Entitlement and Compliance Management

Software License Management: Process Improvement Using Automatic Renewal

By Flexera Global Consulting Services EMEA

I have recently engaged with a software publisher who needed to deliver licenses to customers worldwide. For some countries, customers are allowed to divide payments into multiple chunks over time. The publisher, on the other hand, must ensure the customer performs the payments at the times expected. For this reason, the process of delivering software licenses depends on the ongoing status of their contractual agreement with the publisher: customer receives a new time-limited license with extended validity period every time the publisher receives the payment in advance for that period.
 
The key to making this work is to use the renewal functionality of your software license and entitlement management solution. By doing this, the software order will now generate only one entitlement line item in your entitlement and license management system and the duration will be set to the initial number of weeks that depends on the order. Using an interface program to the entitlement and license management system handles the renewal process automatically on a scheduled basis, queries the entitlement and license management system fulfillments to identify the expiring licenses and it creates renewal line items with an extended duration. The new activation IDs will be sent in one email with a link to a self-service portal to the license administrator, who will create new licenses with extended expiration date after validation of the contractual agreement with the customer. All interface operations are performed via web services.
 
This is a simple process improvement example and it served the purpose of increasing confidence in the adoption of FlexNet Operations entitlement management solution to handle license management moving forward.
 
The picture below shows process flows and comparisons in graphical format:
 

 
Lines in black outline previous delivery process (multiple orders with same start date and different durations) while lines in green outline new delivery process (one order with automatic renewal at expiration).
 
The software license and fulfillment process could be improved by automatically verifying the payment status. The publisher’s subsidiary is currently responsible for verifying the payments and generating the license on behalf of the customer.
 
How have you solved software license and entitlement management challenges?

Reflections on SoftSummit 2011 Software Licensing Conference

By Ann Reist

As I reflect back on SoftSummit 2011, the conference dedicated to addressing software licensing and entitlement management topics and trends, one of the highlights of the conference for me was the keynote address from Chris Gahagan, SVP of Products & Solutions for Avid.

Chris shared his journey of creating "One Avid." His story, not unlike most software vendors and intelligent device manufacturers that serve multiple market segments, began with the idea of the value that unified licensing could bring to his organization.  Chris shared this insight, "One licensing approach does not work for Avid's significantly varied users and market segments……however, a Unified Licensing Framework will."

During his presentation he shared why "unified licensing" mattered. And for Avid, what that boiled down to was—it is all about the customer and improving the customer experience.

Chris outlined Avid's licensing framework requirements and from there he took us through his journey of creating a Unified Licensing Framework, including:  Getting Started, Getting Smart, Getting Validation, Getting Committed, Getting Busy and finally Going Live.

He wrapped up the presentation with the following takeaways and thoughts:

• Requires real executive directive and on-going attention
• Significant effort far beyond my product organization
• Significant time required as lots of stuff needs to change
• Product owners will never choose to do this on their own
• Insights into the business have been invaluable
• Benefits are being realized already
• Need to have a strong, fearless, persistent, committed PM
• Yes, we would do it again!

 Next time…more reflections and takeaways from sessions at SoftSummit.

Characteristics of a Successful Entitlement Management Program

By Michael Smith

Last time I outlined the Characteristics of a Successful Software Licensing Program.  However a licensing program is only as good as its entitlement management program.  Dedicated entitlement management is described as follows:

"An Entitlement Management Program is the loosely coupled but highly cohesive partner to the Successful License Program. This dedicated system should be completely separate from any existing ERP or CRM system. These systems are dedicated to financial and customer driven responsibilities, respectively, and make poor substitutes. Entitlement Management for licensing should be a "hub" of all operational activities and license-based business process. "

Entitlement management should be operational model driven. Operation models are driven by means of several business drivers that encourage new revenue models, streamline operational costs and improve the customer experience. These drivers help define the corporate business goals, customer needs and competitive business practices required for a successful operational model. Once these goals are determined the business level process can be developed within but not limited to the following categories: revenue based entitlements, non-revenue entitlements, entitlement administration, license fulfillment process, license lifecycle, customer management and transition planning. Each of these categories will typically have several business specific use-cases that will need to be supported.

The operational model based entitlement management program is manifested through the ideology of an entitlement hub. The entitlement hub is the container in which one can pour their business hopes and dreams to maintain a competitive edge. The entitlement hub defines the business level interfaces for the operational model to function. The entitlement hub is service oriented architecture broken into several distinct modules that control the functionality required for each of the operational model categories.  For instance, the module responsible for the policy and management of revenue-based entitlements is the entitlement hub Order Manager. This module is loosely coupled but highly cohesive with the business level interface that will integrate with external financial systems that contain order data.

