SOFTWARE LICENSING

10 Reasons Why Off-the-Shelf Licensing Software Makes Sense

By Mae Kowalke, TMCnet Contributor

When considering a licensing and entitlement management system, there’s the tendency to build one in-house. But resist the temptation, according to Flexera Software.

“Historically, many of our hundreds of customers attempted to build their own systems, when at some point they realized that it was a losing proposition,” wrote Flexera in a whitepaper on the topic. “The in-house solution was insufficiently flexible and scalable, and required too many resources that could be applied in other areas of core-competency.”

There are at least 10 reasons why most companies should choose a commercial off-the-shelf (COTS) licensing and entitlement management system.

First, there’s future-proofing.

“Commercial solutions will ALWAYS have more functionality, more associated best practices, and more industry case studies, allowing you to design a solution that will meet your needs today and into the future,” stressed Flexera in the whitepaper. “This functionality and constant improvement provides product agility which means the capability to proactively or reactively change product packaging, license models, and pricing to meet market conditions.”

Next, off-the-shelf solutions provide faster time-to-benefit and customer satisfaction because the licensing and entitlement management system can be used write away and the systems are polished for ease of use and maximum functionality.

Commercial solutions are tuned to the needs of the software business, too, instead of being built from a general foundation like many in-house systems often are.

“Customers who internally develop systems tend to base their entitlement management solution around a classic ERP implementation,” noted Flexera. “ERP systems are effective for managing finances and for facilitating the development of physical entities, but are usually not built to support the unique needs of the software or intelligent device markets. On the other hand, COTS licensing and entitlement management systems provide effective support for the ‘product lifecycle.’”

Risk reduction, allocating company resources to core competencies and leveraging industry best practices are three more reasons why in-house development often is a loser proposition.

“Ultimately, there is a large investment that is going to be made over time in an entitlement and license management system. This investment affects all aspects of the organization and the capability to get it right across so many stakeholders is difficult and not typically within the realm of most companies,” according to Flexera.

“Most COTS companies, such as Flexera Software, have successful records of achieving results,” it added. “Why not partner with a proven partner?”

If those were not already enough reasons why companies should resist the temptation to build their own licensing and entitlement management system, Flexera also has pointed out that off-the-shelf solutions provide business scalability and increased revenue from enterprise agreements.

“Companies that buy COTS solutions tend to standardize on that solution across their range of product offerings and business processes, lowering operational and development costs via ‘reusable’ and standard components and eliminating manual processes,” the company noted. “Companies that build solutions tend to continually expand their licensing and entitlement management solution as they acquire new companies, never standardizing on a single approach.”

Increased revenue from enterprise agreements also means off-the-shelf offerings make sense.

“Many of the usage reporting facilities enable software publishers to tune enterprise-level agreements for their largest customers based upon a mutually agreed usage and pricing formula (typically tuned to the need of each customer),” according to Flexera. “It’s not uncommon for many software publishers to obtain 50 percent or more of their revenue from a handful of accounts who have special, non-standard enterprise agreements.” The inability to gather accurate usage information often results in software publishers missing the opportunity to gather upside revenue that is built into the agreement because there is a lack of factual information.

So if your business is thinking about rolling its own licensing and entitlement management solution, it is time to think again.

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