Joe Freda, CFO, Flexera Software
In my first blog I covered the impact of software monetization on revenue recognition, the second covered driving recurring and predictable revenue, the third covered customer intimacy and now I’ll take the final area – business model flexibility.
#4: Business Model Flexibility
The one constant in technology is change. Whether your customers have adopted trends such as cloud, virtualization, Internet of Things or others you need to assure investors that you can leverage these trends to create new opportunities and not just react “on your heels.”
Why should you care? Capitalizing on trends requires a high degree of flexiblity in your business models which means you’ll need scalable, agile business models and processes so you can support the complexity that these new technologies bring. If you get it right you can rest assured that your IP is protected and monetized in these complex environments.
What you can do: Ensure that your software licensing and entitlement management solution enables flexible business models so that you can adapt to change quickly and with as little disruption as possible.
For example, many intelligent device manufacturers are shifting from hardware only to hardware plus software plus services which carries with it a whole new set of supply chain requirements. After all, managing digital assets like software is very different than managing physical goods. Many have found that their ERP systems are great for managing the hardware business but simply are not nimble enough to manage the range of activities associated with software license lifecycles – activations, re-hosts, partial renewals, de-activations and more.
Further, software business models also need the utmost flexibility so you can enforce and monetize IP and usage in a variety of environments ranging from virtual to cloud and everything in between.
Investors will look favorably on your ability to pivot so you can offer multiple business models to meet your customer’s needs which ensures you’ll be able to reduce product over-usage and capitalize on the trends today and into the future.
I hope this series has helped those of you considering an IPO. Are there any other areas you need help with?