Can you quickly and accurately determine your installed base?

That seems like a fairly easy and obvious question. Do you know who has which of your licensed software and/or hardware products, where they are located and to what each of your customers is entitled? With many companies responding to market demands for greater license flexibility and customer self-service, maintaining accurate installed base data is becoming a huge problem that must be addressed.

Accurate installed base data allows you to maintain and grow your software and/or intelligent hardware business. Revenue from compliance true-ups, maintenance, support, upgrades, up-selling and cross-selling all depend on accurate installed base data. Attempting to audit license compliance based on erroneous installed base data can severely damage your relationships and reputation. Maintenance and support renewal quoting always starts with an accurate installed base view and asking customers to tell you their installed base undermines customer confidence. An otherwise focused up-selling or cross-selling campaign is considered “spam” to targeted customers that do not meet the applicable installed base profile. And, requiring your channel partners to report installed base lifecycle data in an accurate and timely manner is often more than they can achieve.

Maintaining accurate installed base data is usually difficult because licenses tend to change during their lifecycle – sometimes frequently. Some of the common lifecycle stages include: initial sale, maintenance renewal, move, rehost, update, upgrade, downgrade, subscription extension, end-of-life and return. In addition, if you have an indirect sales channel, the initial sale can include two or more additional sub-stages. Inadequately integrating these transactions renders the installed base data for applicable licenses obsolete and useless. Workarounds require expensive, custom or manual integration with other transaction systems – and these workarounds are seldom scalable.

One of the most common misconceptions I’ve heard is that the “installed base” module in an ERP system is a viable system-of-record for storing all license lifecycle transactions. The problem is, as Mathieu Baissac pointed out, ERP systems were never architected to support the dynamic nature of today’s flexible, self-served license transactions. ERP systems were designed to manage relatively static, physical assets – largely from an accounting perspective. They worked OK for software when license rights (i.e., entitlements) were relatively static – involving only initial sale, fixed period maintenance and end-of-life. But, as entitlements became more dynamic and hardware became field-expandable and networked, ERP systems became less and less viable. Many companies invested heavily to augment their EPR installed base modules to fill the functionality and performance gaps, but that has proven prohibitively expensive, slow and risky. At this point, ERP systems are only the system-of-record for the initial sale stage of the license lifecycle – primarily because they are often used to process orders. SalesForce.com is increasingly the primary or secondary order entry system for many companies because it is a natural, lower-cost environment for that purpose.

An Entitlement Management System is increasingly recognized as the “always-accurate” installed base data solution. An entitlement management system converts orders into entitlements consisting of license rights that customers can then consume, transform and manipulate – within the terms of the purchased license rights. Those rights can include all of the license lifecycle stages mentioned above and many others – overdraft, peak usage, draw-downs and term licenses. License rights are not only applicable to software. Many intelligent hardware products are also being developed with flexible use rights metrics like storage capacity, router channels, networking bandwidth, medical diagnostic tests and even surgical procedures.

Flexera’s FlexNet Operations solution is an example of a mainstream entitlement management system that is specifically designed to manage the dynamic nature of current and future software and intelligent hardware lifecycles. It integrates with other on-premises, on-demand and mixed-environments like Oracle, SAP, Saleforce.com and many others using standard, configurable interfaces. Also, its tight integration with electronic software download, in-product license management and in-product messaging functionality to provide commercial, out-of-the-box best practices.

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