SOFTWARE LICENSING

Is it time to Change Your Software Licensing Model?

By Carrie Schmelkin, TMCnet Web Editor

Software licensing is perhaps one of the best ways to protect intellectual property, and successful licensing solutions help independent software vendors properly monetize their investments. With the market rapidly evolving, software licensing has become increasingly complex. While software vendors work to remain competitive and be leading innovators, they often grapple with how to make sure they are fairly compensated and that they retain all of their customers.

And just as financial plans get reevaluated every few years, software licensing models should be reviewed every so often, according to a recent blog post by Flexera Software.

Flexera Software, the leading provider of strategic solutions for application usage management, recently posted a blog called “Maybe It's Time to Review and Adjust Your Software License Models,” which highlights that while small changes to license models can have big effects on the bottom line, they may be necessary. Flexera Software encourages software companies to revisit their license portfolios every few years to consider if they need to implement changes.

Some of the drivers behind determining whether or not it is time to make software license model changes include the need to simplify licensing due to years of mergers and acquisitions, change in the computing environment, change in buying patterns and customer composition and change in competitive landscape.

With regards to M&A, there can be incredible difficulty buying a solution from a software vendor because of all of the different metrics used to buy a solution.

“Some of the license metrics were priced on CPU, some were priced on named user, while others were priced by concurrent users,” the blog states. “Overly complex product lines can lead to revenue loss as a result of channel confusion which makes it easier to sell competitive solutions and customer dissatisfaction which can lead to discounts. Compliance operational costs may also be higher.”

Moreover, a change in the computing environment can warrant one to rethink the licensing model. As the adoption of portable computers, virtual machines, cloud computing and Software-as-a-Service (SaaS (News - Alert)) continues, compute environments are more complex now then even a few years ago. Depending upon how these technologies apply to your software, it's possible that without a change in license model, customers are using more software than you intended when the license model was developed, according to the blog post.

If one of these drivers applies, software companies ought to rethink their software licensing models and determine if their inadequate software licensing is the cause of poor metrics.

“It may be more effective and simpler to change your license model, than to change your product,” the blog explains.

Flexera Software helps companies benefit the most from their software licenses by helping companies create organizational leadership for pricing and licensing, through the development of license policies and basic principles, all of which are designed to ensure the ongoing optimization and leadership of software licensing excellence.

For more on Flexera Software offerings, click here.