Entitlement and Compliance Management

An Approach for Addressing Software License Compliance in Virtual Environments

By Tu Le

In many of my discussions with software producers relating to software licensing and machine fingerprinting, almost all are using hardware MAC address, the UUID (Universally Unique Identifier) of the motherboard and/or CPUID information. However, should software licensing be completely based off of the hardware MAC, UUID of the mother board or CPUID information? This process worked very well before the introduction of virtualization but now that virtualization has become more mainstream in the corporate and enterprise environment, software producers really need to reconsider how they are going to license their software.

Machine-based fingerprinting is a typical security model that almost all software licensing is based off (and still exists today). This model breaks down when applications and operating systems are being virtualized and running simultaneously on  the same physical machine. Often times, these virtual machines are a complete replica of one another running on multiple and sometime across different data centers. It is however, fairly straight forward to detect and prevent the movement of a virtual machine through various licensing strategies including:

• The ability to detect and deny running in any virtual environment
• Proxy approach to gain access to the physical host identity
• The use of a security dongle
• External proprietary hardware

However, many of these approaches are not ideal solutions in an enterprise environment where mobility of virtual machines plays a key role and an integral part of enterprise IT operations. For example, they are not ideal for addressing:

• Maintenance period without downtime
• Disaster recovery requirements
• High availability
• Server migration and consolidation without downtime
• Data center expansion
• Workload balancing across multiple and heterogeneous data center

As virtualization technology becomes more mainstream across the enterprise environment, the ability to detect and determine whether a clone virtual machine exists across multiple network segments; but at the same time allow the mobility of a virtual machine is a challenging problem to solve.

Perhaps an ideal solution would be to allow the virtual machine to "call home" and register itself to a trusted source, typically the software producer back-office entitlement management system. This model would require network connectivity to the outside world that would allow the enterprise to move and make a clone of a virtual machine without being out of software license compliance.  What are your thoughts on this approach, would this model work in your environment?

 

Top 13 Entitlement and Compliance Management Blog Posts of 2012

By Ann Reist

After researching the most read Entitlement and Compliance Management: Talking Successful Software blog posts of 2012, we found that the most popular topics were on the subscription economy, software-defined networking, usage-based (pay-as-you-go) licensing, virtualization, software license compliance and SaaS. Not surprising, as all these topics and technologies will most likely continue to dominate the market in 2013.

Top 13 Posts

1. Don't be Afraid of Subscription License Models
2. Common Software License Types and Terms
3. What the Heck is a Token Software License Model?
4. Software Defined Networking Enables New Software Licensing and Business Models
5. Usage-Based Licensing without Usage Data – Is it Possible?
6. Software Licensing – What are the Best License Metrics for a Virtual Machine World?
7. The Software Industry is Recovering from the Recession
8. True Pay-As-You-Go Software Licensing Model – Myth or Reality?
9. What is the ISO-19770-3 Standard and How Will it Make Software License Compliance Easier?
10. Virtualization is the Biggest Game Changer in Software Licensing in Many Years
11. The Next Evolution of Software Licensing: Monetization of Usage Data
12. An Introduction to the ISO/IEC 19770-3 SAM Standard Software Entitlement Tag
13. SaaS is More Than a Software License Model

What technology played the biggest role your in business in 2012? What topics would you like us to address in 2013?

SoftSummit Regional Briefings—Register Now

Flexera Software is pleased to announce that registration is now open for the SoftSummit Regional Briefings. 

The SoftSummit Regional Briefings feature the interactive format, informative speakers and networking opportunities that are trademarks of SoftSummit—presented in a smaller, more intimate setting. This year, Flexera Software is offering the SoftSummit Regional Briefings in three locations: San Jose, California; Cambridge, Massachusetts; and Houston, Texas.

These events are free of charge, with sessions open to Flexera Software customers as well as prospective customers. But seating reservations are limited, so you must act now to secure a spot.

