Software Monetization Featured Article

Leveraging the Cloud for a More Efficient and Effective Software Delivery and Monetization Model

December 27, 2012

It is hard to escape the reality that software is moving to the cloud. At first it was a novelty and available only for specialty uses. But, when resource-intensive software such as the Adobe (News - Alert) Creative Suite joins the cloud as software-as-service (SaaS), you know the floodgates have opened wide.

Forrester predicts the global cloud market size is expected to more than double from roughly $33 billion in 2012 to about $78 billion in 2015, according to a recent webinar, “Customer Usage and Insight paving the road to optimized cloud-based business models,” by Todd Steel, senior product manager for software monetization solutions provider, SafeNet.

By the end of 2012, noted Steel, 45 percent of all companies will be using SaaS in some form, according to Forrester (News - Alert), with that number expanding to 60 percent in 2013.

Top performing companies plan to use SaaS even more, he noted, with 26 percent of software budgets going toward SaaS (News - Alert) for leading companies versus 16 percent for everyone else.

With this shift comes a demand for new licensing schemes, Steel added.

Steel went on to point out that customers are demanding more flexibility in licensing and delivery, including buy-as-you-like, where the customer has a perpetual subscription; pay-as-you-like, where there is a fixed price for pay-per-use; deploy-as-you-like, an on-premise cloud option; and access-as-you-like, granting anywhere, anytime access.

Part of the shift toward SaaS offerings comes from the business preference to draw from operating expenses with a software subscription instead of having to get authorization for the capital expense of purchasing software all at once and regardless of whether it will be used or not.

The shift to cloud delivery also changes how companies develop software.

“Software companies need to become more flexible,” noted Steel, “and need a platform to support this.”

That means instead of something like an annual update cycle, developers need to constantly iterate their software and create a feedback loop. No longer can developers get customer insight from value-added resellers and roll those ideas into an annual release. With the cloud, software companies must get feedback straight from the customer and run continuous support, sales, development, innovation and licensing.

“The successful solutions in the cloud market in the future are not individual cloud products,” said Steel. “It is a battle of cloud ecosystems. It is successful software vendors teaming with good platforms with good infrastructure hosting vendors in order to provide an end solution to customers, which then needs to be built on very solid service-level agreements.”

But the challenge for all parties involved in the ecosystem is collecting insight directly from the customer, and that comes from having good business processes and good vendors that know how to gather information from customers and leverage that information in their part of the ecosystem.

One option software providers might want to consider as they adjust to the new SaaS reality is a service such as SafeNet’s Sentinel Cloud. Sentinel Cloud helps providers monetize their offerings in the cloud by providing flexible service catalogues, provisioning features, end-user service usage controls, and service usage measurement. In short, it enables a flexible, easy and cost-effective means for software companies to have peace of mind and increase their speed to market and IP monetization.

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Edited by Peter Bernstein
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