Blog Entry

Jun 6
2011 

Customer Intimacy Will Drive Old School Licensing to the Cloud

“It works, but it is old school”. That is how I’ve heard many business leaders describe their longstanding licensing implementations lately.   So what is next for this space?  As a long time software licensing business and implementation consultant I have the opportunity work with some of the industry’s leading minds in this area and can confidently say that I have seen the future of software license enforcement and it revolves around, you guessed it, the cloud.

Traditional client/server licensing stores a series of certificates that describe the details of corporate and individual end-user entitlements on a license server. Each machine within and end-user’s environment all point to this server. The server constantly counts and controls access to the end-user’s dedicated license or pool of licenses so that a single license can service multiple users. This is a solid licensing model with plenty of upside:

  • It’s a proven way to go to market with a shareable license that can add value to multiple users. These types of shareable licenses can be a perfect fit for user-based software.
  • The license server model gives customers centralized control over license management.

But this model has a number of drawbacks around customer intimacy.  The new social networking world is driving companies to care about customer intimacy as this becomes the next major competitive front in the commercial world.

  • Vendor insight – The biggest drawback is the software vendor having no insight into what’s happening within their end-user environments. Since the license server is controlled by the software publisher, the only thing a vendor has visibility to is how many licenses live on the server, not their usage.
  • Customer experience –Handling license keys can be clunky and time consuming depending on the vendor’s delivery tools.
  • Customer insight – If the customer wants to understand their own usage, they typically need to invest in commercial or homegrown usage tools that massage the log files created by the server.

Licensing solutions that reside in the cloud are naturally more connected and can drive traditional benefits of software licensing while adding so much more…

  • You could offer end-users floating/network/concurrent licensing without having to deal with license keys or license files. Just configure a smart server that can periodically phone home (your back office), point the clients at the server and they’re in business. I know, I know, license servers that can communicate outside of the customer’s environment are not for everyone and that’s perfectly fine. But many businesses are open to that communication if it is controlled and occurs on a regular schedule.  People said the same thing about putting their customer data in to Salesforce.  Many companies rely on network services today for payroll, HR functions, CRM and so on – these companies know your usage patterns very well.
  • Newly ordered software licenses can be instantly provisions to a customers’ on-premise servers.
  • You can have real-time access to activations and usage patterns even down to the feature level.  That can drive metrics based decision about where to invest resources for future development
  • You can turn that data around and offer usage information back to the customer – solving an age old complaint CIO’s have around their organizations consumption of software and the resulting negotiation and haggling over renewal and licensing fees.

We think all these things are either here now or coming soon – and we are right at the front of this change. Check out www.sentinelcloud.com for more information.