Blog Entry

Sep 28
2012 

How to Bring Harmony to the Enterprise Licensing Model

Here is a little secret – I love shopping. Yes, I admit it. I like shopping for clothes, shoes, wines – you name it. But I hate malls, stores, and I especially hate being followed around by a pushy sales rep!! When it comes to shopping, I have my own routine and associated expectations.   I research my options,  look at competitive alternatives (brands), seek a good deal without having to bargain, try to have it shipped to me (if possible), and should I need to return it, I want to be able to ship it back and get a replacement.  My favorite online retailer meets all of my expectations, whether I am buying clothes or shoes for myself, and yes, jewelry for my lovely wife when I have messed up.   This raises the question, why  shouldn’t I enjoy the same experience when it comes to licensing software?

Too often, high tech software companies dismiss the above experience, saying “Well… that’s a consumer-driven model;  enterprise users don’t buy  that way.” Not true.  Enterprise buyers are consumers too. They experience the above consumer model daily in their lives, and  wish that it applied to their work-related purchases as well. And why shouldn’t they?  The ideal consumer model is customer-friendly.  Enterprises can (and should)  expect to receive the same experience

Almost every mid-size enterprise has a centralized IT organization that typically deals with licensing software for their users. However, when it comes to licensing software, the process is often time-consuming and highly ineffective. Business users determine what software they want to license based on their internal needs,  be it a CAD/CAM tool for an engineering organization or a CRM for customer services organization,  and then they go to an IT organization to get the “best” deal.

The IT organization goes through initial steps that are quite similar to my online shopping spree.  They figure out what critical features the business is looking for, and then pick out a few companies who offer those features in their software.  Unfortunately, this is where things start to slow down.

In most organizations, IT teams put  out RFPs or RFQs to the narrow list of companies to see what pricing they will get. Very frequently, there is an “evaluation” period where business users evaluate multiple software packages. This is then followed by a negotiation period, where parties negotiate the ‘up-front’ licensing costs, as well as ongoing costs related to maintenance and increased usage.  Months later, long after the business users identified the need for that particular software, they finally get what they wanted.

Now, imagine an alternate universe. You’ve identified your needs.  But in this scenario, you don’t go to IT.  Instead, you find a vendor offering software as a service (SaaS).  Evaluating the software is no longer a tedious process. All you do is log into the SaaS vendor’s portal, and set up a trial account.  Log in, and voila! Seconds later, you are evaluating the software’s features and various options. No need to set up installation or a test environment.   What’s next? You are ready to look at pricing, but instead of the back and forth pricing discussion, a price catalog is available via your trial account! Not much different than mobile-phone pricing, you are presented with various options: per seat, per-feature, per-user   – take your pick. You do the math, and you figure out what works best for you.   Start feeling a bad case of buyer’s remorse? No problem!  Simply reconfigure your options, your pricing changes, and life goes on with no worries about “shelf-ware”.

Okay, I admit that not all enterprise applications are this straight-forward to use and license. But, if you are a software vendor, don’t think that you can’t strive for this simplicity. Don’t get left behind in the race for this new “pro-sumer” – your future generation of purchasers in Enterprises. This generation is growing up in a world of automation like none other.  They are more likely to shop online than in a store, and in many cases, if they can’t buy it online, they don’t need it.

You don’t have to be a SaaS vendor to simplify and automate everything from trial to pricing to updates – you can do that even as an on-premise vendor. Companies like SafeNet are dedicated to helping you monetize your software and automate the experience for your end customers, even for complex applications.

Alright, now back to some shoe shopping….

  • mtm800e

    This is very good idea and i am sure it can work for some simple applications, however with more complex software application which combine external hardware devices it can be tedious process.

  • Prakash

    What’s interesting is that IDC’s Amy Konary mentioned at Licensing Live 2012 that 30% of all enterprise software would be purchased on line by 2014!