Briefings Schedule

Morning Session - 8:30 am to 12:00 pm
Flexera Software Customers and Prospective Customers
Breakfast will be served. Beverages and snacks will be available throughout the session

• Flexera Software State of the Union
• Discussion of major trends (cloud, SaaS, virtualization) and impacts to software licensing and entitlement management
• 2012 Key Trends in Software Licensing and Pricing Survey Results
• Customer case study and presentation
• Panel discussion with all presenters

Afternoon Session - 1:00 pm to 3:30 pm
Flexera Software Customers "Deep Dive" Session
Lunch will be served. Beverages and snacks will be available throughout the session

• Product roadmap discussions
• Customer feedback
• Product direction

Register Now for a SoftSummit Regional Briefing near you!

Peaks and Valleys: Software Licensing for the Elastic Cloud

By Richard Northing

One of the most compelling aspects of cloud computing is its elasticity.  With cloud provisioning models such as SaaS, PaaS and IaaS, organizations can scale up capacity to support business growth and/or temporary spikes in demand much more easily than they can with traditional IT architectures.  They can also scale down capacity when business slows and/or spikes are over.

Just as important in an uncertain and unstable global economy, the cloud mitigates the risk of being locked into fixed IT costs in the vent of a business downturn.  So even if the business continues to grow, the rental model offered by the cloud still feels more prudent than the capital model.

Discussions about cloud elasticity, however, tend to focus on infrastructure—in particular compute, storage and network.  Infrastructure virtualization and automation are enabling vendors, cloud service providers and enterprise IT organizations alike to achieve a great deal of flexibility when it comes to supporting peaks and valleys of demand.

In fact, a general best practice of “buy the base, rent the spike” is beginning to emerge whereby IT organizations are driving down the cost of supporting well-known workloads internally with private on-premise cloud architectures while shifting more dynamic, less predictable workloads to private and public off-premise cloud resources.

Conversations about the efficacy of this model, unfortunately, quickly deteriorate when the issue of software licensing comes up.  That’s because ISVs have not all responded with equal speed or with similar policies to the phenomenon of the elastic cloud.  Some want their customers to pay for elasticity with a fixed enterprise software license.  Others want to charge for peaks.  And many are still adopting a wait-and-see attitude—even though the move to the cloud is well underway.

None of these responses seem useful for a market that is demanding elasticity as an intrinsic component of any technology buy, rather than as a value-added option.  Any failure to address this demand for elasticity will simply drive customers to open-source solutions, to SaaS resources that may be functionally inferior but economically more compelling or to other vendors that understand the new rules of the cloud game.

ISVs therefore need to ask themselves some basic questions about how they want to play in the elastic cloud, including:

• How should use and software entitlements be properly defined in computing environments where processor cores and end-user devices are no longer fixed assets—but are instead themselves becoming services that can be spun up, spun down, moved and morphed on an as-desired basis?
• How will revenue and sales compensation be affected if the customer’s cost becomes dynamic?  Are pure-play upfront software licenses and SaaS-style subscriptions the only viable models for ISVs?  Or does the advent of the elastic hybrid cloud call for new elastic hybrid software licensing models?
• How will cloud-friendly innovation in software licensing have a positive impact on brand value, customer experience and competitive positioning in the long term?  Will gains in these areas offset potential short-term losses in revenue and increases in business complexity?

Infrastructure vendors are moving aggressively to offer customers new value propositions around elasticity, economies of scale and the offloading of low-value technology ownership tasks.  In doing so, they are breathing new life into markets that were heading towards stagnation.  It will be interesting to see how—and if—ISVs successfully follow suit.

In fact, being the first to meet the needs of the market with the right software licensing model that monetizes the cloud might just be the differentiator needed to push your solution over the top and give you the competitive advantage.

How do you think ISVs should respond to the new imperative for elasticity?  Do you think the industry as a whole is responding fast enough?  What do you perceive as the primary obstacles to a better, faster response?  Feel free to share your ideas below!

2012 Key Trends in Software Licensing and Pricing Survey Now Open

By Ann Reist

In its eighth year, the 2012 Key Trends in Software Licensing and Pricing Survey is now live. The survey, sponsored by Flexera Software and prepared with assistance from IDC, looks at software licensing, pricing, and compliance enforcement trends and best practices. The survey is open to all software vendors, intelligent device manufacturers, and enterprise customers who use and manage software and devices.

