What Your Software Licensing Provider Isn’t Telling You

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What Your Software Licensing Provider Isn’t Telling You

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If you make apps or software, defining a need for your product and creating something of value that your customers are prepared to pay for is a great first step. However, an ISV can only create successful software company if their software is continuously protected, monetised and updated. Developing a successful SaaS monetisation strategy starts with using the right software licensing provider. At a very basic level, you will reconcile software that has been paid for against software that been issued. However, there are a number of much bigger pain points that you need to consider and overcome.

Even the simplest looking consumer scenario brings problems when requirements change, licenses fail, staff leave, end-users decommission hardware or users update their operating systems. Ultimately your software licensing provider should be able to provide you with a licensing model that reflects the needs of your customer – and business customers these days expect a consumer-like experience for all of their digital products.

Successful software licensing starts with how you issue your licenses and you need to think carefully – get it wrong and you will kill your business. In the case of trial or evaluation licenses, you’ll be issuing and managing entitlements on software that is yet to be paid for. Therefore your software licensing provider must give you granular control. Operational efficiency when on-boarding new customers will also equate with a great customer experience and ultimately enable you to create a successful software company. However, to achieve effective software licensing you will have to let go of outdated systems.

Paper software license

image of man writing on paper with a penPaper software licenses are usually only deployed to large companies or businesses and occasionally standalone devices that will never connect to the internet. For example, in the past, if a large retail store wants to install software at 50 locations within its organisation, instead of managing 50 installations of the software individually, the company can buy one copy of the software. A signed paper document then authorises them to use it on 50 computers.

Monitoring software overuse with paper licenses requires lengthy and expensive audit processes, which creates a significant problem and access rights cannot easily be revoked. Pushing updates to customers can also be very cumbersome and time-consuming and paper licenses severely restrict the licensing models an ISV can offer. These days a software licensing provider will very rarely offer licensing through physical media as it does not offer enough protection to the software vendor.

Software protection dongles

The license dongle was once the solution of choice for a software licensing provider. A software protection dongle is a hardware key that is programmed with a specific, per-user license key code. The key is attached to a computer or appliance externally and the software unlocks. Without the dongle, the software may run in a restricted mode, or may not run at all.

software protection dongleAn end-user cannot easily change a hardware or device ID. Therefore the use of a hardware serial number in conjunction with a license key can means that a software licensing provider can offer a more secure software licensing system. However, with enough time, all software protection systems can (and will) be broken.

Modern dongles include built-in strong encryption, smart card technology and code porting, and it’s not unusual to still encounter ISVs using dongles in specialised domains like GIS, Image Processing or Medical. However, owing to their high cost and complexity, and high maintenance costs, it’s increasingly rare to find dongles in all but the very highest value desktop software applications such as military or banking. Physical product keys on dongles also present opportunities for distribution to go wrong. If a product is shipped with a missing or invalid key then the software itself is useless. Software dongles get lost and are also prone to damage (aka the ‘dodgy dongle‘). They increase operational costs through device cost, storage & delivery, have compatibility problems and can easily be passed from one user to another. Hardware cloning is also a threat. Upgrading and updating dongles to the latest available software can become a huge drain on resources, for both you and your customer.

Software licensing with digital documents

Your software licensing provider can also issue license keys as a license (or LIC) file attached to an email, typically provided with an order confirmation email. This circumvents the dongle issue of having to physically harvest and redistribute media in order to share an entitlement, however digital product keys still encounter numerous distribution and maintenance problems.

ISVs need to determine who needs access to the software license keys – is it the person in procurement or IT management that you’ve been negotiating with or the person that will use the software? License files then need to be stored and saved on the end user’s device and the software will still need to be activated and the license keys deployed. Ongoing IT support is required – who will your customers’ contact in an emergency in the case of a lost, expired or deleted file? You (and your customer) will also need to maintain some sort of record of rights and entitlements and you will both need to keep these records up to date for reconciliation purposes. This adds a significant headache for everyone.

When it’s time to upgrade or downgrade entitlements, you may need to go through the whole activation process all over again and in the case of revoked usage rights, you will need to find a way to confidently ensure that your customer isn’t using an old license file. Businesses don’t stand still, employees move through organisations and they decommission and update hardware. Roles change, rights and entitlements change, mergers take place and companies grow, often losing track of digital assets in the process.

