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Opportunity: Software Licensing Revenue Recovery

Software licensing Opportunity: Software Licensing Revenue Recovery For software vendors and, by extension, their channel partners, the lack of visibility into how software is being used creates revenue leakage. Best Sources of Upside for ISVs Mobile apps (51%), virtualization (45 %), subscription-based licensing (43%), embracing public cloud computing (41%) and the Internet of things (37%) […]

Written By: Michael Vizard

Dec 22, 2015

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Software licensing

Opportunity: Software Licensing Revenue Recovery

For software vendors and, by extension, their channel partners, the lack of visibility into how software is being used creates revenue leakage.

Best Sources of Upside for ISVs

Mobile apps (51%), virtualization (45 %), subscription-based licensing (43%), embracing public cloud computing (41%) and the Internet of things (37%) are cited as having the most growth potential.

Greatest Sources of Risk

Nearly half (48%) cited security. Only 20% of respondents see risk associated with bring-your-own-device practices, while mobile apps and public cloud were cited by 18% and 17%, respectively.

Role of the Internet of Things

32% cited IoT is having a high impact on customer satisfaction, while 30% said it is having a high impact on security. In the next 12 to 24 months, 16% said that the IoT will cause a significant impact on business models.

Impact of the Cloud

38% said cloud security is still a concern. In 12 to 24 months, 15% of respondents said the cloud will impact business models and lifecycle processes.

Impact of Virtualization

29% said security concerns are having a high impact. In 12 to 24 months, 13% said virtualization will affect lifecycle processes.

Impact of Mobile Computing

Customer satisfaction (34%), new product innovation (33%) and security concerns (33%) are all high-impact issues. In 12 to 24 months, 17% of respondents said they will feel the effect of mobile in both the security arena and supporting new business models.

Licensing Options

Only 51%, offer “try-and-buy” options, and 49% offer variable-licensing models to accommodate customer preference. Only 47% package different product variants to accommodate unique market needs. Still fewer, 39%, offer upgrade paths to more expensive software versions. Only 23% offer “freemium” licenses. And just 20% offer mobile versions of their software.

Dependence on Perpetual Licensing

Just over a quarter (26%) said that all of their revenue comes from perpetual licenses. Within two years, this will shrink to 14%. But 61% said half or more of their revenue still comes from perpetual licenses today. Within two years, this will decrease to 54%.

Dependence on Usage-Based Licensing

Today, 17% of producers said that half or more of their revenue comes from usage-based licensing models. Within two years, that will increase to 21%.

Usage of Licensing-Management Systems

61% do not rely on a commercial licensing system. Rather, they develop and maintain their own licensing systems in-house to address at least some of their needs. Only 35% use a purpose-built commercial licensing technology.

Software Revenue Leakage

Software license non-compliance is rampant. A full 63% said that customers are out of compliance in that they’re using software beyond what they’re entitled to use.

Levels of Software-Licensing Automation

The majority of producers still have not automated their back offices by implementing entitlement-management systems. In fact, 58% develop and maintain their own entitlement-management systems to address at least some of their needs. In contrast, 22% do nothing, while 19% use a proprietary, custom extension of their ERP/CRM systems. Less than a quarter (23%) use a purpose-built third-party commercial entitlement management system.

Michael Vizard

Michael Vizard is a seasoned IT journalist, with nearly 30 years of experience writing and editing about enterprise IT issues. He is a writer for publications including Programmableweb, IT Business Edge, CIOinsight, Channel Insider and UBM Tech. He formerly was editorial director for Ziff-Davis Enterprise, where he launched the company’s custom content division, and has also served as editor in chief for CRN and InfoWorld. He also has held editorial positions at PC Week, Computerworld and Digital Review.

Opportunity: Software Licensing Revenue Recovery

Michael Vizard

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