Managing high-value software assets can be difficult for two primary reasons — the increasing complexity of software licensing agreements and the lack of software license management best practices. Experts tell us that medium and large enterprise software customers manage upwards of 70 software license contracts, which require renegotiation and renewal at various times throughout a year. When software licensing involves multiuser software with enterprise, transaction, processor, concurrent user or named user constraints, the management headaches mount.
The challenges of software license compliance and software license management are many, but the rewards can far outweigh the costs of tackling the problem proactively with a comprehensive software license optimization solution that delivers next-generation software asset management capabilities.
Flexera Software, a provider of software license optimization and application usage management solutions, recently announced a significantly enhanced compliance management solution for application producers. The enhanced solution helps application producers maximize software revenue and eliminate revenue leakage through new support of increasingly popular usage-based, "trust but verify" software licensing models.
Flexera Software's compliance management solution is built upon FlexNet Licensing, which empowers producers to combat software piracy and increase revenue by easily enabling new pricing, packaging and software licensing models, and FlexNet Operations On-Demand, the most comprehensive entitlement management solution that empowers software vendors and intelligent device manufacturers to support new revenue models easily and efficiently while streamlining and automating complex back-office processes. Both of these are included in the FlexNet Producer Suite, a comprehensive and proven Licensing, Entitlement & Compliance Management solution for embedded software licensing, electronic software delivery, software updates and entitlement management.
The enhanced solution now provides application producers with the flexibility to implement any software licensing model across the entire spectrum - from strict enforcement to usage-based, trust but verify. More than 20,000 applications already implement strict-enforcement licensing models using Flexera Software's compliance management solution.
It empowers application producers to automate compliance management for usage-based, trust but verify licensing models. The solution lets producers capture actual customer software usage data, access that data through a portal, reconcile the usage data against the license agreement terms to determine a compliance position, and if appropriate, send the usage data to an external billing system to invoice the customer for licensing fees owed. Enterprises also have access to a portal that presents customer usage data, usage trends and compliance status.
"Software licensing continues to evolve. Driven by the demands of their customers and competition, application producers increasingly are implementing new models, many of which are usage-based," said Amy Konary, research vice president - Software Licensing and Provisioning at IDC (News - Alert), in a statement. "Having the flexibility to support the full spectrum of software licensing models is a competitive advantage."
Application producers can monetize their software through a variety of licensing models outlined in the license agreement, which are designed to capture the value of the software and dictate its permissible use. Noncompliance occurs when actual use exceeds licensing terms, in which case the license agreement may provide for enforcement options available to the application producer.
Increasingly, application producers are shifting from strict enforcement models to trust but verify and subscription offerings, and accordingly are implementing usage-based models as a means to monetize their products. Visibility into the customers' actual software usage and the ability to compare that usage to the license agreement terms and conditions is critical to supporting these new license models.
According to the 2011 Key Trends in Software Pricing & Licensing Report, 47 percent of application producers do not monitor how customers are using their software. Moreover, the report reveals that the problem of 'inadvertent' noncompliance is widespread. More than 85 percent of enterprises in that survey said that at least some of their software spending is associated with application use that exceeds the license agreement.
"Our solution automatically provides the hard data to prove to both the producer and customer whether usage has exceeded the license agreement terms, by how much, and if additional payment is warranted, the means to accurately bill customers for the difference," said Mathieu Baissac, vice president of product management at Flexera Software. "With this 'trust but verify' capability, application producers have flexibility to implement the most appropriate licensing and enforcement mechanisms for their business - knowing they will have the data needed to verify use and get paid for their intellectual property."
By offering usage-based pricing options, application producers can simultaneously create new software revenue streams, cater to new and emerging markets and address changing demands for how customers want to consume software. However, most software companies lack the flexible licensing, usage tracking and billing capabilities to accommodate the growing licensing and software monetization options available to them.
On the back end, the compliance management solution compiles a statement showing actual usage, entitlements compared to the product use rights in the license agreement, and a compliance statement accessible to the producer and customer via a portal, making it easy for application producers to easily track individual customers' software usage, as well as that of the entire customer base. Moreover, the compliance management solution manages the back-end operations associated with collecting and reporting on usage data, as well as sending that data to the appropriate billing systems for collection.
"New licensing models are constantly emerging, which if leveraged can open up significant new markets for producers," said Baissac. "However manually building out the infrastructure to accommodate these licensing models is complex, costly and constantly changing. Keeping up diverts precious resources from a company's core software development competencies. With our compliance management solution, application vendors can now quickly and easily implement any software licensing model that makes sense for their business, without having to worry about how to implement the licensing model or bill for software use."
Interested in learning more about why compliance management matters? Take a look at this whitepaper, “Software License Compliance Management: Optimizing Software Revenue and Customer Satisfaction.”
Flexera Software's FlexNet Licensing (composed of FlexNet Publisher and FlexNet Embedded) makes it easy for application producers to monetize, secure, enhance and grow market share through the flexible pricing, packaging, and licensing of applications, intelligent devices or equipment using embedded software. FlexNet Licensing also gives organizations the power to protect IP and rein in unauthorized software use to prevent revenue loss.