Climate Change” Denial?

Are Application Producers in “Climate Change” Denial? A Report by Contents Introduction ............................................................................................................................. 3 Part 1: Evidence of Business “Climate Change” – Environmental Risk Factors Posing for Producers ................................................................................................................................ 3 Opportunities and Risk of Emerging Technologies............................................................... 3 What Impact Will IoT, Cloud, Virtualization and Mobile Have on Producers’ Climate Change Readiness?.......................................................................................................................... 5 Shifting Customer Demand Creates Instability in Producers’ Revenue Models .................... 9 Enterprise Customers’ Tech Environments Are Also Shifting ............................................. 11 Ignoring the Signs of Business Climate Change, Producers Are Not Adequately Managing Customer Licenses and their Software Entitlements .......................................................... 13 Likewise Ignoring the Signals, Producers also are Not Adequately Automating License Management ...................................................................................................................... 14 Part 2: Impact of Business “Climate Change” on Producers .................................................. 16 Climate Change is Contributing to Software License Non-Compliance, Contributing to Revenue Leakage.............................................................................................................. 16 Software Company Mergers & Acquisitions, Create Disruption for Customers ................... 18 Producers Report Wide Array of Business Climate Challenges ......................................... 20 Producers Are Lagging in Offering Flexible Software Monetization Options ....................... 21 Conclusion ............................................................................................................................ 23 Infographic ......................................................................................................................... 24 Survey Background ............................................................................................................... 25 Methodology and Sampling ................................................................................................... 25 Survey Demographics ....................................................................................................... 25 Location of Respondents ................................................................................................ 25 Respondents’ Vertical Market ......................................................................................... 26 About Flexera Software ......................................................................................................... 29 Are Application Producers in “Climate Change” Denial? – Page 2 Are Application Producers in “Climate Change” Denial? A Report by Flexera Software Introduction The environment in which application producers create, sell and manage their software is in a state of dramatic and accelerating change. Survival for these producers experiencing this business “climate change” depends upon their ability to read the writing on the wall and address these challenges head-on. To thrive in a dramatically different business climate means adapting business models and operations accordingly, and applying best-in-class people, processes and technology. For producers – business operations revolve around Software Monetization. How do producers adapt to changing technology environments, license their software to maximize profits, protect their intellectual property and keep customers happy amidst the whirlwind of constant and buffeting change? This report examines the new and emerging technology trends that are having the greatest climate change impact on application producers, the struggles they’re facing in the face of software climate change, and some solutions that could make a difference for those producers ready, willing and able to adapt. Part 1: Evidence of Business “Climate Change” – Environmental Risk Factors Posing for Producers Opportunities and Risk of Emerging Technologies Preparedness is a measure of assessing opportunity and risk, and then acting on the best information. The impact of new technologies is an essential element of this measurement. At a strategic level then, a good leading indicator of business climate change preparedness can be gleaned by examining the trends and technologies in which producers currently see opportunity and risk. We asked respondents to consider the benefit and risk of a host of emerging technology trends that are being widely discussed today. In terms of opportunities – It should not be surprising that producers see the greatest potential in such categories as providing mobile applications (51 percent), supporting virtualization (45 Are Application Producers in “Climate Change” Denial? – Page 3 percent), offering subscription based licensing (43 percent), embracing public cloud computing (41 percent) and the Internet of Things (IoT) (37 percent), to name a few. In terms of risk, security topped the list of producers’ concerns. Given the growing instances of data breaches, security vulnerabilities and reports of malicious code found on corporate networks, this should also not be surprising. According to the survey, 48 percent of producers view security as a significant risk. In comparison, other tech trends seem to pose much less business climate risk to respondents. For instance, only 20 percent of respondents see risk associated with Bring Your Own Device (BYOD), only 18 percent see risk in providing mobile applications, and only 17 percent see risk in public cloud computing. Do the following technology trends pose opportunity, risk, or both for the future of your software company? Opportunity 100% 14% 18% 20% 20% 21% 25% 35% 80% 41% 43% 35% 60% 41% 35% 37% 39% 44% 29% 40% 34% 32% 51% 20% 41% 45% 43% 40% 37% 30% 24% 25% 0% Great opportunity Some opportunity No opportunity Are Application Producers in “Climate Change” Denial? – Page 4 Risk 100% 16% 28% 30% 80% 35% 51% 49% 44% 46% 44% 36% 60% 56% 40% 60% 47% 44% 34% 41% 41% 41% 20% 48% 17% 20% 18% 8% 11% 10% 12% 15% 0% Great risk Some risk No risk What Impact Will IoT, Cloud, Virtualization and Mobile Have on Producers’ Climate Change Readiness? Considering the pervasiveness of trends such as the IoT, cloud, virtualization and mobile, we wanted to drill down beyond benefit and risk to examine what sort of impact these trends are having on various aspects of producers’ businesses and operations. Awareness of the impacts is necessary before producers can put into place the necessary systems, processes and technology to leverage the opportunities and mitigate the risks. For instance, is the IoT bringing in new competitors? Helping in the creation of new markets? Affecting product innovation and services offerings? Is the cloud impacting customer satisfaction or security concerns? Is virtualization creating new IP protection concerns? Is mobile impacting producers’ business models or supporting new lifecycle processes? According to the survey, 32 percent of producers said that today the IoT is having a high impact today on customer satisfaction, and 30 percent said it is having a high impact on security. In the next 12-24 months, 16 percent of respondents say that the IoT will cause significant impact around supporting new business models. Are Application Producers in “Climate Change” Denial? – Page 5 With respect to the cloud, 38 percent of respondents said a high impact today is around security concerns. In 12-24 months, 15 percent of respondents say there will be cloud impacts around supporting new business models and lifecycle processes. Concerning virtualization, the largest percentage of respondents, 29 percent, say security concerns are the high impacts today. In 12-24 months, 13 percent say that they will feel impacts around supporting new lifecycle processes. Finally, with respect to mobile, the high impacts today felt by producers include customer satisfaction (34 percent), new product innovation (33 percent) and security concerns (33 percent). In 12-24 months, 17 percent of respondents say they will feel the impact of mobile in both the security arena and supporting new business models. Are Application Producers in “Climate Change” Denial? – Page 6 Please indicate the level of impact that these technology trends are having on the following aspects of your business: Internet of Things 100% 9% 10% 11% 9% 8% 9% 8% 12% 16% 13% 80% 39% 38% 39% 38% 45% 48% 45% 39% 42% 47% 60% 40% 21% 23% 27% 27% 26% 22% 24% 27% 25% 25% 20% 32% 30% 25% 25% 23% 25% 19% 18% 17% 14% 0% Increased Creation of New product New New Customer Security IP protection Support new Support new number of new markets innovation solutions services satisfaction concerns concerns business lifecycle competitors innovation offerings model processes High impact today Some impact Today No impact and none expected No impact but expected in 12-24 months Cloud 100% 10% 9% 7% 13% 12% 12% 13% 12% 15% 15% 80% 26% 27% 22% 22% 32% 28% 22% 33% 29% 34% 60% 29% 37% 40% 38% 35% 37% 33% 40% 30% 35% 35% 20% 38% 25% 26% 28% 27% 26% 27% 28% 20% 16% 0% Increased Creation of New product New New Customer

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