Key Findings from the 2011 Survey

• Revenue Generation and Customer Satisfaction Driving Changes: Forty-two percent of application producers indicate that they have changed their pricing and licensing policies over the past two years to make them more flexible. The top two reasons for this shift have been to improve customer relations (46%) and generate more revenue (40%). Accelerating the sales cycle (27%) was also cited as a key reason for broadening pricing and licensing policies.
• Software Budgets Starting to Increase: Forty-three percent of enterprises report that, looking ahead two years, they expect their software budgets to increase–up from 33% in 2010. Twenty-eight percent expect their budgets to stay the same, and 22% expect them to decrease.
• Moderated Approach to Adopting Cloud Licensing Strategies: Application producers are taking a gradual view in anticipating licensing strategy changes to accommodate the cloud. Forty-six percent indicate the changes they‘ll need to make will be moderate over the next two years. Thirty-four percent anticipate no change, while 21% indicate changes will be significant or dramatic.
• Tracking Customer Usage Remains Blind Spot for Application Producers: Of the application producers responding, the largest proportion, 47%, report that they do not monitor customer usage of their products. For those that do, 20% report doing so using internally developed tracking tools, and 16%, using manual audits. Only 10% use third party tracking tools.

Get the entire 2011 Key Trends in Software Licensing and Pricing Report

Don't miss your opportunity to take part in this year's survey! Emerging trends such as the cloud and virtualization are changing the way software vendors and intelligent device manufacturers must monetize, license and entitle their products in order to meet changing customer needs. These trends also impact how enterprises pay for and use software and intelligent devices.

The survey results will be presented by Amy Konary – Research Vice President, Software Licensing and Provisioning for IDC, at an upcoming webinar.

Be sure to weigh in on the 2012 survey so that your opinions are heard. All those who participate and provide contact information will receive an executive summary of the results and be entered into a drawing for an Apple iPad 3.

Take the survey now!

• Survey for software vendor & intelligent-device manufacturer professionals 
• Survey for enterprise professionals

Disconnect on Software Licensing Between Producers and Enterprises—An In-depth Analysis of 2008, 2009 and 2011

By Mathieu Baissac

Flexera Software and IDC do a yearly software licensing survey to Enterprises and Publishers. I recently completed an in-depth analysis of these surveys and will be blogging several articles on some interesting findings. I selected 3 and 4 year spans to avoid “short-term” trends.

One of the questions I explored was “What are the trends around software license enforcement from the Publishers’ perspective” and “How does that compare with Enterprises’ perspective”.

Publishers Perspective 

	2009	2011	Delta
Does not do licensing enforcement	28%	7.8%	-20.2%
Uses dongles	20%	27%	+7%
Uses internet activation	28%	48%	+20%
Uses floating licensing	28%	55%	+27%

Some analysis:

1. More enforcement is growing (none+serial only – 64% in ’09 vs. 35% in ’11 –a 45% delta)
2. Dongles are not dead—they are growing (35% growth—perhaps due to combating virtualization and more intelligent device manufacturers)
3. Ease of use is a big driver in the changes
   -Internet activation: 71% increase in 2 years
   -Floating licenses: 96% increase in 2 years

Enterprises’ Perspective 

Preferred licensing models	2008	2011	Enterprise Delta	Producer Delta	Enterprise/Producer Delta
Floating licenses	71%	48%	-23%	+27% (’09-‘11)	50%
Trust-based licensing	9%	16.3%	+7.3%	-12.2%	20%
Vendor supplied automated monitoring mechanism with annual true-up	3.8%	12.2%	+8.4%	Not asked
Dongles	2.5%	0.0%	-2.5%	+7%	9.5%
Product activation over internet	9%	22%	+13%	+20%	7%

Contrast 

• Publishers are increasing use of floating licenses but enterprises are liking them less and less
  • Root cause of this is unclear
• Publishers are increasing software licensing but Enterprises want more “trust-based licensing” or “automated monitoring with annual true-up”
  • Enterprises want the flexibility to ramp up and down licensing as their business changes
  • Publishers probably dislike that option as (a) they don’t have the tools or (b) they don’t trust enterprises to stay compliant
• Both Enterprises and Publishers like the “ease of licensing” that product activation provides

Flexera Software is working on a compliance automation solution—which we believe will significantly improve the producer/enterprise divide.

