Sales & Marketing

Tips for Building a Next-Gen Software Monetization Experience

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The themes are all too familiar: “We have a manual process for creating license keys that we’d like to automate,” “We implemented something years ago, but it’s a mess and causes more problems than it solves,” “This is a nuisance for our customers and our support is weighed down by licensing calls.” On the one hand it’s not uncommon for back-office systems to be the subject of criticism and debate. What makes a licensing and entitlement management system that much more scrutinized is the measurable impact it can have on customers. 

A poorly implemented system can cause customer frustration at best and lost revenue at worst. On the other hand, a well-deployed system can result in excellent business intelligence, improved customer attachment and reduce the loss in revenue that results from software that isn’t tracked. The uniqueness of an electronic licensing system is in the fact that it doesn’t merely live in the back office. 

The products need to have the correct intelligence embedded in them, the back-office systems need to be updated accordingly and the fulfillment teams need to understand the distribution mechanisms. As a result of this complexity it is often the case that the number-one reason for a failed licensing project is poor business integration followed by a lack of project management. Technology, it seems, is rarely the culprit, although it often bears the brunt of the blame. 

Stakeholder buy-in 

I’ve often compared the thankless task of putting together a corporate-wide licensing plan to the cliché of herding cats. And in my experience the analogy is appropriate. Even if the current licensing system, or lack thereof, is causing all manner of grief, the winner still remains unclear if licensing is implemented well. As such, no specific department or functional group feels compelled to take on the task of overhauling what’s already in place. How much effort will it take a CIO who wants to change the back-office licensing system to get buy-in from all the various product management and engineering stakeholders? 

Conversely, if the project falls in the hands of an engineering group, then the CIO will have to be convinced to cooperate in spite of resource constraints that are typical of IT organizations. And even with coordination and buy-in from the technical stakeholders, sales and marketing departments will weigh in on customer experience. Is it any wonder that so many deployments take place with important implementation aspects neglected or missing altogether? 

At this point it should be clear: If you can’t get a cross-functional group together to agree on certain core principles, you might want to redefine the goals of your implementation. Without a cross-functional team with representation from all the stakeholders impacted by an entitlement management deployment, you’ll likely end up with a broken implementation and uttering one or all of the statements I mentioned at the beginning of this article. 

This isn’t to suggest that getting the right representation will result in smooth sailing. The opinions on what should be licensed, how and for whom will vary dramatically from department to department. These are often lively discussions, and it’s important to moderate them if possible. External consultants can play a valuable role as mediator and a source of best practices and experience. In spite of the myriad of ways in which software companies can differ, there are actually a number of commonalities, particularly where it comes to handling entitlements. 

Prioritization 

Prioritization is of paramount importance. The question continually needs to be asked: “Are we trying to fix what isn’t broken?” It’s important to focus on the elements that will create the most ROI with the aim to expand the scope down the road. There’s no need to be overzealous in an initial deployment. 

It’s also important to bear in mind how the products are sold at every step of an implementation. The need to license as a means to prevent improper use can sometimes overstep its bounds and cut into sales efficacy. This very common, and generally unintended, consequence is a result of letting technology rather than business goals guide an implementation. This is why it helps to recheck the objectives of the overall project at every step of the way. Ask the question: “How will this license model improve the way we sell today?” or “How will this fulfillment methodology better enable our customers and channel partners?” 

As Mike Tyson memorably once said when asked about how he prepares for a boxing match, “Everyone has a great plan until they get punched in the face.” What may seem completely reasonable on paper could be quite different when facing the practical realities of a deployment. 

Where to start 

There’s no magic formula for success, but a sound approach is to start at the end. And the “end” in this case would be customer experience. Once the project is done, what will the customer experience be? Too often deployments start from the inside out, focusing on product integration with the assumption that the customer experience will be a positive one. If all the various customer scenarios aren’t thought through, there’s a good chance things will fall through the cracks. If the goal is to ease customer adoption and improve business process, then that part should be thought through in detail right at the start of the project. 

Map out the various customer scenarios and plan to test them sooner rather than later. Most engagements defer the customer experience aspect until the pilot phase, with the assumption that adjustments and corrections will be made once there is feedback from a set of sample customers. At this point it’s usually too late. Test a few deployment scenarios ahead of time, even if the other pieces of the project aren’t in place. How your customers use your products now versus tomorrow can have a huge impact on how you choose to integrate a licensing and entitlement management infrastructure in your organization. 

Additionally, it’s important to keep it simple. What makes an electronic licensing deployment unique is that while the management happens in the back office, the license consumption happens from within the product itself. This requires a very atypical coordination that isn’t part of the DNA of most software companies. 

It’s very easy to get carried away with clever, sophisticated licensing models that achieve all the business objectives of feature-based, pay-per-use, consumption-based, try-and-buy and user-based models. But someone at the other end must manage and deliver the licenses, and customers end up having to keep track of their entitlements. Keeping it simple may sound overtly obvious, but complex licensing systems are one of the major reasons that many deployments are unsuccessful. 

And lastly, establish some metrics for success up front. The most common metric for success in the industry today is the level of support calls. This suggests that poor customer experience is such a concern that, as long as that part is working, the project is considered successful. Ultimately you want to be able to improve the way you sell, retain existing customers, expand your markets and grow your revenues as a result. At the start of a license management project you should establish some prioritized objectives as the desired outcome of the engagement. Those objectives and outcomes should have some quantifiable metrics associated with them so that you can revisit them at various stages of the deployment to see the level of success achieved. 

As I mentioned earlier in this article, the lack of ownership is a challenge to this sort of project. The ownership body is required during the implementation phase, but it also should be part of a committee that is tasked with constant evaluation and analysis to make sure the objectives are met. 

Markets and buying trends are constantly in flux; as such, how you license today may not be the best approach a few years down the road. Don’t let negative customer feedback be the alert mechanism for change. Stay ahead of your customers and your competitors by regularly measuring the effectiveness of your licensing technology against your core objectives and make the necessary adjustments. 

Electronic entitlement management certainly has its complexities; but by applying the right business process and with the right level of planning and coordination, it can be a powerful engine for revenue growth and business intelligence. And there isn’t a software company out there that would object to more of that. 

Jamshed “Jam” Khan is senior director of professional services at SafeNet. Jam leads a team responsible for consulting services, product deployments, program management and customer support. He joined SafeNet in 2004 as part of the merger with Rainbow Technologies and has over 17 years’ experience in license and entitlement management. His past roles in engineering, technical sales and product management, give him a broad perspective on the entitlement management market and criteria required for customer success.

 

 

 

 

 

 

 

 

 

 

Comments

By Tom Vik

Great Article Jam. I like the part about having a clear prioritization and capturing the ROI early on in the exercise

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