Software Monetization Best Practices: Lifecycle Methodology and Implementation Plan
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WHITE PAPER Software Monetization Best Practices: Lifecycle Methodology and Implementation Plan Contents Introduction .............................................................................................................................................................2 Background .............................................................................................................................................................2 Market Considerations ...........................................................................................................................................2 Organizational Challenges .....................................................................................................................................3 Key Organizational Considerations ........................................................................................................................3 Software License Program Management ...................................................................................................3 Policy and Procedural Considerations ........................................................................................................4 Technology Considerations ..........................................................................................................................4 Establishing a World-Class Software Licensing and Monetization Process ......................................................4 Gemalto’s Software Monetization Best Practices Lifecycle Methodology ..........................................................4 Gemalto’s Software Monetization Best Practices Scorecard ..............................................................................5 What do the Software Monetization Best Practices Scorecard Results Mean? .................................................6 The Benefits of Building an Optimal Software Licensing and Monetization Process ........................................7 Summary and Conclusions ....................................................................................................................................7 About Gemalto Sentinel Software Monetization ...................................................................................................8 About THINKstrategies, Inc. ..................................................................................................................................8 Software Monetization Best Practices: Lifecycle Methodology and Implementation Plan - White Paper 1 Introduction Andreessen discussed how a new breed of software-enabled Outlined are the most important principles and critical companies were emerging in almost every industry that components of an effective software licensing and were significantly disrupting their respective markets. These monetization program to successfully respond to today's disruptive players were capitalizing on new Open Source rapidly changing marketplace. and Cloud-based software development alternatives that lowered the barriers to entry in the software marketplace. The white paper will describe the proven Software At the same time, the proliferation of consumer-oriented Monetization Best Practices Lifecycle Methodology which mobile apps were resetting customer expectations Gemalto has developed that helps product managers and regarding the ease of use and cost of acquiring software their corporate executives operationalize and integrate their solutions. software licensing operations into their ongoing business to generate greater customer intimacy, improve product Yet, even Andreessen may be surprised by how quickly his quality, and drive greater operating efficiency. vision has become a reality. The rapid rise of Software- as-a-Service (SaaS), usage-based applications and other The advent of the Cloud, rapid adoption of Software- revolutionary forms of software-enabled innovations are as-a-Service (SaaS) and advancement of the Internet of now becoming mainstream. Things (IoT) are fundamentally reshaping how software is developed, acquired and utilized. In response to these This software proliferation is closely related to the broader trends, software product managers and their corporate digital transformation process being experienced across executives must rethink how they package, price and protect many industries. In fact, this new generation of software has their software licenses. They must adopt new Cloud-based created unprecedented business opportunities and an equal software monetization portals that can be utilized by their number of organizational challenges. As Bill Ruh, President customers, channel partners and employees alike to keep of GE Software, has stated, pace with the constantly changing market demands. The portals and platforms which support them must also “…any industrial business that does not become a integrate effectively with established back-office systems software business will not be relevant.”2 and a new generation of Cloud-based alternatives. GE and other companies, as well as many government This white paper will also describe a useful Software agencies, are deploying software everywhere across the Monetization Best Practices Scorecard that can help “Internet of Things” (IoT). A recent Business Intelligence software product managers and corporate executives IoT Ecosystem Research Report forecasts there will be 34 to determine if they are ready to respond to these new billion devices connected to the internet by 2020, up from 10 challenges and capitalize on today’s market opportunities. billion in 2015.3 The report also predicts nearly $6 trillion will be spent on IoT solutions over the next five years. The Scorecard Gemalto has created, with the help of THINKstrategies, is based on the consulting framework In order to capitalize on the unprecedented opportunities Gemalto uses when it works with clients. The Scorecard created by this new connected world, every organization also captures the best practices which Gemalto has – including commercial enterprises and public sector witnessed during thousands of client engagements. agencies – must now think of themselves as software developers and providers. The purpose of the Software Monetization Best Practices Scorecard is to help product managers determine the right Becoming proficient in developing and delivering new software licensing and monetization policies, procedures software to meet the escalating needs of customers while and technologies they should put in place to achieve their keeping pace with intensifying competition has become business objectives. imperative. Background Established and emerging software vendors must In August 2011, Marc Andreessen, Co-Founder and General implement a new set of software licensing and monetization Partner of the venture capital firm Andreessen-Horowitz, policies, procedures and technologies to succeed in today’s and Co-Founder of Netscape, published a seminal opinion increasingly complex competitive environment. To stay piece in the Wall Street Journal entitled, “Why Software Is relevant- you have to innovate. To be successful you have to Eating the World,”1 in which he claimed: make money as well as guarantee and protect the revenue stream. “More and more major businesses and industries are being run on software and delivered as online Market Considerations services.” For a growing number of businesses, software is becoming their primary product. Therefore, properly packaging, pricing and billing for the software is critical to their business success. Software Monetization Best Practices: Lifecycle Methodology and Implementation Plan - White Paper 2 The first step to building a winning software licensing and Organizational Challenges monetization process is fully understanding the market Electronic SKU management, on-demand capacity extension requirements for your software solutions. and analytics-driven marketing are just a few of the many new opportunities now available to drive new software In the past, software was primarily deployed on-premise revenue, delight customers and reduce costs. But software and only required updating on a periodic basis because of developers and device manufacturers are also faced with the relatively static nature of the operating environment. many challenges when it comes to maximizing the monetary In today’s far more dynamic world, software is expected to value of their solutions. These challenges range from how be available ‘on-demand’ and to be continuously enhanced to to scale their licensing operation to making their back-office meet the constantly evolving needs of the user. And, in many more efficient in order to reduce costs. cases, the software user/buyer wants to be able to select the appropriate package from a variety of choices. Two major disruptions are underway. These changing expectations have forced a growing number First, always-on connectivity and big data is transforming of software developers – both established independent traditional markets. The Industrial Internet of Things software vendors (ISVs) and intelligent device vendors (IIoT) is reshaping the healthcare, transportation, developing software for the first time – to juggle multiple telecommunication and many other industries. software licensing options with a variety of packaging and pricing approaches. Second, seat-based and time-limited software licensing models are giving way to usage-based and on-demand Properly packaging and pricing software licenses must pricing schemes. be combined with the