A software licensing solution is a solution that allows companies that write, publish and sell software applications to easily issue, manage and revoke the licenses that they provide to their customers.
The term can be sometimes confused with a software license management solution which sometimes refers to a tool used by a licensee of different software applications to keep track of the software licenses they have purchased from different software vendors, for audit purposes. Learn more about license management here.
The industry has done a poor job at distinguishing clearly between the two types of solutions – when thinking about it, it is easiest to think about it from either the perspective of the software vendor selling an application or the customer buying the application.
The aim of this article is to define what software licensing solutions are and what they should be able to do in the 2020s. We'll first look at what licensing solutions are used for and then compare traditional solutions to more modern ones.
What Does a Software Licensing Solution Do?
A software licensing solution allows an independent software vendor (ISV) to license the application it has created to a customer on specific business terms and the software licensing solution is used to ensure that the application can then only be used by the customer on those specific license terms.
Examples of how a licensing solution works
- For example, if a customer has purchased a license for 30 days access to a web based application for one person, the software licensing solution is used by the vendor to ensure that only this person can access the application for that specific period of time. It then ensures that after the 30 days finish, access to the application is no longer granted.
- A similar, but more complex scenario might be a customer that has licensed 5 seats to a desktop application on a floating license basis for use across 15 of its employees. The software licensing solution would ensure that only 5 of the 15 employees would be able to access the software application at any one time. This is the case irrespective of application type and can be used for desktop applications, web applications, mobile applications, virtual machines and even APIs.
Traditional Software Licensing Solutions Are Slowly Killing Your Business
Traditional software licensing solutions are outdated and cumbersome. More and more independent software vendors are moving away from these so-called ‘flexible’ licensing solutions to more modern solutions that offer genuine flexibility in the multi-app, multi-platform 21st Century.
Knowing how to license your software is critical and you need to get it right, for both you and your customers. For you as the ISV or software publisher, it’s your software applications that you worked so hard to plan, design, implement, test, debug, deploy, iterate and deploy again that are the lifeblood of your company and its employees.
It’s your applications that are purchased by your customers and it’s this software revenue that pays salaries, keeps the lights on, allows you to invest in even better products and continue on the path to corporate greatness. These products need to be protected by an effective software licensing solution that both serves to maximize revenue as well as protect your Intellectual Property (IP) from unauthorised use.
Your customers need to ensure that they’re using your software legally, but also that they aren’t paying for licenses they don’t need. Acquiring too many licenses wastes their resources, but not having enough leaves them open to a potential lawsuit. In many cases, over-usage has less to do with a company deliberately trying to avoid paying license fees, and more to do with their inability to track or understand their own usage of applications internally.
Traditional software licensing solutions that rely on software license keys or dongles fail to address any of these issues for either software vendors or their customers. They fail to protect the IP of the ISV and offer no ability to ensure an accurate match between usage and license fees paid. For the customer, they significantly increase software downtime, can’t offer flexible or granular usage models, and can become a major support issue.
How Do Traditional Software Licensing Solutions Work?
Traditional software licensing solutions rely on heavy manual processes for license generation and license reconciliation for desktop applications. Typically there will be an entitlement representation system within the ISV back-office that allows access rights to be defined and that generates the license keys.
There also needs to be some sort of record or database view of the rights and entitlements for each customer, which requires deployment and management by the customer. Keeping these systems in sync when onboarding new users and particularly when end-users change within the customer company, can become a significant headache for both parties.
So let’s say that you’re a software vendor and you just landed a great new customer who agrees to buy 10 licences. With traditional software licensing solutions you would generate 10 new license keys using your back office system. Details of these licenses are then added to a spreadsheet as well as being added to a CRM system like Salesforce.
Lots of Infrastructure, Lots of Manual Processes and Lots of Wasted Resources
It’s unlikely that you would have a MAC address, dongle or email address to tie the rights and entitlements to at the outset, so when you eventually obtain this information your spreadsheets and CRM system will need to be updated with the unique identifiers. You’ll also need to update your database every time the rights and entitlements of your customers change.
Once you’ve generated and recorded your license keys they still need to be physically delivered to your customer, most likely by email. This could mean sending out license keys directly to individual end users for them to install or maybe this will be done centrally by IT. Regardless of the delivery system, licenses then have to be installed within the end-users machines, device or network to eventually be able to use the software.
Even if you’re using license servers like FlexNet LM, there’s lots of infrastructure, lots of manual processes and lots of wasted resources. What’s even more frustrating is that when you want to upgrade (or downgrade) entitlements, you basically have to go through the whole process all over again, sometimes with the end customer having to uninstall licenses explicitly and then install the new ones. This whole process significantly increases software downtime and can become a major support issue for both you and your customer.
Also if your end-user decommissions a piece of hardware and wants to switch the entitlements from a decommissioned MAC address to a new MAC address, there’s no way to reliably destroy prior access rights. Software vendors have to trust that end users are not using license keys on decommissioned machines and only using them on the new ones.
The inability to be able to reliably rescind usage rights is a huge problem with traditional licensing solutions.
10Duke Enterprise overcomes all of the headaches associated with traditional or ‘flexible’ software licensing solutions. As well as reducing infrastructure and costs, it’s infinitely scalable and will allow you to confidently grow your business and offer a world-class software service to your customers.
How Do Modern Licensing Solutions Work?
Let’s go back to our 10 licenses again – you just landed a great new customer who agrees to buy 10 licences. However, this time you’re using a 10Duke licensing solution, so now everything is driven 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 have 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 the 10Duke API and it enforces application access.
10Duke provides you with a cloud-based representation of this two-way linkage with your customers’ authoritative rights always sitting within your cloud view. You’ll always see the most up to date version of your customers access rights and when you want to upgrade them you simply update their entitlements within the cloud and this automatically propagates down to the end user.
When it’s time for access to be revoked, simply update the end-user’s entitlements through your dashboard and the next time they run the software they will have been downgraded to the new rights.
You can reliably rescind or upgrade prior access rights at any time and always ensure that the end-user is running with the correct entitlements. There’s no need for lengthy entitlement updates, giving you and your customers more operational efficiency and providing higher customer satisfaction.
Learn the Basics of 10Duke Licensing
True Flexibility and Control On Tap
With 10Duke you get true licensing flexibility and granular control – how, where, when and from what devices your applications can be accessed.
Your customers will love it because after the end user has set up the initial connection, they simply use the software based on the rights that they’ve negotiated and agreed with you. As you enhance and extend usage rights this will be propagated automatically down to that end client.
Integrations with CRM systems like Salesforce are also straightforward to deliver, saving you and your team the hassle of having to keep CRM manually in sync with your licensing system.
If you’re a software vendor, it’s all about your customer’s experience. 10Duke Enterprise will help you deliver customer-centric licensing with a proven ability to drive more revenue than conventional licensing solutions. We’ll help you remove licensing complexity from your end user environment and reduce support tickets, helping both you and your customers to deliver more.
Learn What Identity-based Licensing is
Are you a software developer looking to sell more? Learn more from our guides:
Should You Build Your Own Licensing System or Buy It From a Specialist?
Software Monetization Guide – How to Monetize Software?
Software Licensing Guide – Why is it so important?
Why Software Companies Should Consider the Subscription Business Model
What is a Software License Manager? [Guide]
Software Licensing Solutions – Guide
Software Licensing Models – Ultimate Guide to Software License Types
Customer Identity and Access Management – What should a good CIAM solution provide?