Software Monetization Featured Article

Software Monetization Addresses New Business Models

July 17, 2017

Customer expectations are changing and that means that business models are changing too.

Increasingly, organizations are offering outcomes and services as opposed to products. That’s due in part to mobility and the cloud.  Customers are demanding new ways to buy software and businesses are responding with more options such as consumption- and subscription-based services.

That means businesses increasingly are relying on recurring revenue as opposed to one-time sales. This changes not only the way companies sell their products but the way they support them. Today the sale does not end when the purchase order is received.

In fact, new data from Aria Systems suggests that in the future just 9 percent of U.S. companies will rely exclusively on one-time sales models. Meanwhile, IDC (News - Alert) believes that by next year, 60 percent of connected device manufacturers will generate recurring revenue via a software-based offering or service.

Gemalto notes these forecasts in a new white paper titled “Crossing the Licensing Chasm: How to Leverage Technology to Transition to a Recurring Revenue Model.” In this paper, the company explains how software monetization solutions can enable the move from one-time product sales to recurring revenue models.

“Leveraging software monetization technology refers to the application of software license management, and billing technologies to enforce business rules with the goal of ensuring software-based products are properly licensed and paid for,” Gemalto’s (News - Alert) white paper explains. “Whether based on a one-time fee, or a recurring pre-or post-paid subscription based on time, feature usage, metered consumption, or any combination of these, your products must be properly licensed and paid for.”

Gemalto adds that modern software protection and license management systems allow for complex licensing; automate self-service activations, licensing, and updates; protect intellectual property; and track and report usage. And, it says, software monetization can describe the billing solutions that automate billing and subscription renewals, issue invoices, and track usage per account for software-as-a-service offerings.

“Making the transition from large one-time sales models to relationship-based recurring revenue models will touch every part of your organization and requires a well thought out pricing strategy and the proper technology,” Gemalto notes. “Those organizations that take advantage of what the software monetization technology stack has to offer in licensing and entitlement management, customer billing, and back-office automation will ease the transition and achieve the greatest success.”