Embedded in product downloads

For products acquired by download, the software licensing solution can be provided as part of the product download. Your customer doesn’t have to explicitly save and run the license files as these are automatically distributed and deployed as part of the download process. Again if the license directory is moved to an alternative location (or deleted) this may invalidate the software licence and the software will fail to run. This can create an IT support issue and again you need to consider who your customer will call in an emergency.

Apart from the ongoing support issue, you also need to consider whether a cached version of the software will run if the user is not connected to the internet. In the case of revoked entitlements, if your customer doesn’t update their version of the software, will they still be able to run your software product indefinitely using their previous access rights? Requiring your customer to explicitly uninstall and reinstall the latest version of your software is also going to create support issues and as well as providing a poor customer experience.

Outdated license key systems

A software licensing provider like FlexNet LM has offered value to software vendors in the past. A group of networked computers could access and run the same software using a single license file, therefore, enabling software licensing models like floating licensing to be deployed.

Typically software license keys issued using a license server are deployed by a third party software licensing provider that sits between you as the ISV and your customer. Enforcing this method requires license servers and IT infrastructure to be installed and deployed at each end user’s location. The server can also be set-up with multiple license files, so for example license file A issues licenses relating to software function A and license file B issues licenses for Software function B and so on. This enables multiple features to be licensed from the same product.

When your software runs it usually picks up and sends a hardware ID to a server hosted internally at your customer’s location. This internal network server then requests a license key from the stored license file and combines this information with the hardware ID to produce a digitally signed message which, when sent back to the software enables it to run. A license management system inside the server issues the licenses and a Vendor Daemon tracks how many licenses have been issued and who has those licenses.

In order to request and validate a license file, you must collect and co-ordinate license server information – copy and send a license file between server software, request and copy the corresponding hardware license information, confirm its accuracy and then this combined license key must communicate with your registered program for it to run on the end device.

Revoking licenses, monitoring access and software license reconciliation becomes a significant issue unless you and your customer have an unlimited budget and unlimited personnel. Poorly maintained servers are also notorious for working fine one day and suddenly failing the next. Also if the Vendor Daemon stops, users can lose access to their licenses, sometimes without warning, therefore losing work.

A server software licensing provider does not solve the problem of effective license management. Organisations will still have to dedicate a lot of resource to software license reconciliation and undergo lengthy and expensive audit processes. Customers lose track of their end-users as people move through or leave organisations and pushing updates and tracking software overuse can still be very cumbersome and time-consuming. In today’s world of BYOD and the evolution of remote working environments, it’s very easy to lose track of exactly who needs access to software products and who actually has access. End-user environments are not always tightly defined by a single local area network, as a result enforcing license server models can become overly complicated.

Summary

Every software application has a software licensing process and if your customers are lucky the process will be straightforward, logical and transparent. If your customer is unlucky the process created by your software licensing provider will be complicated, poorly executed and will frequently fail with a lot of software downtime. Unless you have an unlimited budget you don’t want to be shipping physical license keys or creating software downtime for your customers through resource-intensive software licensing processes.  Your software licensing provider does not need to insist on a complicated process involving lots of hardware. A licensing system can be flexible without being complicated but unfortunately, this isn’t usually the case when a key-based license solution is deployed.

Most software suppliers still operate with a high number of manual or outdated processes when they provide their software products to customers under license. Sooner or later these processes will break. It’s time to let go of using a license key altogether. Software licensing is integral to the success of your software business and therefore getting the right software licensing solution to support your long-term objectives is critical to reducing risk.

10Duke – Your identity-based software licensing provider

Consolidating your software business into a cloud-based identity management and software protection solution instantly enables you to manage and automate your software licensing processes.

The ability of API controls to tightly manage real-time application access means that 10Duke can accurately control a variety of license models, from trial SaaS subscriptions, site-based floating licenses, PAYG subscription models and even aggregated floating usage. Software vendors and their customers can more easily track how and where software is being used because access is based on the authenticated identity of an individual end-user.

With 10Duke your customer never has to install a license server at their site and you can deliver digital licenses 24/7 with updates to a license reflected in real-time. The 10Duke Entitlement Service enables you to offer streamlined customer-centric licensing from the cloud so that you and your customer can grow your business with confidence.

Find out more about 10Duke Product Licensing Solutions. Read the case study to find out about how Trimble uses 10Duke identity-based licensing for multiple online applications.

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