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SafeNet Takes the Pain out of Managing Multiple Licensing Technologies when ISVs Merge

March 31, 2014

Ever wonder about what happens with licensing when Independent Software Vendors (ISVs) merge? In an increasingly software-centric world where managing the software that delivers an ISVs’ intellectual property is critical because it touches almost every aspect of business operations, this is not a trivial matter. It leads to the obvious question, “How does an ISV handle multiple licensing solutions in the event of a merger or acquisition?”

To get some insights on the subject, I recently had an opportunity to discuss the challenges presented when ISVs merge or acquire other companies with Michael Welch, VP North American Sales at SafeNet.

Merged Software Pain Points

To summarize briefly, the context for our discussion was as follows: When software companies are acquired or merged, there is often pain created by multiple licensing solutions being in play across the company’s newly expanded technology offerings. Often, the biggest challenge is in the back-end operations, where business model reconciliation and connections to key operational systems, including CRM/ERP systems can break down. To make matters worse, many organizations are resistant to make any changes to their software licensing management system for fear of disrupting the customer experience and negatively impacting sales and ultimately profitability.

In short, the challenge for organizations becomes figuring out how to manage multiple licensing solutions and maintain a consistent (and positive) experience for their end users.

TMCnet:  The term “back office” software covers a lot of ground. Let’s start with a description of the software that fits into this category.

Welch: Back office is a broad term. It covers the tools and applications that companies use for core functions such as sales, finance, marketing, supply chain, etc. It tends to be the mission critical software that runs their business

TMCnet: When and where does SafeNet (News - Alert) get involved?

Welch:   SafeNet provides solutions that enable software and technology vendors to better manage and control the way their software is consumed. This encompasses being able to ‘enforce’ different usage and licensing models as well as being able to ‘manage’ the entire licensing lifecycle – from delivery of a license key to a new customer right through to being able to track renewals and subscriptions. There is huge advantage to be gained where ISV’s have a tight integration between their licensing and these functions. Where mergers/acquisitions occur you tend to see multiple licensing technologies in play which can potentially disrupt the lifecycle, regardless of whether it’s 2 or 22 different solutions. Establishing a common platform to manage multiple licensing solutions and establishing that integration into critical back-office systems paves the way for things like automation and self-service which enables the ISV to deliver an excellent experience to their end customer. The net result is zero disruption even though they might be dealing with a completely different company following a merger or acquisition.

TMCnet:  Is there a customer angle here as well?

Welch:  The goal here is two-fold. The ISV wants to deliver an excellent experience to their end users.  That might start with offering easy access to a free trial version of their software and ultimately transitioning them to purchasing a fully paid subscription. During the subscription period the ISV might want to promote new features and functionality to their customers as well as being able to communicate other new product offerings to them. For the customer they might want to see what they have paid for, maybe how long their subscription has to run and also make sure they have access to the latest ‘bells and whistles’ for the products they bought.

Software usage tracking and analytics has also become a huge part of consuming software. ISV’s want to know how their software is being consumed, right down to what buttons are being pushed and how often. Consider how powerful it is for a Product Manager to be able to see exactly what features are being used in their products and how often. This can help drive investment decisions and prioritize where engineering/development resources should be targeted based on real life usage of their products. The end customers are also becoming more demanding in terms of wanting more flexible and  sophisticated pricing models – seat based licensing isn’t always the best for the end user. By way of example they might want to pay per project or have some kind of consumption based model. Being able to offer this is always going to be dependent on the ISV being able to track and monitor usage so they can translate this into data that can be used for billing purposes.

TMCnet: What are the challenges when a merger or acquisition occurs and multiple licensing solutions exist?

Welch:  We have lots of real world examples here. We work with a large company in the software development space that has undergone multiple acquisitions and supports thousands of customers globally. They have over 20 different licensing solutions in place spanning multiple products lines that run across multiple OS platforms. This creates many problems, not least of which is where the expertise lies with each flavor of licensing technology but also how do you manage all the different types of keys? The goal is ultimately maintaining a consistent experience for the end customer regardless of the licensing that each product uses.

In this type of scenario there are a few options. SafeNet can offer an ‘entitlement management platform’ to enable the creation, delivery and management of all license keys.

We don’t ask the ISV to go through 'the pain,' a rip and replace of their existing licensing solutions, as we provide them with a platform to manage those solutions regardless of key type used – homegrown,third party, hardware based or software based. The other option which we see many of our customers move to over time is standardization on a single licensing solution. This can be a big undertaking as it does involve a rip and replace of old for new but it provides a uniform means by which all products are licensed. Having a common enforcement solution across an ISV’s entire product portfolio and a single entitlement management platform for managing everything is ‘nirvana’ for the ISV

TMCnet: What is the most effective way to approach a project like this where an ISV is looking to consolidate multiple licensing solutions?

Welch: Experience has taught us that the most important thing is to get somebody to own the project. There are multiple functions within the ISV that must be involved including operations, support, engineering, sales, marketing, finance and many others. The challenge is often that nobody wants ownership or accountability but everyone wants to have a say in how it works.

It’s clear that licensing can impact all areas of an organization. Sales are concerned about how easy it is to on-board a new customer and how it impacts renewal rates. Finance might be concerned with revenue recognition and when a new order is bookable – is it upon delivery or activation and what’s the proof or delivery receipt behind this? Operations will care about how the license keys are delivered and tracked. Product Management will care about what the end user experience is like. IT might focus on security and the implications on infrastructure if licensing is tied to a key platform like their CRM/ERP system. Generally we see product management owning these types of initiatives as they ultimately control what goes into the product and licensing is always a key component of this. It’s key for a project like this to have an owner so if it is PM they need to garnish the support of the aforementioned functions and involve them in every step of the project, including executive sponsorship. It’s also important to view this as a project to solve business problems, not just fix technical issues …having 10 different licensing solutions is a technical problem for sure but the business problem it creates is far more important. Think “what is the goal here”? Maybe it’s preventing attrition of the customer base because the renewal process has become impossible to manage. Maybe it’s moving from a manual email based license key delivery process that’s slow and cumbersome. Maybe it’s revamping the price book and introducing new product bundles to broaden the appeal of the ISV’s offering.

We aren’t recommending boiling the ocean here but once there is clear ownership and agreement on what the objectives are the move to licensing nirvana can be done in bite-sized chunks.

It’s a cliché but the customer is king and they will ultimately drive most of the requirements. We believe, and can demonstrate, that better licensing and entitlement management can translate into operational efficiency and the ability to deliver a superior customer experience.

TMCnet: So where are we today with market trends in licensing?

Welch: Let’s turn the clock back. Ten years ago licensing tended to be focused on controlling the number of users and eliminating piracy. That’s still the case and ISV’s will always want to protect their IP but there are many more elements to consider now. We view the market having shifted towards “Software Monetization” which still encompasses ‘control’  but we see ISV’s placing equal (and sometimes more) importance on how their solutions and services are packaged, how they are managed and how they are being used by their customers.

SafeNet software monetization solutions are based around four key areas. When companies merge we would expect there is always some complexity that ensues but with the right planning and clear business objectives there is no reason why the net result for both the ISV and ultimately the end customer isn’t anything but positive … maybe even nirvana.

Edited by Cassandra Tucker
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