Top 12 Licensing
Executives are Facing
By Peter Bernstein, Senior Editor
It’s no secret that independent software vendors (ISVs) of all sizes are in the midst of an unprecedented change affecting almost every aspect of how they create, deliver, track, protect and monetize the value of their intellectual property. The impact of this sweeping change is forcing the creation of new ways to package/bundle software and innovative business models in addition to establishing dynamic relationships between ecosystem partners/vendors and their customers. It’s a brave new world.
As is the case of industries in major transition, a big part of the story lies in the subsequent required restructuring. Large historic premise-based solution providers who relied on perpetual licensing are rushing to embrace the cloud and the mobile device explosion in order to accommodate the accelerating metamorphosis in customer requirements and preferences. Meanwhile, new entrants are experiencing more than just growing pains. These new players are targets for acquisition or are on the acquisition path themselves. On top of all of this, are the challenges in the day-to-day practicalities of how to manage growth resulting from M&A, organic activities, and to ensure that neither internal nor external transformation creates organizational and customer chaos.
Of all these dynamics, the last point mentioned about ensuring order, instead of creating chaos as change occurs, has become a top priority. However, the challenges are substantial. It indicates that getting control over back office integration issues arising from ISVs who have a multiplicity of software licensing and entitlement management solutions is crucial.
TMCnet: It might be useful to start with a definition of back office integration since it can mean different things to different people depending on the business one is in.
Khan: That is a great observation, especially in the ISV space. The reason is that if you look at the software business historically, it has evolved in an interesting manner over time. It started as dealing with what we now consider the basics, such as providing ISVs some type of software protection. By this I mean such things as guaranteeing accountability for licenses sold, implementing anti-piracy and anti- reengineering capabilities, using rudimentary tools to keep honest people honest (e.g., in compliance).
The advent of the cloud as a delivery system for software, along with virtualization and the need for mobility and a consistent look and feel on multiple devices has been a game-changer. What gets overlooked is how all of this gets managed.
Once organizations are into a project there is the realization that there is no good way to manage the process and integration with other systems. Systems such as ERP, CRM, etc. cut across and support almost every line-of-business (LOB) as the pace of business process-automation accelerates. In order to create value from this automation, it is essential to optimize making it critical to integrate the licensing and entitlement solutions with these “back office” solutions.
TMCnet: You called all of this a game changer. How so?
Khan: The evolving new business models for purchasing software such as software as a service (SaaS (News - Alert)) and hence an alternative to perpetual licenses, along with additional compliance requirements, etc., has made things more complex, but also the solutions more useful. It is driving the need for ISVs and customers to have better visibility in real-time to their software environments, and enhanced management and control capabilities on top of the basics I mentioned. It is rapidly transforming not just the ways in which software licenses and entitlements are managed, but how all of that information is turned into business intelligence for software monetization purposes.
For developers it creates the opportunities to automate their operations as well as being more responsive to changing market conditions. That visibility enables ISVs to be more responsive on a variety of fronts since knowledge of usage is power. For ISVs customers means knowing what they have, along with who and how it is being used, which enables them to better control costs and ensure the right people have the best tools at the right time to get their jobs done.
TMCnet: Describe a bit more, from an integration perspective, what is changing.
Khan: The historic approach, from an ISV perspective, has been on product development. It has been about getting a solution out there, with a perpetual license in most cases. As mentioned, how it was to be managed was an afterthought. Because of all the factors we discussed, particularly when companies go through some type of restructuring, issues arise. Such issues affect companies that, once merged, will likely have hundreds, and possibly thousands of software licenses to be managed. Even when running the same software from the same vendor, there may still be different versions under different licensing and entitlement management regimes.
It gets even more complicated. Add on top of this the need for IT to integrate all of this while they are also integrating all of the operations/back office software. It is easy to understand why having centralized visibility and control is so important to the customers and critical for the ISVs in terms of helping customers sort everything out. And, the final challenge is that typically you can be dealing with home-grown licensing and entitlement management solutions where there is tribal knowledge that can be lost during a merger or acquisition.
TMCnet: Lots of challenges, but let’s discuss why help is available or certainly on the way.
Khan: The good news is that SafeNet has a set of cloud-based solutions that allow for visibility across a company’s entire software licensing and entitlement environment - whether those licenses and entitlements are legacy or existing, on-premise ones or in the cloud, or more typically, a hybrid mix of commercially available management solutions and internally developed ones.
In addition, while the move to subscription based solutions means complexity in tracking entitlements, the right solution, since it is automated, actually can ease the management problem and provide enhanced control for the ISV over enforcement, along with providing truly valuable business intelligence.
In fact, our solutions provide ISVs with a lot of extremely valuable information. This includes having the ability to access entitlements when an order is shipped. They can run various types of reports on things like orders shipped vs. orders fulfilled, how effective a channel is performing, feature and function usage, getting info on real-time use of modules within an application, or module within a suite. In terms of how to be responsive to specific customer needs and changing market requirements, we think this is invaluable information, especially when integrated with information being generated by other back office systems.
TMCnet: What about SafeNet’s footprint and impact of adopting your approach to software licensing and entitlement management?
Khan: Our goal has always been to provide ISVs options. We do believe that the world is moving toward a SaaS model, when applicable, and our solutions are no different. We allow vendors to leverage the low touch IT benefits of SaaS along with the specific benefits we discussed earlier for ISVs in terms of access to information. No forklifts are required since you can keep what you have. We are implementing, or have implemented, connectors to industry ERP and CRM solutions, which means there are a similar overall set of requirements, and ease-of-use for doing such things as tracking entitlements to SKUs.
The beauty is you can connect any part of our system to anything else. In short, you can build it, deploy it and implement it, or work with others. We complement what is already out there. We are just another piece that plugs into middleware in other back office systems. We are part of the overall back office machinery.
TMCnet: What trends are you seeing?
Khan: The first big trend we see is simplicity; giving visibility and control of entitlement both on-premise and in the cloud. The conversation for ISVs is now not solely about the sale, it is about the business value generated from integration of entitlement solutions into other operations, as an important tool for enabling ISVs to measure and manage the health of their business. It is about having a real-time handle on revenue recognition. This is a real change in terms of understanding the role of entitlement management and we are seeing ISVs appreciating this as a “must have” when not that long ago, it was more of just a curiosity.
Part of the reason for this new attitude, is the benefit provided to ISV customers in terms of them knowing how software is being used at a very granular level. It means being able to only pay for what you need, have a good fix on renewals and compliance, and provide perspective on planning for future requirements. It is a true win/win.
TMCnet: Last but not least, how about a few quick points about the value proposition for adopting a centralized software licensing and entitlement management solution?
Khan: At the end of the day, SafeNet is an ISV our self. We understand ISV challenges and get it. We are constantly thinking about how we want to monetize our software. What this means for ISVs is that they need to consider the following:
Learn about these core elements to a complete software monetization strategy: