Category Archives

3 Posts for Revenue Recognition

Apr 13
2012 

Exploring the Four Aspects of a Comprehensive Software Monetization Strategy

by Michelle Nerlinger

Software monetization can be viewed as the adoption of any variety of measures an organization takes in order to increase the profitability of their intellectual property, in this case, software. These tactics can range from sophisticated anti-piracy and IP protection techniques to creative pricing and packaging strategies. It is important to note that no individual software monetization technique is greater than the combination of multiple techniques. No matter what type of software application has been developed or how that application is being delivered to the end-user, a comprehensive software monetization strategy hinges on four key factors – how effectively the software publisher can package, control, manage, and monitor, their offering(s).

Aug 9
2011 

Show Me the Money! Revenue Recognition Best Practices (Part 2)

by David DiMillo

In my last blog entry (Show Me The Money, Part 1) we looked at a number of factors that play into software revenue recognition when a vendor (ISV) introduces electronic license enforcement into their product lines.  Part 1 focused on the principles and mechanics behind giving customers access to the software upon order execution so that the ISV may recognize revenue.   Part 1 concluded by bringing another key element into the revenue recognition equation: time.  Time can affect revenue recognition in a number of ways:

  • We have the time required by the customer to actually get their license keys after the ISVs claims to have given them “access” to the software.
  • We have the software’s ability to run by default without a license key for a temporary amount of time.  Does that count as “access”?
  • We have some ISVs selling perpetual entitlements but wanting or needing to deliver license keys that expire annually.  Does the customer really have access to what they bought?
Jun 28
2011 

Show Me the Money! Revenue Recognition Best Practices (Part 1 of 2)

by David DiMillo

I bet that made your ears perk up a bit, didn’t it?

Your CFO probably has the same type of reaction when the topic of revenue recognition rears its head. After all, it is one of the most critical elements in your business’ machinery.

Customers frequently ask me about the impact license enforcement and license key delivery can have on a company’s ability to recognize revenue.  This indeed can be a touchy subject, so I should start by making a few foundational statements.

I will not suggest how your company should manage revenue recognition nor do I intend claim the revenue recognition practices are acceptable or VSOE compliant.  Your company’s finance team should be the ultimate authority as to what is acceptable for your business.   I encourage any business considering license enforcement to ensure your CFO is will deeply engaged in your license delivery processes.

I will, however, discuss a number of revenue recognition techniques and best practices that I have seen used by multiple successful companies with revenues over a half billion per year.