Software Licensing Becomes Top Competitive Differentiator for ISVs

By Richard Northing

Historically, independent software vendors (ISVs) have thought of software licensing primarily as a means of protecting their intellectual property (IP) and maximizing revenue.  Effective software licensing technology, after all, is essential for ensuring that IP is not intentionally or unintentionally used in a way that violates contracts.  The right software licensing structure can also help ensure that ISVs receive incremental added revenue for incremental added value.  Neither of these software licensing value propositions is going away any time soon. 

As enterprise technology environments enter a new transformative period characterized by the adoption of virtualization and the cloud, however, software licensing is playing a new role for ISVs—that of a significant competitive differentiator.

Virtualization and the cloud are having this impact because they are fundamentally changing our entire notion of what constitutes a customer’s “environment.”  A server is no longer a physical machine X in location Y.  An application is no longer the code that runs on stack S to support client platforms P₁ and P₂ to provide access for known users U₁-U_x.  Instead, customer environments are highly fluid physical and logical spaces that are being continually re-shaped by workloads, cost, performance, compliance, market pressures and the incessant emergence of new provisioning alternatives.

And as enterprise IT managers wrestle with the new realities of their fluid environments, they are getting less and less patient with ISVs who don’t “get it.”  In fact, many of them are starting to make strategic decisions about which ISVs are in and which ones are out based on whether their software licensing schemes fit with the new reality of IT.

Three factors in particular are driving IT managers to make software licensing a top criteria for deciding which ISVs are worthwhile partners:

Customers demand fairness.  IT managers are downright angry at ISVs that fail to recognize the new rules of enterprise infrastructure.  ISVs that fail to accommodate the ascendancy of the virtual machine and the sometimes-my-PC-and-sometimes-my-smartphone user risk having their business taken from them by ISVs that do—even if their solutions are superior in other ways.

Customers demand flexibility.  IT managers today understand that their environments are in transition and that the way they deploy applications today might not be the way they deploy them eighteen months from now.  ISVs, on the other hand, tend to resist changes to their software licensing models and agreements.  ISVs that adapt to the fluidity of enterprise IT with more flexible software licensing will therefore be able to claim competitive superiority.

Customers demand a great experience.  IT managers are finding life complicated enough as they add layers of virtualization to their environments and try to successfully manage more “moving parts” than ever.  The last thing they need is for their ISVs to make software licensing and entitlement management more difficult for them.  ISVs can therefore add differentiated value by making it simpler and easier for customers to track existing software entitlements and activate new ones.

The bottom line is that, in a virtualized world, software licensing is not just a way for ISVs to pursue self-interest.  It’s also a way for them to demonstrate genuine understanding of and concern for their customers’ rapidly evolving needs.  ISVs that match technology innovation with software licensing innovation will win in this new world.  Those that don’t will risk becoming the latest victims of market disruption.

 If you’re an ISV, how have you altered your software licensing strategy to address virtualization and the cloud?  And if you’re an enterprise IT manager, what changes do you want to see your ISVs make in response to the changes in your IT environment?  Share your thoughts and responses below.

The Next Evolution of Software Licensing: Monetization of Usage Data

By Tu Le

As more companies (both software publishers and intelligent device manufacturers) move towards virtualization, software licensing is evolving from on-premises licensing models—concurrent, node-locked, perpetual, etc.—to monetization software license models based upon usage data—pay-per-logon, pay-per-use, pay-per-period, etc. The market trend for 2012 and beyond labeled as "adopting Cloud" is becoming more mainstream and ubiquitous because, in the past 5 years,  virtualization technology has transformed datacenter computing from physical to virtual.

As software licensing models slowly, yet surely evolve to the Cloud eco-system world, it is important to understand the need for a similar evolutionary process to happen as it did for datacenter computing. Today, traditional software license models rely solely upon the ability to uniquely identify and enforce to machine parameter(s). For example, if you bought Microsoft Office, you had the right to install and run that application suite on one computer. The ability to identify a physical machine in order to enforce license rights is then critical to preventing license leakage. Now, with the ever increasing use of virtualization technology, it has become impossible to uniquely capture the true identity of a machine.

