By Peter Bernstein, Senior Editor
For frequent readers of this channel, you are aware that occasionally when I author postings I like to do a little tweaking of the headline to keep you interested in reading every last word. Well there is more than a little double entendre in the above headline since obviously as the world goes software-centric, monetization even in the embedded area is no longer about a tight linkage with the box. Plus, the person I turned to for insights on the subject was THINKstrategies, Managing Director Jeff Kaplan.
The reason talking to Jeff was so opportune was that he had recently been the featured speaker at a SafeNet sponsored lunch and learn with business executives not only from the ISV community but also from the important end user IT organizations representing several major vertical markets. The talk, entitled, Leveraging the Advantages of a Cloud-based Licensing Model to Achieve Your Business Objectives, was, to use two words “spot on.”
TMCnet: What were the top three takeaways you wanted the audience to keep in mind?
Kaplan: There were three main points I wanted to the audience to understand. First, the nature of software is changing, and as a result the ways people are attempting to monetize its value are also changing. Second, your organization needs to not just appreciate this but also know that there is urgency required, i.e., if you don’t take advantage you will be left behind or not survive. And, last and certainly not least I told them this is not just about adopting the right software but is about dealing with or developing new business models.
TMCnet: Can you provide an example that you used?
Kaplan: As a means of showing how disruptive a new business model can be, I used the Zip Car example. The rental car business as we all know has been around forever, but if you look at how Zip Car changed the business model by making it easy to lease a car just for when you needed it and to see how this has changed the dynamics of the rental car market in New York City, you can easily understand how fast markets can be disrupted, as well as the desirability of products and services that are on a pay for only what you use as you use it model.
TMCnet: What was important to relay to the audience concerning your views on migrating from current practices? After all, along with the sense of urgency there is also the sense of foreboding that can go with contemplating a migration of anything, and particularly to the cloud.
Kaplan: I covered a few points, starting with the observation that the move to the cloud is omni-present. It is taking place in all industries, of all sizes, all around the world. There is a myth that this was about SMBs as low-hanging fruit and that really mission critical activities would not move to the cloud. This is absolutely not true and all you need to do is look at Amazon Web Services (News - Alert), SalesForce.com, eBay, PayPal and numerous other examples to see that businesses of all sizes are running on public cloud. And, hybrid cloud and private clouds are mushrooming with many large corporations doing a lot more than hosting email. In short, the cloud has had, and is still in the early stages of having a revolutionary impact.
That revolutionary impact directly impacts the ISV community in terms of its delivery of services, the protection of their intellectual property, and the user community. Indeed, it is the younger workforce who expects their resources to be at their disposal conveniently wherever they are and whenever they need them; that is, in many ways driving the move to the cloud, and certainly the way software is now packaged, delivered, sold and managed.
There have been innovations in infrastructure that have enabled cloud-based entitlement and licensing to give ISVs the visibility, flexibility and security they need to give users options. These include such things as what type of software the customer needs so it can literally be easily customized. It also deals with how software gets delivered, deployed and paid for on multiple devices where compliance issues that could be complex are made easy.
There has been real innovation on the infrastructure side at the frontend side of things and at the back end with integration into business processes as well. Migration to the cloud for software licensing and entitlement management is happening because it is a win/win/win for the ISV, the IT department and the end user.
TMCnet: How so?
Kaplan: The ISV gets the obvious and multiple benefits of the cloud in terms of easier delivery, better visibility into usage and therefore compliance, and an annuity revenue stream as customers move to subscription-based pay-as-you-go and pay-as-you-grow models. They can also provide customers with different business models for payment, update quickly and turn on or off various features, unlike the old days of shipping separate discs, etc., and offer functionality consistently on that version through the cloud with fewer concerns about user abuse or misuse.
For IT they have a much better view on what software they have, what is being used and by whom, hence a better view regarding what needs to be renewed, updated, decommissioned, etc., and that means they can ask better questions about things like integrations, support and have a good fix on costs over their planning cycles.
For the user, it means a better user experience because they can have access to what they need, when they need it, and they don’t have to worry about whether it is compliant with company policies or rules. Like I said, this really is good for everyone.
It is going to take time to evolve, given all of the on premise solutions that are already out there and working fine. But, companies are learning that cloud-based licensing and entitlement is the future, and that future is coming at us fast.
TMCnet: What was top of mind for the audience?
Kaplan: There were a couple of interesting questions raised. They began with the ones you would expect regarding: ‘Why should I care?’ and, ‘What does it really mean to me?’ I answered those with the points we discussed before.
We then proceeded to the issues of migration, i.e., ‘What should I be thinking about in order to move forward?’ And, there was intense interest in my observation that now is the time to be making decisions about moving forward.
For ISVs I warned them that we have entered an era where the customer really is king and that if they don’t have options from you, they have the option, with a click of a mouse or the touch of a pad to find satisfaction elsewhere. In fact, that satisfaction could come from anywhere and no vendor of software solutions should take for granted their market position. Hence, ISVs need for pure competitive/ monetization reasons to be able to accommodate the requirements of being fast to market and with lots of feature and pricing options. Understanding that a cloud-based licensing solution is about monetization and not just about billing was a point iterated several times.
I also advised them and got some agreement from the non-ISVs members of the audience that enabling the end users to have choices is important because it engenders trust. This is not just trust in the ability to use approved software as needed, but also in a world where shadow IT has become a problem — that IT can be trusted to be responsive both in terms of the tools that can be used and that they are secure without being intrusive.
Plus, it may sound strange, but there is an allure here based on the fact that people like to feel they are part of a movement. Cloud-based licensing and entitlement management has that feel right now because it is producing tangible differentiated value for sellers and buyers alike.
TMCnet: So the bottom line really is the bottom line?
Learn about these core elements to a complete software monetization strategy: