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.
I was emailing back and forth with a colleague of mine the other day about whom, within the ISVs business stands to gain the most from offering trial versions of their software. Well, after much discussion, here’re the cliff notes…
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.
BRIC countries (Brazil, Russia, India and China) offer tremendous growth upside for many companies. Independent Software Vendors are no different. This fact leads to familiar conversations happening inside many software companies. “We need to enter the high growth markets. However, we have no licensing or our current licensing is not designed to focus upon piracy. We don’t want to invest all that effort only to end up giving our product away”.
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!
In speaking with our larger global customers I’ve noticed a troubling and difficult conundrum when it comes to software licensing trends. Firstly, ISV customers in established, advanced economies are demanding greater granularity and flexibility than ever before when it comes to how they implement and use software. In most cases the ISV’s are more than happy to oblige. Closer alignment of pricing and value creates happier customers, less discounting and more achievable up sell opportunities for the future.
It came from out of nowhere. One day you woke up and the world was tweeting. Tweeting, really? You thought to yourself…”This is one fad that I’m passing on, a tweeter, I’m not.” You even made a pact not to fall victim to a Facebook page. As friends and family buzzed about their latest Farmville conquest, you proudly stated the fact that you were a non-conformist.
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.