In this blog post, Randy Littleson, Senior Vice President of Marketing at Flexera Software speaks with Rami Ahola – Global Electronics Center of Competence at IBM and Vikram Koka – Vice President Intelligent Devices and IoT at Flexera Software and asks them to about expense of connectivity as well as the licensing and entitlement lifecycle.
Randy: Will connectivity be priced based on subscription model, and applications on a consumption based model? Do you see that model happening?
Rami: Yes most of the connectivity that you have in the devices today is some sort of cellular network type of connectivity, which is subscription based not consumption based. For the cell phone or network companies it doesn’t make a whole lot of sense to provide consumption base connectivity pricing because often it’s very short bursts of data going relatively and frequently out of the device. The consumption price would need to be ridiculously high for them to make any money off of that.
Randy: What is this license lifecycle and why is it important to monetization?
Vikram: The notion of license lifecycle is primarily the result of an auditor, as devices get more intelligent there is more capabilities which have been either purchased or added on over a period of time. You need to have a record of what set of capabilities are actually deployed on this particular asset over the life time it’s been deployed in the field. Initially they’re being shipped with a certain set of applications on the endpoint. Over time, additional capabilities may have been added to it, from either the original manufacturer or a third party application provider, and this endpoint may actually be working with other parts of the ecosystem. One of the key things to remember is for an IoT provider, it’s an ecosystem play to a large part. The second key part is that the behavior of the device will change and grow over a period of time, and that’s powered based on additional capabilities added potentially as a license capabilities, but that record needs to be kept. There needs to be a consistent viewpoint of what that entire state of this particular asset is. In cases as such as a Returned Materials Authorization (RMA) because something changes and you need to replace it, you need to know what is running right at this point in time so you can replace it in its entirety. I’ve heard people refer to this as being the change from a physical supply chain towards a hybrid or digital supply chain. It’s a combination of what is originally shipped and things which have grown over a period of time, which is where the entire lifecycle comes into play. That leads to the license lifecycle or an entitlement lifecycle, but it’s fundamentally a reflection of the change in the supply chain. As devices get more sophisticated, things change over a period of time, how do you manage that? What is a central depository to keep that fulfillment lifecycle, what is the current state in hand to be able to replace it, and then to be able to upgrade it.
Randy: Let’s take that one step further, you mentioned entitlement management, let’s talk about entitlement management specifically related to monetization and focus on the upsell and cross sell opportunities from having a good entitlement management system as well.
Vikram: Once you have a connected device and expect this ecosystem to grow through additional applications, you need to know what’s running on it. Customer and install based intelligence is absolutely essential for any device manufacturer to be able to do an upsell. We are used to this in the consumer space with smartphones. You have a record of exactly what’s on your phone and can wipe it clean, restore it, be able to get a new phone and get the same applications. You need that behavior with an IoT application and with an intelligent device. For an upsell opportunity you need to know what’s running on the device. In the industrial space a lot of these assets can grow over time. They can be renewed with newer algorithms in machine shops, as well as in additional capacity in the networking equipment and telecommunications or new manufacturing techniques for a factory floor system. Knowing what version of the software the device is running, knowing what the physical capabilities of that asset is, gives the opportunity to be able to upsell, upgrade, be able to then perform these diagnostic operations as Rami was talking about in the case with Rolls Royce, be able to extract additional value, an ongoing value from it. A good entitlement management system is absolutely critical for making these monetization’s options feasible and possible.
Share your perspectives— The importance of the licensing and entitlement lifecycle in IoT
Part 1 discussed Defining the IoT
Part 2 discussed Monetizing the IoT
Part 3 discussed Licensing the IoT
Part 4 discussed How Industries and bundling play roles in IoT
Up Next: Part 6: The roles cloud, virtualization, and security play in IoT