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Track Short Term "Demo" Software Licenses to Improve Business Results

By May 2, 2011Article

Not all short-term software licenses are created equal, especially non-revenue licenses. Software publishers generally do a good job tracking their revenue licenses, but they will often treat all non-revenue short-term licenses as “demo licenses” to address a variety of pre-sales, administrative and other issues. But, if publishers start to track the purpose for issuing those short-term licenses, it can illuminate possible hidden costs or revenue opportunities for the software publisher.
Short-term license rights, whether there is a license key technology behind them or not, are created for a variety of reasons:

  • Demo– used by the sales team to demonstrate the product to customers
  • Evaluation– used by the customer for evaluating a product in their environment
  • Evaluation Extension– used because additional time is required for an evaluation
  • Failover or Disaster Recovery– used for managing a physical emergency in the data center
  • Development– used for creating a development environment that allows customers to deploy new versions of your product into a test environment before deploying into production
  • Emergency or Remake– used to issue a short-term license because the incorrect product was shipped
  • Stop-Gap– used to address the time required to process an order or a short-term market need due to peak-usage requirements
  • Education and Training– used by internal personnel for conducting training
  • Peak Usage– used by customers to address a short-term business need of high capacity usage
  • Not for Resale – used by distribution partners for demonstration or pre-sales

If you create special part numbers or processes for these reasons, you may help increase business results. Examples include:

  • Are your demo and evaluationlicenses being converted to revenue? You may have hidden revenue opportunities by making demo and evaluation licenses a structured part of the sales opportunity process.
  • Are you issuing a variety of short-term licenses because customers have seasonal or project-based peak-usagedemand? Could this be a hidden revenue opportunity to create peak-usage licenses that command a premium price?
  • If you issue enough failoverlicenses, might there be some value associated with them? Can you charge for them?
  • If you issue a fair amount of emergency or remakelicenses, you may have some systemic issues with your entitlement management systems that need to be corrected. This information can begin to help you develop an ROI to address these issues.
  • If you issue a fair amount of development licenses, can you and your customers track them and identify them as separate from production licenses for compliance and auditing purposes?

So what can you do? Ensure that you have either processes or part-numbers to identify the reason for creating all of these different licenses – all of these licenses are not created equal. In general, it’s best to track non-revenue licenses outside of your ERP and revenue systems. Once you start tracking these licenses and their purpose, you have a great start for making some changes to reduce operational costs and improving bottom and top-line revenue!
Cris Wendt is Principal Strategy Consultant at Flexera Software.
This blog is reposted with permission.

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