By Cris Wendt
When you fully understand how customers use and value your software, you may begin to realize the benefits of offering entitlements to different license models to meet the nuances of deployment requirements. This is especially true for software vendors and embedded device manufacturers that offer enterprise-level software that forms part of the backbone for the customer’s operational infrastructure. What you may find, is that these nuanced requirements may be reasonably common, and possibly represent revenue opportunities.
By offering these deployment-centric licenses, you tell your customer that you understand how they use your software, and, that your offering is targeted to meet their operational deployment needs. In addition, by communicating value, you may begin to realize increased revenue. Furthermore, if you begin to codify these licenses into your product SKU structure or entitlement model, then these models can be integral to your offering. Such models can be built into your entitlement management processes in an automated fashion, and not become an after-thought that requires manual intervention or special considerations when managing software compliance.
The software license models that we see that are often after-thoughts to a company include:
- Development and Test Licenses: In direct B2B sales models, the enterprise customers of the software vendor often require copies of the software to perform internal test and development to incorporate new versions of your software into their environment. This is often the case for ERP, MRP, or CRM software, which is integrated with other systems. It’s not uncommon to have 3 “non-production” uses for (what becomes) production software, including development, QA/test, and user-acceptance test. These tend to be offered as perpetual or subscription licenses, with restricted usage limitations (e.g. internal use, non-production).
- Fail-Over / High Availability Licenses: This is a requirement if you sell software that is used in mission critical applications, such as 9-11 response systems, industrial control systems, medical systems, high-availability storage, power management systems, or financial transaction centers. In these mission-critical situations, your customers will have a business continuity plan to continue operation in cases where there is a disaster such as an act of war, flood, earthquake or similar emergency. In these cases, software licenses will need to be immediately available so that the business can continue operation. Depending upon your customer’s plans, you may need a “hot backup”, “cold standby” or ongoing high-availability license to provide your customer. Depending upon how you provide value, these can be a selection from: perpetual licenses governed by restricted usage limitations, event-based licensing (e.g. a fixed number of fail-over events), or an event triggered time-based license.
- Deployment Licenses: These are licenses required by your customer’s internal services organization, external partner, or customer to deploy operational software in a production environment. These licenses are required for software that requires a lengthy configuration setup period, such as setting up a telecommunications environment, or, complex financial transaction center. These licenses are required by software vendors who sell a subscription license or software support, who want the start date of the license or support to align with the end of the deployment. This is typically a time-based license that requires entitlement processes aligned with the software deployment model. While this may be a potentially complex process, these are easily accommodated with a well-designed entitlement management process and system.
Anytime you price and license software, it’s important to consider how the software and pricing align with commercial value. But, often neglected are the use-cases described above which may provide areas of untapped opportunity.