Part 1 of 3 from the series “Take on Licensing: What High-Tech Manufacturers Need to Know”
If you’re an equipment manufacturer in the high-tech sector, you are probably already deeply involved in the evolution from a pure hardware manufacturer to a software vendor. Whether you are in the business of selling software-driven equipment for the automotive industry, medical imaging and diagnostics, digital printing, sophisticated surveillance systems, coin-operated gaming and casino gambling, the change to software licensing is impacting your business.
Next Wednesday, Chris Holland, Vice President of Software Rights Management for SafeNet will present at the Software and Information Industry Association’s (SIIA) All About the Cloud Conference in San Francisco. Chris’s presentation, Understanding and Avoiding Four Common Pitfalls of Cloud Service Monetization, will take place on Wednesday, May 25 at 1:30PM PDT. SafeNet will also showcase Sentinel Cloud Services, the industry’s only software licensing and entitlement management solution delivered in the cloud for the cloud at booth #8.
I just completed the last two stops in a multi-city tour of full day educational sessions on best practices for rolling out Software as a Service (SaaS). During the past couple of weeks I have had the privilege to present to and learn from audiences in Boston, Santa Clara, Tel Aviv (a hotbed of startup activity), and London. I was also privileged to be able to call on the tremendous presentation skills and knowledge of some experienced people that live the business of cloud services day to day. For anyone interested, all the presentation material is available on slideshare.
I would like to take this opportunity to thank:
There were some key themes that emerged at these events…
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.
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!
The software industry is in the midst of a dramatic shift. No software publisher big or small will be left unaffected by enterprise and consumer end-users’ growing preference to consume their software as on-demand services. According to industry-leading analyst firm IDC, by 2010 nearly 65% of new product from established ISVs will be delivered as SaaS services and nearly 85% of net-new software firms coming to market will be built around SaaS service composition and delivery. As a software publisher, the question you should be asking yourself is not how to avoid the cloud – but how to navigate a migration to the cloud for all or some of your applications as quickly and efficiently as possible. In a recent presentation, Saugatuck Technology’s Mike West made it quite clear that every aspect of an ISV’s business will be impacted by a shift to SaaS, from business planning and management, technology development and operational processes, and even corporate culture.
I don’t have many pet peeves in life. Okay, my kids will tell you I’m the typical dad who gets irritated when they leave the lights on in their rooms and monkey with the thermostat. But besides that, I roll with things pretty well.
Then comes perhaps my only work-related peeve: the misuse of the term “license”. I am sure it stems from my IBM days where teams of gifted lawyers spend oodles of cycles slicing, dicing, chopping and julienning seemingly simple concepts and produce software license agreements of Tolstoyian proportions.
First of all, I’d promised myself I would not write about Apple just based on how popular the topic is. Obviously, I’ve broken that promise. What strikes me most though about Apple’s current success is how it seems to go against the currently espoused play-book for success. Secondly, does Apple’s focus on hardware actually result in better software development practices?
In my role I meet with many hardware and device manufacturers. One theme is very consistent: Historically, we ignored our software as it was only really there to facilitate or drive our high value hardware sales. Now though we are looking to monetize our software as we find hardware is becoming commoditized. They want help from us to help them protect, manage and deliver their software. As I mentioned, this driver is one of the most prevalent trends in our overall industry today.