Software Monetization Featured Article

Why 'DIY' Might Not Be the Best Software Monetization Solution

May 04, 2012

Software vendors (ISVs) are experts in developing specialized software for their markets. With talented engineers and developers on staff to design new features and functions as required, it’s no surprise that ISVs are pre-disposed to taking a do-it-yourself approach. However, this independent mindset can lead vendors down a thorny path when it comes to building a software licensing and entitlement management solution. On its face, software licensing appears to be a fairly straight forward project – but before taking a do-it-yourself approach, vendors should understand the hidden costs involved in building homegrown solutions.

The first matter to consider is the level of protection the ISV needs. When a software vendor sells products to a wide range of customers, those customers come with varying levels of trust. Therefore, software licenses must be securely self-enforcing and be able to protect the vendor’s intellectual property against reverse engineering or theft. Effective protection requires specialized security skills that may not be readily available within every software vendor’s development team. Acquiring these skills in-house – either through supplementary training or recruitment – can be extremely costly.

In addition to needing more skills to address protection, homegrown solutions also mean software developers are spending time on areas outside their core competency. Diverting resources away from delivering a “first-to-market” competitive product can be a dangerous proposition. Tradeoffs will have to be made between developing the product and adapting the licensing solution to changing needs. It’s a difficult balance to maintain that can easily result in a loss of product differentiation. It also slows development cycles, which in the fast-paced software market can have a devastating impact on the ISV’s long-term viability.

Software Monetization solutions like software licensing and entitlement management systems also need to be flexible and integrate across the entire business structure. Reporting and visibility tools must be constantly updated to meet changing requirements. Integration with back-office support systems by IT personnel is necessary as well. In-house development teams can be hampered by their own experiences and expectations, and unable to design a system that’s open-ended enough to scale for new applications and business initiatives.

In a white paper, Build vs. Buy: The Hidden Costs of License Management, software monetization solution provider SafeNet (News - Alert) calculated the long-term costs of homegrown solutions. Between the development costs, skill-acquisition and lost-opportunity costs, a solution can run anywhere from 1 million to almost 5 million dollars, depending on the level of security.

On the other hand, going with a commercial option, such as SafeNet’s Sentinel Software Monetization Solutions, offers many advantages. Not only are the initial implementation costs lower, the solution provider assumes most of the responsibility for supporting ongoing requirements and ensuring the product has all the latest advances. Existing solutions are more robust than a typical homegrown solution and can provide specialized tools and features that increase operational efficiency.

The bottom line is that ISVs can focus on what they do best – getting their competitive product to market quickly, without worrying about whether their licensing and monetization solution is optimized to support their evolving sales, distribution and protection requirements.  

Edited by Amanda Ciccatelli
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