In speaking with our larger global customers I’ve noticed a troubling and difficult conundrum when it comes to software licensing trends. Firstly, ISV customers in established, advanced economies are demanding greater granularity and flexibility than ever before when it comes to how they implement and use software. In most cases the ISV’s are more than happy to oblige. Closer alignment of pricing and value creates happier customers, less discounting and more achievable up sell opportunities for the future.
The second trend is entering newer, rapidly growing markets such as China, Brazil, India and Russia (BRIC economies). The extent of the problem differs on a case by case basis but in general in these markets the concern is unlicensed use. The answer? Implement relatively strict licensing policies to ensure compliance by existing customers or to act as a disincentive to pirate resellers.
Thus you can see the challenge. What typically happens is that the more established markets account for a greater percentage of revenues today as well as the location for product and/or senior management. ISV’s that have developed sophisticated licensing models suddenly realize that they’re woefully positioned to enter into these new markets – at least with an appropriate peace of mind as it relates to unlicensed use.
The answer is to keep this in mind from the get go. Design licensing in a way so as to create the ability to adjust it based on the markets that you enter. I know that seems trivial or perhaps unhelpful. What that means is – if your company is focused on these BRIC markets constantly remind yourself of that fact in your licensing and pricing strategy meetings. Put a poster of the Kremlin or Hidden City in your meeting room.
There are other solutions too – certainly SafeNet’s hardware locking devices are a part of the strategy for many companies. Lastly, and I’ll drill into this topic in a later post – customer support can have a very important role. This last area is nearly always over looked but can be a powerful deterrent.