Software Licensing and Entitlement Management : Some New Twists on Current Themes in 2010

By: Cris Wendt

With 2010 upon us, I thought I’d share some of our field observations about industry trends we see in the field for software licensing and entitlement management. While some of the topics below are certainly well documented, we have been seeing some twists.

From Device Revenue to Software Revenue:

We have been working with more high-tech manufacturers in 2009 and in 2010 who have been traditionally viewed as hardware manufacturers, that is companies who have derived most of their revenue from hardware. This seems especially true in the medical equipment, industrial automation, and the telecommunications industries. As the underlying hardware becomes commoditized, an increasing number of companies are looking at new ways to create more annuity-based revenue streams from software, maintenance, and services. This includes the design of new entitlement management systems to track the deployment and even of their software through complex sales channels to know more about who is using their products

Server Virtualization in Production:

While the general growth in virtualization is certainly no surprise, what did surprise us wasn’t the use of server virtualization per se, but the increased deployment of virtualization into production environments (as opposed to just development and test) as a way to take advantages of technologies such as WMware’s Vmotion to create lower cost business continuity solutions. This trend has also been driven by the improved performance of virtualization offerings.

Evolution & Maturation of SaaS:

Almost all companies we work at are in some phase of planning a SaaS solution to bring to market, if they haven’t already done so. Certainly, many small companies offer exclusively SaaS-based solutions, but what surprised us is how many mature companies are looking to create new revenue opportunities from hosted offerings. This means that simply offering a solution in a SaaS model may no longer be a unique way for startups to differentiate themselves against the more traditional software companies. For the mature SaaS companies who realize SaaS isn’t enough, we’ve been working also with some to evolve their solution to increase revenue through improved authentication, and improved entitlement management.

The Next Phase of M&A:

We see many larger companies creating initiatives to simplify and consolidate product offerings that have evolved through years of M&A. By consolidating complex and often overlapping product lines into fewer, "high impact" products and license models, larger companies are finding it easier to do business with channel partners and customers and simplify the sales process. In addition, the reduction of clutter enables companies to focus development and support on newer generation products.

Interested in hearing more on trends and predictions? Join us on January 28, 2010 as Amy Konary from IDC will be presenting the software licensing and pricing survey findings and share insights during a Flexera Software Webcast.