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The Biggest Software Licensing Mistake That You Can Make


The software and IoT world is bursting with new opportunities for software developers and their customers yet due to outdated processes, many software vendors don't know how or even if their customers are using their products. Software needs to be licensed in order to protect revenue and the intellectual property (IP) of the ISV.

However, thinking of software licensing as simply minimizing unauthorised use of your software is a huge mistake. You don't just need to know who your customers are, you also need to know if they're getting value out of your products.

In software licensing terms, IP protection means that your software will only run if a valid software license is available. However monetizing software doesn't just mean collecting money from your customers so that they can run your software, there's a rich stream of data to be collected as well.

The software licensing landscape is evolving. Perpetual licensing is probably still the dominant software license type, but increasingly ISVs are moving to other more consumption-based licensing models. Use-time, concurrent and subscription licensing models are rapidly gaining popularity and ISVs need to stay current in order to stay competitive. Market Research Future noted that 'vendors who do not offer cloud-based solutions will face increased competition in the coming years as businesses, are preferring cloud over on-premises solutions.'

ISVs need to fundamentally rethink their idea of value

Activating an instance of software is just the beginning of what will hopefully be a very long and mutually beneficial relationship between you and your customer.

However, you need to consider the whole customer journey and provide an exceptional customer experience long after you've made the sale. You need to manage the modern market challenges of evolving license models and changing working environments, but you also need to take some responsibility for your customer's success by creating opportunities to reduce costs associated with IT infrastructure and license management and by providing them with actionable insights.

Helping your customers connect consumption with outcomes will ultimately increase your bottom line. Knowing which products and features your customers find most valuable will help you price those features accordingly. Adding actionable insights to your software licensing solution will help you identify and react to business changes and introduce product improvements. But none of this is possible with outdated license key solutions.

If you're a software vendor you should be able to easily and securely protect your products and check for unauthorised and concurrent users. However, software licensing isn't just a computational comparison to check for authorisation issues or a customer database reconciled against a list of license keys. Your software licensing solution should be a way for you to connect to your customers – an engine that drives engagement and revenue, providing flexibility and actionable insights for both you and your customers.

Managing the market challenges of modern software licensing

The global market for enterprise software is expected to reach 389 billion U.S. dollars by the end of 2018 and is anticipated to reach over $500 billion by the end of 2022. If you are an ISV selling software products, you are in a consistently fast-growing market. There's a very strong incentive to provide flexibility and transparency to your customers when licensing your software – put simply, if you don't then someone else will. The market is shifting towards increased flexibility and business customers are beginning to assume that they can only pay for the features they want and turn off the features they don't need.

Many software developers are stuck in the mindset of 'one-time' revenue, fixed price and fixed consumption, but you need to offer your business clients more flexibility if you want to stay competitive. Business customers are starting to expect software vendors to deliver a consumer-like experience for all of their digital products and it's no longer a case of whether or not ISVs and software producers have to change; they must change in order to step into the future.

A large portion of software vendors are still using traditional software license keys and this, combined with the distribution method chosen, often ultimately restricts the amount of flexibility that they can offer. In the past ISVs have turned to on-premise license server solutions in order to manage software licensing more efficiently, however again the mindset is still very much focused on the use of software license keys.

Essentially, license server solutions simply automate the distribution of license keys amongst a group of authorised users and this approach will not remain competitive in the 21st century. A license server solution requires IT infrastructure and license servers to be installed in each end user's location – all without actually solving the problem of effective license management.

Offering multiple license models for the same products means being able to efficiently manage concurrency while retaining the ability to permanently revoke access when necessary. With the internet of everything (IoE) and true PAYG subscription software licensing potentially lurking in the shadows, it's now more important than ever to be able to monitor and tightly control software over-use. However, you also need to be able to offer data and actionable insights to your customers for your licensed products as well. None of this is possible with traditional, outdated license-key solutions.

How can 10Duke help?

10Duke Entitlements will enable you to manage customers and entitlements across all your products and to integrate and automate licensing processes. Moving to a cloud-based product licensing solution allows you to automate and speed up fulfilment processes, create a more scalable back office and to recognise revenue much quicker.

10Duke drives everything from the cloud. You set up your new customer as an organisation within your dashboard and email the end-users directly. They create their own web-based account with your company and when they activate their account for the very first time, they're automatically able to access the applications they've licensed from you based on an authenticated and active session. This even applies to desktop apps.

There are no license keys to generate or install, your applications simply delegate all authentication and authorisation decisions to 10Duke and it enforces application access using strict API controls. You can easily provide access to software upgrades, flexible pricing models and ultimately a superior customer experience.

10Duke Entitlements consolidates your software licensing process under a central entitlement management system that can empower your customers through better business intelligence. You'll be able to provide a seamless software delivery experience to your customers as well as offer insight into their application usage.

Through 10Duke you can gain access to a highly scalable web service that both stores and extracts the data generated by the devices your customers are carrying or the applications they are using. You can use this data to create valuable, actionable business intelligence that can help shape a new product or service and provide your customers with even greater value.

Read the Trimble Case Study.

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