By Michael Costa and Jim Berthold
In our last post, Software Publishers Lose Out on Maintenance and Subscription Renewal Revenues, I talked about how and why software publishers continue to miss out on high margin maintenance and subscription renewal revenues. In this post, I’ll share best practices on how software publishers can actually increase software maintenance and subscription renewal revenues.
Existing processes & systems tend to lose track of software entitlements & fulfillments after the initial order. The initial order represents a small percentage of the transactions performed on an entitlement over its lifecycle. Order management systems are not designed to manage post-order entitlement & fulfillment transactions – e.g., transfers, re-hosts, returns, downgrades, upgrades, updates, converted trials, etc.
Let’s assume that you are software company ABC Corp. You have sold your products to 1,000 customers and retained all of the original order data in your ERP system. After the initial order, 35% of your customers have made changes to their entitlements & fulfillments during the past year. The changes vary between moving licenses among users & facilities, returning some because they were incorrectly ordered or no longer needed, exchanging some for other products, updating some to newer releases, upgrading some for additional capabilities, etc.
If you’re like most software publishers, as your customers submit these change requests, you tend to focus on getting them done quickly to satisfy your valued customers. Documentation is secondary and, while you may have specific policies for each situation, collecting and managing all of that information about all those changes is haphazard & scattered.
What’s needed is a purpose-built entitlement management system that provides customer self-service to manage all entitlement & fulfillment transactions, including the post-order types discussed above. Such a system ensures an always accurate view of the installed base and can be integrated as necessary to share this information with ERP, CRM or other backoffice systems. Alternative approaches either try to customize the Installed Base (IB) module of ERP systems or use an ERP/CRM system for order data & augment with a variety of other systems/sources to manage post-order entitlement & fulfillment data. Such alternatives are usually very expensive to develop & maintain, leaving large installed base accuracy gaps & yield relatively low maintenance renewal rates.
Having the appropriate backoffice system to accurately know at all times what each customer is entitled to drives efficient software operations and is essential to being able to increase and maximize maintenance and subscription renewal revenues. The key to this is an entitlement management system that effectively captures all post-order transactions.
Software maintenance fuels software company growth with predictable annual profits. Accurate installed base data is a must-have for optimizing maintenance renewals and the lack of that data is the primary reason for sub-optimal software maintenance renewal rates.