Some recent articles I found online got me thinking about a post I made a little under a year ago – One Man’s License is another Man’s Poison. When I looked at it again – it took me a minute to figure out the chart.
Charts that take more than a few seconds to figure out are not very good charts.
So I decided to re-do it.
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.
Churn is something we all have to deal with in the software industry, whether it is repeat customer churn (hard to measure) or subscriber churn (easier to measure).
Repeat customers are those that come back for more (seats, years etc…) – and in order to measure churn you have to define what period of time needs to pass before you decide they are not coming back. Subscribers sign contracts that have known end dates – so it’s much easier to keep track of churn.
Software companies that start life in the cloud (pure plays) have advantages over those established in the on-prem world. One of the most important advantages is the ability to know – at any time – exactly how the service is being and has been used. And, arguably more importantly, how that has changed. On-prem ISVs don’t have the same advantage.
This knowledge can be used to drive a number of activities. All of which are available to on-prem – but are just harder to get and are always less real-time. “Harder to get” and “less real-time” translate to more expensive and less competitive.
Today SafeNet announced the release of Sentinel Cloud Services, the industry’s first and only software licensing and entitlement management service delivered from the cloud for the cloud.
Sentinel Cloud Services make it quick and easy for SaaS and PaaS vendors to build and manage their service offerings, ensure service agreement compliance, and simplify all of the operational processes associated with cloud service contract provisioning, authorization management, and usage tracking.
“SafeNet Sentinel Cloud Services provides a viable alternative to traditional billing and payments services because of a catalog-driven licensing and entitlement management solution that integrates with back office ERP, accounting and installed base billing solutions, either in the Cloud or on premises,” said Mike West, VP and Distinguished Analyst, Saugatuck Technology.
What are you going to do as the market landscape changes? I pose this question to many of the ISVs I talk to when the topic of ‘software as a service’ comes up. This very question is one that my team and I here at SafeNet have thought about for a couple of years. It started off as a what-if, eventually morphing into a when; thinking was replaced with researching, defining, building and testing.
It is no secret that the preference towards consuming software as a service via the cloud is growing rapidly. According to Saugatuck Technology, in 2010 the purchasing preference for all new ENT software was cloud-based, and is projected to hit nearly 50% by year end 2014.
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!
Software pricing and packaging is an art form and perfecting it is an ongoing battle. Add cloud services to the mix along with your on-premise offerings and you have a recipe for disaster. I have spent the last two years working with ISVs who are in the midst of planning and migrating all or a portion of their product portfolio to the cloud. A significant obstacle is how to price and package their offerings to build a customer base, prevent cannibalization, and ultimately increase profitability. I have decided that their stories and the successful approaches are certainly worth sharing!
There is no question that SaaS as a business model is becoming more and more attractive. According to Saugatauk Technology, Inc., 45% or more of new enterprise IT spend will be devoted to cloud-based applications by 2014.
Even today, SaaS revenue growth remains much higher than on-premise software growth rates. So it’s no surprise that most organizations are beginning or at least thinking about transitioning current business models to include SaaS. Chances are, YOUR ORGANIZATION IS ONE OF THEM.