Software Monetization Featured Article

It's Not Just About Licensing Anymore: Cloud-Based Software Licensing Enhancing Efficiency, Customer Experiences, and Competitiveness

June 07, 2016

A few weeks ago, I had the privilege of moderating an extremely insightful webinar, Cloud-Based Software Licensing: Enabling Operational Efficiency, Delighted Customers and Sustainable Competitive Advantage. I was joined by Jeff Kaplan Managing Director, THINKstrategies and Jamshed "Jam" Khan, Director of Professional Services, Gemalto, who talked about the reasons why cloud-based software licensing is the path to any organization’s future success.

Jeff Kaplan is a Cloud/SaaS (News - Alert) expert and strategic consultant focused on leveraging the business benefits and new market opportunities created by Software-as-a-Service (SaaS), Cloud Computing, and Managed Services. Much of the webinar discussion was a result of recent research that Kaplan compiled to help companies gain competitive advantage and deliver a better user experience in order to satisfy customer demands in the NOW economy. End users are demanding more personal interaction and flexibility in purchasing and using their software. The webinar and related white paper provide insight on what is required today for companies to become market leaders.

Jeff refers to “The Discipline of Market Leaders: Choose Your Customers, Narrow Your Focus, Dominate Your Market,” written  by management consultants Michael Treacy and Fred Wiersema, where they suggest that companies could only become dominant players in their industry by achieving a proficiency in one of these three areas:

  1. Product differentiation
  2. Operational excellence
  3. Customer intimacy

Treacy and Wiersema believed that the cost involved in gaining superiority in more than one of these areas was prohibitive, and recommended corporate executives focus their resources on only one of these disciplines or risk becoming mediocre and losing their competitive advantage.

Today it’s actually the opposite. Companies who master only one of these are considered mediocre.  It is not enough to have great products and value-added services. A great user experience matters! To provide a great customer experience, new operational rules apply. This will allow market leaders to not just deliver great products but also deliver on their brand promise.  

The paper points to as an outstanding example of how excelling in all three categories has enabled the company to attain and expand their market leadership. Indeed, when one looks across almost any vertical market where business transformations have taken place, leveraging the cloud has become foundational.

This is where cloud-based licensing comes in. The next generation of cloud-based licensing and entitlement management provides unprecedented visibility and data on customers and usage.

“Customer insight,” as Kaplan notes, “is data that can help you understand your customers, better serve their needs, and in turn, increase their loyalty and lifetime value.”

As Marc Andreessen predicted in his article “Why Software is Eating the World,” the right kind of software licensing is integral to the success of the business. The new generation of licensing and entitlement management solutions provide the insight necessary for product differentiation. Being able to track usage data and product feature adoption along with pricing flexibility and the ability to expand into new markets on a dime is the best way to future-proof your business. In addition, “Licensing activation, entitlement management, and enforcement are essential software licensing capabilities that allow you to monitor, measure, and maximize application usage to deliver products people want at the right time and the way they want to consume them,” states Kaplan in the white paper.  

Gemalto’s Sentinel EMS is a web-based solution that gives software providers an integrated license and entitlement management platform with back-office integration capabilities. It also includes a set of advanced data collection and reporting functions that enable companies to improve their business operations, enhance the user experience and identify new business opportunities, and improve profitability.

Sentinel EMS is the platform that HP Enterprise Group (EG) uses to deliver operational efficiency, product leadership, and customer intimacy. HP provides an extensive portfolio

of software solutions to large organizations. Although HP EG isn’t a cloud-based ISV, its experience illustrates the changing market dynamics. Because of the scale of its portfolio, the company was experiencing many product licensing-related challenges and increased costs with support calls and with licensing operations.

I will not spoil the experience of learning first-hand about the white paper or the insights provided during the webinar except to quote Kaplan’s closing remarks:

“Software monetization solutions create market leaders and significantly improve your chances of achieving success in the three disciplines described in Treacy and Wiersema’s book. While the changing nature of software design and utilization pose plenty of software licensing and monetization challenges, a new generation of software monetization solutions that includes cloud-based licensing is creating even more opportunities for organizations to attain market dominance.”

Sometimes when you are in the thick of it, it’s hard to describe what is happening. Software monetization solutions can address these issues, and do more than simply control access and permissions for software. Software monetization solutions also provide an invaluable source of information to help companies meet their customers’ needs, and keep them as customers.

Edited by Stefania Viscusi