Revenue Recognition

In today’s world, doing business the conventional way and maintaining the status quo does not promise recurring revenue as it did in the past. Nor does it provide a competitive …
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In my role as Strategic Analysis Manager of the Software Monetization division at Gemalto, I lead in-depth strategic market analysis, evaluate worldwide technology trends, and understand the competitive market to support new strategic leads and business opportunities. Recently, I had the pleasure of talking with Kathleen Goolsby, Managing Editor at SandHill.com, about the mind shift that’s taking place in the medical equipment sector.

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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?

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I can tell you with first-hand experience that being a product manager is a tricky and thankless role!  On paper, your task is to understand customer needs and translate them into product requirements. You must then work closely with your R&D team to realize those requirements into a product that hits the market at the right time and at the right price.

Sounds simple, right? The reality is that its way more complex than that, with a myriad of decisions and trade-offs to make along the way.  Product managers have to  react to the realities of what is possible in the time and budget available, and constantly adapt to changing market conditions and competitive moves.

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Guest blog post by Amy Konary, Vice President, IDC

For decades, success in the software business required executing on the following:

1. Make a Killer Product

2. Drive down Marginal Costs

3. Sell as many Units as Possible

4. Repeat Steps 1-3

Traditional software monetization models have been built to support this approach. However, today’s software customers are focused on using what they have, rather than buying more.  Read More

This question recently appeared on Quora, and I thought it would benefit our readers to hear the answer.

“What is standard practice for when companies want to “switch seats” in a SaaS licensing context? I run an early-stage SaaS company and we sell on a per-seat basis. Occasionally I’ll get a request to switch a seat from one user to another. Sometimes this is because someone left a company and in other cases it’s because a user isn’t very active and they want to switch to someone who will be more active. What is standard practice here for this? Obviously we’d prefer that a new seat license be purchased rather than transferring a license but we also want to try to be flexible given that we’re a start-up”

This question reaches outside of the SaaS domain and applies to many per-user or named-user license models in the traditional on-premise environments. Read More

Recently, SafeNet’s Prakash Panjwani had the opportunity to sit down with the team at TMCNet and discuss SafeNet’s success in the security market. As a part of that interview, Panjwani attributed much of the company’s growth to a strategy comprised largely of acquisition and adaptation. Through several strategic acquisitions, SafeNet has positioned itself well within the evolving security landscape.

One trend that Panjwani is seeing first hand is the evolution of companies migrating to the cloud.

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Software monetization can be viewed as the adoption of any variety of measures an organization takes in order to increase the profitability of their intellectual property, in this case, software. These tactics can range from sophisticated anti-piracy and IP protection techniques to creative pricing and packaging strategies. It is important to note that no individual software monetization technique is greater than the combination of multiple techniques. No matter what type of software application has been developed or how that application is being delivered to the end-user, a comprehensive software monetization strategy hinges on four key factors – how effectively the software publisher can package, control, manage, and monitor, their offering(s).

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In my last blog entry (Show Me The Money, Part 1) we looked at a number of factors that play into software revenue recognition when a vendor (ISV) introduces electronic license enforcement into their product lines.  Part 1 focused on the principles and mechanics behind giving customers access to the software upon order execution so that the ISV may recognize revenue.   Part 1 concluded by bringing another key element into the revenue recognition equation: time.  Time can affect revenue recognition in a number of ways:

• We have the time required by the customer to actually get their license keys after the ISVs claims to have given them “access” to the software.
• We have the software’s ability to run by default without a license key for a temporary amount of time.  Does that count as “access”?
• We have some ISVs selling perpetual entitlements but wanting or needing to deliver license keys that expire annually.  Does the customer really have access to what they bought?

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