In my first blog You May Think Selling Your Software is a Good Idea – But Are You Sure?, I looked at the initial challenges a traditional hardware manufacturer could face as they sought to leverage the opportunities of integrating and using software within their hardware products.
The article affirmed a couple of doctrines:
- If you’re a software producer and you are embedding software in your devices, you need to be sure you own the intellectual property and have the rights to offer it to your customer base.
- Once you know you own the software, unless you want to give away your rights to it, you never, ever, sell the rights to that software!
So now that you’re – sold – on the concept that you’re going to license (not sell) software – we all know that it can get complicated, particularly if for years you have been giving away the software and now are expecting your customers to potentially sign additional software license agreements.
IDC recently did some research into customer expectations relating to what they expect from a software vendor. I’ve taken some of the headline findings and added some further narrative to re-enforce their views:
The Software Vendor Should Take Responsibility for Ensuring Compliance
I’m not advocating that the software licensee should be absolved of all compliance responsibility but it has to be said that many software vendors still don’t make it easy for their customers to remain compliant or manage the license lifecycle of their software.
Licensing and entitlement management technology, including Flexera Software’s FlexNet Operations makes it easier for customers to stay compliant. In those situations where non-compliance occurs – it becomes a great upsell opportunity where a customer has flexibility to use additional licenses (‘Agreed Overage’) and the software provider has visibility into the over-use (automatic emails that notify producer of over-use). This provides the customer with flexibility and provides an excellent non-confrontational upsell opportunity.
Simplify Licensing Terms and Metrics
I’m a strong advocate of ensuring you have simple robust but fair licensing terms. Historically there have and continue to be very restrictive players out there who look for every opportunity to gouge the customer, particularly if they believe they have a niche offering.
Keep it as simple as possible – keep your software license models and metrics to the minimum – particularly if you’re new to the game.
Provide License Administration Tools
It is increasingly becoming commonplace for customers to have access to a portal to view their licenses and entitlements and see what is being used. In addition, large organisations are looking for tools that will allow them to manage software by business units, within countries or by regions to provide flexibility managing the use of their expensive software assets and move them around to meet the ebbs and flows of their business.
This is a perfect example of why it is important to simplify your licensing and, for instance, not overly restrict where a license can be used within an organisation.
Offer Concurrent User Licenses
When you look at the previous expectations you can quickly see a pattern emerging. The customer wants licensing to be fair and centric to their business requirements. Concurrent licensing, often known as a floating license, is another way to provide your customers with the flexibility to use software licenses that are not being used by one individual to be available to someone else.
It should be a quid pro quo in that these licenses are normally more expensive but provide the customer with greater flexibility. Concurrent licenses can be easily and effectively managed by the customer, using their administration portal. They can see and monitor usage as well as ‘borrow’ licenses to work off-line away from the license server.
Both software producers and customers’ perceptions of licensing have changed over the years. The producer must be aligned with customer expectations and what they are prepared to pay for. The emergence of hardware manufacturers morphing into software providers and capitalizing on IoT has provided the platform whereby the customers’ needs must be heeded if they are to be successful.