By: Cris Wendt
The one aspect of selling digital goods or a software license that will trip up most companies is the "license lifecycle".
In the physical world, once an order is placed for a system or device, the item will be shipped and then the transaction largely completed, outside of maintenance. This is transaction-based environment. When selling software, the fulfillment of the software licenses or bits is the beginning of an ongoing process with the customer. Once the software is sold and installed, there is a lifecycle of the license that defines an ongoing relationship with your customer. This lifecycle consists of numerous software entitlements and fulfillments (see Step 5 for more definitions), that must be linked together over time:
Conversion of try-before-you buy licenses to full production licenses as a customer completes an evaluation and wants to convert to a purchased license.
Updates to new versions of software as a result of maintenance entitlements. This includes the rights to new versions of the same product, with minor increases in function, and perhaps some bug fixes.
"Migration" to new versions of software due to M&A activity of the software provider. For example, if a software provider buys another software or high-tech manufacturer with a similar product, they may decide to end-of-life one of the two products, and enable all customers on maintenance to receive the product that will continue in the marketplace.
Renewal of existing maintenance agreements or software license agreements that entitle customers to receive the new software updates.
Upgrades to new versions of software that may be purchased. This may include an upgrade to a new major version of software, or, an upgrade to a richer functional version (i.e. Personal Edition to Professional Edition).
Up-sell of add-on or optional functionality that extends the performance of the original product that was sold.
Moves and transfers of the software license to different machines, or different organizations.
- Returns or re-issues of software due to administrative mistakes or incorrect product selection.
As a result of this morphing of product functionality due to the software product lifecycle activities, it's important to design business processes and systems with an eye toward the requirements of the license lifecycle which means that a single entitlement (e.g. maintenance renewal) can be fulfilled multiple times (e.g. different updates), and, that the result of all of these activities can be linked to one another and tracked. This enables accurate information to the software producer to provide timely and accurate support, and enable, targeted up-selling.
Next Time: Step 7 -- Designing "Prospect to Support" (P2S) Software Licensing Business Processes