Once each of these modules and business level interfaces have been defined a premier entitlement management and license fulfillment engine such as FlexNet Operations should be leveraged to maintain a system of record of entitlement and license fulfillment data. This system of record should also have a template to easily define new license models and metrics. There should also be a mechanism to allow license fulfillment of legacy or homegrown license technologies. The ease of being able to add new license platforms and new integrations to external systems through well-defined business level data contract will result in a sophisticated merger and acquisition platform. This allows companies to grow both organically and in-organically (through acquisition) with minimal overhead to merge heterogeneous business process.   

Another characteristic of a successful entitlement management program is providing a self-service portal built on top of the entitlement hub ideology. This will provide customers with a place where they can self-manage their licenses and entitlements. Also it makes a great place for customer to manage their lifecycle operations for such things as entitlement moves/transfers, license returns and re-hosts of their entitled rights. The self-service portal should not be limited to just customers, internal users can also benefit from a dedicated self-service portal.  A sales and support team will gain much insight on their customer base from a self-service portal that provides visibility into their customer's entitlements. Affiliates and distributors can also benefit from a dedicated self-service portal for their needs providing visibility into complex organization hierarchies for their largest partners.

What characteristics are critical to your entitlement management program?

Are you paying royalty fees for shelfware?

By Mike Costa

Business model innovation is a hot topic for software vendors, intelligent device manufacturers and their customers. Suppliers want to provide customers the ability to easily, quickly and cost-effectively buy what they need, whenever and wherever it's needed. Customers want optimal flexibility, access and efficiency in how they buy and maintain software and hardware.

We're fortunate enough to help many of these ideas come to life and reach phenomenal fruition. Some of the more innovative hardware and software suppliers are doing an awesome job. Just a couple years ago, one-click software installation, pay-per-use software and hardware, self-auditing software and comprehensive IT asset management were dream state concepts. Now, these concepts are rapidly becoming common.

The central theme in most of this business model innovation is the reduction of waste – in terms of time and cost. Waste shows up in a number of areas. The excessive time it takes to install and configure a complex software application and the cost of not utilizing the time- and cost-saving capabilities of recent software releases that customers don't have the time to install and configure. The excess cost of buying perpetual licenses just to address temporary, peak needs. The excess time and cost associated with administering and being subjected to software compliance audits. The excess time and cost associated with allowing IT asset use to grow uncontrollably or not having required IT assets when and where they're needed for critical business operations. The good news is that these forms of waste are actively being eliminated. Sayonara waste!

Well, not so fast. Other forms of waste are starting to make their way to the foreground. One, in particular, is software royalties. Royalties, in and of themselves, are not bad. In fact, they help great products reach the market quicker, standardize certain aspects of products, and improve product quality. In exchange for these benefits, intellectual property providers should and often do receive fair compensation for the value they bring to the products in which they're used. The problem with royalties is not that they exist, it's the basis for payment. The most common approach goes something like this. ABC Corp. develops a software widget that does something really cool and necessary for a hot software product. DEF Corp. decides that about ½ of its customers want a widget in the hot software product, and it's better to embed ABC's widget than to create its own. DEF wants to get to market quickly and it doesn't have the in-house expertise to develop the widget. ABC and DEF strike up a deal where DEF integrates the widget and pays ABC $7.50 for every copy of the hot software product that it sells. As with any hot software product, DEF expects to eventually sell millions of copies. So, what happens to about 50% of that royalty? That's right, it's wasted. 50% of DEF's customers don't use it and the royalty is paid for nothing. By the way, this example could just as easily apply to a hot hardware product.

So, how can we eliminate or reduce this waste? Conceptually, it's pretty simple – tie royalty payment to customer activation or initial use of the widget. DEF can decide to charge individual customers for using the widget, or not. Either way, no one pays for a shelf-ware, or shelf-widgets J. It's not as simple in practice, but it's not daunting either. Changing the premise in royalty payment models isn't an easy discussion for ABC and DEF to have – but aligning DEF's supply chain around its usage-based market requirements is quickly becoming necessary. The infrastructure required to track and report widget activation and use, regardless of whether the widget is software or hardware, is fairly straightforward as well – not simple, but straightforward and usually a rewarding way to reduce waste.

What are your thoughts on paying royalty fees for shelfware?