ISVs have long relied on product keys (otherwise known as software license keys) to ensure that their software is only being used by those entitled to do so. Oftentimes, these product keys are also used to control use of specific features, based on the agreement the end user has with the ISV. Despite the value these product keys hold, they pose a number of challenges for both ISVs and end users.
One of the highlights of the software industry calendar, Cloud World Forum, took place on June 24-25, 2015 at London’s Olympia Grand. The two day expo was aimed at helping C-level decision makers achieve business agility through cloud, analytics, mobility, and social technologies. With 300 speakers from across the IT community, there was something for enterprises of all sizes; SMEs and startups alike. Of course, we were front and center with our presentation, “Transforming Your Business in the Digital Economy”, which sparked some interesting conversations over at our booth.
Aesop’s fable The Grasshopper and the Ant teaches us to “beware of winter before it comes”, meaning that we should anticipate probable outcomes and plan accordingly. Unfortunately for the titular grasshopper, he lacked such foresight and was doomed to spend the harsh winter months without any food. Planning ahead in business might sound glaringly obvious, but all too often, organizations get so caught up in the development of their products, that licensing becomes something of an afterthought to their product development cycle. It’s usually only when a problem occurs that due consideration is given, and even then, it tends to be a cut-and-paste job. This is a rookie mistake, as licensing, when implemented as a software monetization program, can bring tremendous value to an organization.
Simple were the days when only perpetual licenses were sold, and each ISV decided on one locking criteria to build their price model around – like CPUs, cores or dongles. Add floating/concurrent licenses, and a volume discount plan, and you had a price list that was pretty straightforward. It was straightforward for customers, sales reps, customer services, configuration management, etc. Those days are long gone it seems; ISVs need to offer an ever-growing variety of software licensing models to keep up with customer demands and competitive pressure. Subscriptions, pre-and post-paid, usage-based licensing, capacity licensing, machine- or user-centric licensing (license follows the user) – the list goes on. Each license model makes a lot of sense for someone, so where should you stop?
Every so often, an opportunity presents itself that changes the software monetization industry for the better. Before the evolution of cloud, the move from on-premise hardware licensing methods to software licensing changed the way many ISV’s do business today. Brace yourselves, because the Internet of Things is poised to flip the software monetization market yet again.
It can be a balancing act when deciding what features to build into your software products. Some features have intrinsic value to the core functionality of the product, some features add a lot of marketing value, and there are some features that do nothing. How would you know which is which?
Today begins one of software monetization’s most prestigious events, LicensingLive 2014!. Held in Cupertino, California, LicensingLive 2014! will feature several industry leaders including Amy Konary, Rhianna Collier, Ray Wang and Jeff Kaplan, discussing the opportunities that exist in the software licensing space.
Technology has changed many industries in amazing ways. Transportation, manufacturing, healthcare—all have been transformed in the last decade due to increased collaboration, communication, and real-time access to contextual data facilitated by Cloud technologies, mobility, social networks, and analytics technologies. Despite being key enablers to advancement, technology software providers themselves have not always been at the forefront of using technology to transform their businesses from the inside out. However, pressure to transform is coming from all sides, most notably the outside–in. Customers are demanding change with their wallets. Cloud software is growing at more than five times the rate of the traditional packaged software market. By 2018, $1 of every $5 spent on software, and $1 of every $4 spent on applications, will be consumed via the cloud.
I recently participated in the Connected Cloud Summit event in Boston that focused on the opportunities and challenges associated with the Internet of Things (IoT). There was much discussion centered on the industry disruption that is happening across diverse markets such as medical devices and healthcare, communications, industrial automation, automotive, security, and more. It was remarkable to see the pace of innovation that is happening across those industries that is being driven the IoT.
With all major players in the software industry transitioning to the Cloud in some manner, the vast majority of new software companies entering the market are doing so as “providers of Cloud services”. As a result, the $368 billion software industry is changing forever, and packaged software and perpetual license revenue is in permanent decline.