Blog Entry

May 16
2011 

Variety is the Spice of Software Licensing

Monetization of Software continues to innovate in the buyer-seller dynamic creating more competitive options for vendors.  Nowhere is this dynamic more active than in the cloud.  SaaS vendors, true to the nature of their offerings and the culture of their organizations and missions, are offering more ways to consume their services and are updating and tweaking these at a hectic pace.

We believe that in the end, software consumption will be more a function of the customer – but for now and for the vast majority of the software industry it is a function of the supplier side of the equation (ISV, channel partner, means of distribution, revenue recognition etc…).ISVs that have reliably delivered products and packages over many years must be looking at their cloud based competitors with envy at the speed and flexibility that they can introduce new models.

The model that gets all the tech press attention these days is “pay as you grow” or “metering”.  Think of buying software as a service much like you do with voice/data on your smartphone.  This week yet another cloud vendor extended their offering with this type of model – leaving their less cloudy traditional counterparts struggling to get new customers without resorting to wholesale discounting.  For a long time – people confused SaaS with “cheap alternative” – when in fact it’s about building a solid base of recurring revenue customers.

The barrier to flexibility in an offering is the investment in process, channels and technology that goes in to pricing and packaging software.   Making use of the latest and more advanced tools for software monetization can make that much easier.  SentinelCloud offers SaaS vendors the means to instantly create and deploy new package offerings, keep track of customers on different service plans and analyze usage to hone development efforts around the most popular offerings.  The cloud allows all of this to happen pretty much in realtime.  Fortunately many of these benefits are also available to on-premise software offerings (rapid creation and deployment of new models, tracking of customers).

The announcement from Adobe that their popular CS suite will be available as both a perpetual and subscription license is the first big reaction from the on-premise software market to the competitive threat offered by cloud competitors.  But it is not the only one.  We have helped many companies implement unique monetization schemes for competitive advantage – finding ways to eliminate the shelfware fear, implementing concurrency in ways that account for different end user roles and providing ways to enable post-pay based on usage.