Featured Article from Software Monetization
Software Monetization Solutions Help Medical Equipment Vendors Transition to Services Economy
Like most industries, the medical equipment sector is undergoing a change, diversifying from strictly selling hardware and equipment and adding software and services. Embedded software, always-on connectivity and the cloud are some of the technologies enabling this business model shift, and are expected to propel the market to $140 billion by 2018.
Also like most sectors, medical equipment makers face a challenge when to comes to software licensing and monetization. A recent whitepaper published by Gemalto (News - Alert), a company that specializes in software monetization, discusses some of the challenges specific to the medical market and offers a variety of solutions.
One of the biggest challenges medical equipment vendors face is an inability to move quickly enough to take advantage of market opportunities. And in many cases, this is because of a lack of the strategic data and metrics necessary for aggressive and competitive decision-making. When coupled with the rising costs of designing, manufacturing and supporting a variety of hardware equipment models along with budgets constraints on the part of buyers, this can be a deal-breaker in the new services economy.
According to a study from Appleseed Partners, more than 50 percent of medical device vendors have access to data that may be inaccurate, while 10 percent don’t have access to any data at all when it comes to strategic decision-making. That means companies are creating and supporting multiple hardware product variants that simply may not be necessary in an increasingly software-driven marketplace. And this business model has a high price tag (News - Alert) attached when it comes to manufacturing and supporting such a broad portfolio, eating away potential profits and driving product and service prices higher than necessary.
A final challenge for many traditional equipment manufacturers is a lack of flexible business models. These companies have followed a hardware model for so long that they are not equipped to handle subscription and leased-based services models and the technology infrastructure that goes along with them.
Medical equipment vendors can employ a few practical solutions to change their business models and better accommodate a software and services-driven market. The first is to gain as much insight as possible into how their solutions are deployed and which features are used the most. By getting a handle on these metrics, they can then deploy a software monetization solution that capitalizes on gleaning value from software-embedded equipment. And customers can also get the most valuable features out of their solutions and services since offerings will be more specifically tailored to their needs.
Vendors should also aim to reduce the cost and complexity of their offerings to make adoption simpler and more cost effective for customers. They can accomplish this through a software monetization strategy that includes flexible packaging of features along with feature-based licensing and entitlement management. This will ultimately reduce complexity and operational costs for vendors while offering customers better choices and options.
And by deploying flexible pricing models like subscriptions, pay-per-procedure and prepaid and post-paid billing based on consumption, vendors can maximize profits on their offerings while still providing customers with affordable solutions.
Advances in embedded software and the shift toward subscriptions and services can offer major competitive advantages to medical equipment vendors. By deploying a software monetization strategy and solution, vendors can better tailor their business models to market and customer demands while gleaning the most value from their solutions and services.
Edited by Stefania Viscusi
Software Monetization eBooks
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