Four Things Your Software Licensing Model Must Have To Be Successful

Software licensing is one of those strategic imperatives that, if not working well, quickly becomes a top focus for any CEO. A poor licensing program can lead to revenue leakage, operational inefficiencies and customer dissatisfaction. Throw in a highly competitive product & market climate, and companies are forced to adapt, otherwise they face reduced profit and loss of valuable market share.

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On the other hand, implement a successful licensing program and you will have the necessary business tools to improve customer experience, optimize operational process and maximize revenue. Having worked with hundreds of software vendors and intelligent device manufactures overs the years, I have identified four critically important characteristics that any software licensing strategy must have in order to be successful:

  1. Importance of Being Agile
    An agile and flexible approach is by far the most important aspect of a successful licensing management program. Corporate business goals and market climate shift rapidly requiring an adaptive methodology to compete. Programs that can quickly support new operational flows and innovative license models such as usage and cloud based metrics are critical. An agile framework that allows the business to immediately address their “hottest licensing item” without a major IT project is a “must have” for any licensing program.
  2. Centralized License Policy
    A well-defined central license policy is vital to a successful license program.  A license policy provides a cohesive road map for defining an all-embracing product revenue model.  Mergers and acquisitions only further drive the need for one company feel, as disparate process leads to duplication of effort, operational inefficiencies and customer frustration for “solution/package” offerings.
  3. Single Dynamic Licensing Platform
    The demands of an agile approach and centralized license policy mandate that a single “dynamic” licensing platform exist within any license program “worth its salt”. This platform should leverage a technology agnostic interface, being able to easily consume new ways of licensing. Developing such a framework from scratch can be a daunting task. The best option would be to leverage an off-the-shelf commercial product such as Flexera’s FlexNet Embedded which will provide an ideal infrastructure to create a “build as you grow” mindset. In addition, it provides a lightweight platform to capture metered license data enabling some of the newest, most innovative usage-based license models.
  4. Dedicated Entitlement Management
    An Entitlement Management program is the loosely coupled but highly cohesive partner to the Successful License program. This dedicated system should be completely separate from any existing ERP or CRM system. These systems are dedicated to financial and customer driven responsibilities, respectively, and make poor substitutes.  Entitlement Management for licensing should be a “hub” of all operational activities and license-based business process.

A successful licensing program is key to a successful business. Licensing agility and centralized policy allow for a corporate vision to meet critical license needs for new go to market initiatives. This policy then is codified and delivered through a centralized licensing platform. A dedicated entitlement management solution provides the back-office counterpart to the licensing program, allowing configuration licensing changes, rather than ERP/CRM customization, feeding right back into program agility.  It is important to have the necessary business tools, people in place and process for any successful licensing program.

Additional Resources for Software Licensing and Entitlement Management Program Success:

Categories: Entitlement Management, General, License Models, Software Compliance, Software Licensing, Software Monetization, Subscription Licensing

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