are generally engaged in misleading tactics targeted at CIO’s, which runs contrary to my experiences with most ISV business models and sales strategies. So, let’s try to look at this from a different angle as well.
“What’s an Entitlement?”
In recent meetings with leading technology firms, this very question has surfaced several times. It’s both interesting and intriguing to watch the interplay of definitional debate amongst functional users with vastly different hopes of what “entitlement” could mean.
Perhaps the most universal insight was this:
The practical application for how one can use entitlements to enable business processes and new customer experiences was often the most overlooked aspect of the debate.
There has been a lot of dialog about how cloud computing is changing our industry, yet at the core one could easily make the argument that the trend we are witnessing is just another entry in the long history of attempting to reach one, simple goal: reaching your target audience in the most accessible fashion. For many software publishers, the target audience is either the CIO or somebody who reports into that office, and the confusion and consternation we are watching unfold with the emergence of cloud computing is the classic case of trying to predict reactions to change.
However, as IDC analyst Amy Konary recently wrote , the issues really haven’t changed all that much. While her article was really directed at private cloud implementations, the implications for software publishers are really the same as they were in the antiquated pre-cloud era. How do you bring your offering to market in the cloud? What are the “right” ways to sell it? Do you have a platform and offering that allows you to a) scale, b) manage and c) adapt? Moreover, within the public cloud the scalability responsibility also shifts somewhat. The opportunities available to a startup publisher in the cloud vs. an established player begin to look startlingly similar as Amazon’s CTO Werner Vogels recently mentioned at Cloud Connect. To use one example, he mentioned that some services which would have historically only been available to large enterprises in an on premise world are now available to company’s of all size in the cloud, such as encryption and security . An inability to scale can no longer be attributed to lack of resources when you are in the cloud, but must now come down to more fundamental questions of ensuring that your offering can secure appropriate monetization through its own value.