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?