I bet that made your ears perk up a bit, didn’t it?
Your CFO probably has the same type of reaction when the topic of revenue recognition rears its head. After all, it is one of the most critical elements in your business’ machinery.
Customers frequently ask me about the impact license enforcement and license key delivery can have on a company’s ability to recognize revenue. This indeed can be a touchy subject, so I should start by making a few foundational statements.
I will not suggest how your company should manage revenue recognition nor do I intend claim the revenue recognition practices are acceptable or VSOE compliant. Your company’s finance team should be the ultimate authority as to what is acceptable for your business. I encourage any business considering license enforcement to ensure your CFO is will deeply engaged in your license delivery processes.
I will, however, discuss a number of revenue recognition techniques and best practices that I have seen used by multiple successful companies with revenues over a half billion per year.
While your current security infrastructure is robust, you need to ensure that you effectively keep your implementation protected in order to increase your product’s longevity and significantly increase your company’s revenue.
Licensing is a unique experience for every organization, with distinctive business goals and custom business process. More often than not, the challenge to making licensing work is far from a technical problem; it is a business integration or project management problem. To be successful, software publishers need to adopt a top down approach: defining their software licensing vision and then fine-tuning their license enforcement and management processes and technologies. Consensus must be built, processes must be defined and technology must be aligned with these objectives. This is where I come in. With over 18 years of experience building, managing, and evolving some of the world’s most complex licensing ecosystems the least I can do is share some of what I have learned!
Most of us see ‘software entitlement’ and think it’s just a ‘nice to have’ option. You know what else is ‘nice to have’ and ‘keep’ – customers. And we all know retaining customers is much more cost-effective than continually having to acquire them.
Just like a customer loyalty program, software entitlement provides data to better understand your customers. In turn, allowing you to offer customers targeted, high interest, high value packages that are easy to obtain and consume.
One of the inherent dichotomies for software vendors exploring new pricing models is: Who do you talk to? The common response is “Discuss this with your existing customers – they know best” There’s only one problem with that. Your existing customers have already most likely validated your current licensing processes – via the act of purchasing your software. To put it another way, when they looked at your pricing and licensing models they most likely found them to be agreeable enough (or at least not a big enough impediment) to moving forward.
The risk then as you explore new software licensing and pricing models is that you poll your existing customers only. While they’re an important constituent they should not be the only constituent. You need to look at the potential customers who did not buy your solution. Find out why they decided to go in another direction.
I have spent the last couple of decades working for (not just with) major ISVs as the person responsible for “making it all work”. I was the guy the executive team tasked with putting a plan together that showed how we could protect our revenue stream, how we could give customers tools to keep themselves compliant, how we could get better insight into understanding our customers’ product deployment patterns, selecting the right licensing models and policies, selecting the right licensing technology and vendor… all while somehow engineering a good customer experience without upsetting the apple cart. Sound familiar?
A few weeks ago I tried to download a trial version of a software package from a pretty well known ISV’s website. It wasn’t a huge file and should have been a relatively quick download. Unfortunately, that wasn’t the case. After numerous attempts and spending a frustrating hour trying to download the trial, I decided to forgo the whole thing.
I’m not the first or the last person that has had this type of experience. Yet, it continues to surprise me at how little thought it seems some ISV’s put into their Electronic Software Delivery (ESD) solution. The software download process is part of the customer experience and should be treated as such by the ISV. A good experience could be the first step in a long lasting customer relationship; a bad experience may turn away the customer completely.
Customer experience, revenue protection, and resource optimization is top of mind for all organizations, including software vendors. SafeNet and Akamai have teamed up to provide software vendors with a user-friendly, secure solution for automating electronic software delivery (ESD).
By combining the back office licensing fulfillment and automation features of Sentinel EMS, SafeNet’s web based entitlement management platform, with Akamai’s industry-leading Electronic Software Delivery (ESD) solution, customers are able to improve the end-user software purchasing and activation experience while protecting revenue and reducing internal operating costs.