As the next platform combination of application and smart device become more reliant upon the Internet to becoming "Cloud ready," the amount of usage data will increase exponentially. Everywhere we go, we leave behind bread crumbs of data, which are knowingly being collected by Apple and Google for future market research. Whether it is shooting angry birds, rotating color shapes to create the biggest combo break, furiously slashing fruits, or tapping on an ad, data is being created and stored.

A study from Cisco Systems on Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2010-2015 revealed that usage data from consumers to enterprise applications is driving the traffic of the Internet. For example, total raw byte transmission throughput is on average between .24 exabytes (1EB is equivalent to 1,000,000 terabytes) per month today and expected to grow to 6.3 exabytes by 2015 – a 26-fold increase over 2010. A majority of this usage data contributed is from the advancement of embedded and software applications.

The future trend suggests more companies will be looking beyond the traditional software licensing models to help grow top-line revenue and to reduce revenue leakage. Various usage models from per user, per storage capacity, or per throughput, are unfolding in new products and services every day.

Check out these related blogs on virtualization, cloud and usage data models and trends:

• Will the Perpetual Software License Model Ever Go Away? That Depends Upon Who You Ask…

• Virtualization is the Biggest Game Changer in Software Licensing in Many Years

• Think Monetization Before Enforcement with Subscription Software Licensing Models

• True Pay-As-You-Go Software Licensing Model – Myth or Reality?

• Ready, fire, aim. Full speed ahead with virtualization.

What's your Cloud strategy? Are you monetizing data usage? What business models are you using to create more recurring, predictable revenue streams?

Virtualization is the Biggest Game Changer in Software Licensing in Many Years

By Mathieu Baissac

Some virtualization data points:

• In 2010, more software was run on virtual environments than on plain physical hosts (IDC)
• 65% of Enterprises want to virtualize their entire data center (Information Week, 2011)
• InstallShield saw a 132% growth in VMware use in 2011
• 11% of Enterprises said they did not track software in virtual machine (VM) environments (vs. 2.1% for non-VM software) (IDC 2011 survey)

In my years of talking to Publishers, this is the first time I've seen real fear when I start talking about VMs. They know (because they do this themselves) how easy it is to stand up a VM. As Los Alamos Lab IT proudly reports, in a self-service environment, their users can stand up a fully configured server in 30 minutes. Imagine that this VM image contains a license server pre-loaded with all the license files. It sure would be convenient, wouldn't it? So tempting, so easy, so … disastrous… from a licensing and compliance point of view.

If Publishers think they have 6-8% accidental software license over-use on plain old physical hosts, imagine the percentage change in the next 3-5 years as all those data centers get VMed.

What can Publishers and Enterprises do?  Here are some of the tactics that I've seen:

1. Get the VM vendors to come up with a standard, guaranteed to be unique, non-mutable and durable identifier – so licenses can be tied to these
2. Move to floating licenses and ensure that license servers aren't installed on VMs
3. Move to new licensing metrics (usage-based instead of per seat/device/user meters)
4. Move to hosted solutions where the Publisher has control over the license servers
5. Move back to dongles

Whatever the answer ultimately is, it's not "duck you head in the sand" – which seems to be the approach of many Publishers and Enterprises.

VMs are IT's best friend and License Manager's worse enemy.

What tactics are you using to protect against accidental software license over-use?

Insights from Citrix: Software Licensing Implications of Virtualization and the Cloud

By John Lipsey

At the recent SoftSummit conference, Ron Bauman, program manager for the worldwide licensing program at Citrix, shared some insights with Flexera Software.  As one of the original innovators in the virtualization space, Ron is in an excellent position to understand what's happening in the virtualization and Cloud environments and discuss the software licensing implications that those technologies create.  In this video, Ron discusses 3PC—the Citrix vision of the Personal Cloud, Private Cloud and Public Cloud, and the licensing models essential to enable that vision.              

In addition, Ron also shares his thoughts on the value of attending SoftSummit on a regular basis.

View the video: Software Licensing Implications of Virtualization and the Cloud

 

Ron Bauman, program manager for the worldwide licensing program at Citrix