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3 Perspectives + 10 Tips for Software Licensing & Usage Management in the Cloud (Page 1 of 2)

Moving your software to the cloud opens up a world of possibilities, but also exposes you to a world of risk. Piracy is just part of it; there's also usage fees, audits (for both the ISV and the user), version control, updates and upgrades, distribution, and more.

To see how different software developers are handling the move to the cloud, we spoke to three different industry veterans with first-hand experience:

  • Paul Bryden, manager of sales and marketing at GEO-SLOPE, a privately-held developer of applications for geotechnical modeling. GEO-SLOPE was founded in 1977, has 16 employees, and is based in Calgary, Alberta, Canada.
  • Juan Cordovez, co-founder and VP of operations and development at Sentinel-IC Technologies, a Laguna Beach, Calif.-based developer of tools for the RF/analog semiconductor design community. Founded in 2008, Sentinel-IC Technologies has six employees.
  • Randy Littleson, VP marketing at Flexera Software, a provider of usage management tools for software developers. Based in Schaumburg, Ill., Flexera has 400+ employees worldwide. Littleson's 20+ years of industry experience includes stints at Kinaxis, Interface Software, Spyglass, Palindrome, and InstallShield.

Tip #1: Let your customers steer your security choice.

"For us, it's all about the customer," says Paul Bryden of GEO-SLOPE. "We want to make sure customers can seamlessly operate the software without any overhead. 

"As an ISV, you have to pay attention to what your customers want. They will tell you fairly quickly if what you're implementing is comfortable and workable for them.

"We deliver the software electronically. Most customers want to have a USB key to secure their license, because it gives them the flexibility of moving from work to home to out in the field. However, we are also able to secure it by locking to a MAC address or something internal to the computer. In addition, we are looking at Flexera's product that allows to move the electronic key digitally."

GEO-SLOPE is a bit unique in that throughout the company's 35 years of existence -- every year  profitable, by the way -- the software has been protected by a locking mechanism.

"Sure, there has been some push-back," Bryden says. "But it's always been something that our customers have had to deal with; it's part and parcel of the situation. It's improved greatly over the years, and it's less and less evident to the customers. 

"I don't think that, industry-wise, we’ll ever be able to get away from an authorization and validation process. Of course, we would love it if the customers didn't know that any security was involved at all."

At Sentinel-IC Technologies, Juan Cordovez chose to avoid hardware keys. "We do zero dongles; we do it all through files," he says. "A lot of our competitors do dongles, but we've just never found the need. In my experience, and for the type of software that I sell, dongles are not popular."

Tip #2: The price of your software doesn't matter as much as your management of it.

The average sales ticket at GEO-SLOPE is around $10,000, but Bryden doesn't think the need for security is tied to selling price. "Whether you need security is all relative to the person who is selling the software," he says. 

"Even if you're selling a $50 software product, if you're a one-person company you might want some license protection. But if you've got 50 employees to manage things, maybe not. It just depends on the ISV."

Cordovez is a bit more adamant about the need: "I cannot afford to not have a licensing solution," he says. "Even if your licensing costs around 10 percent of your sales, you will want it, because it will increase your sales more than 10 percent. I see licensing as a way to get the revenue that I'm entitled to. It's a way to maximize revenue."

Flexera's Randy Littleson comes down on this question somewhere in the middle. "I honestly think that  there's a great case [for license and usage management] whether you're large or small," he says. 

"The question is largely around scale. Even if I have a low-price product, I might sell high volumes, so the ability to manage licenses, upgrades, make changes -- if I haven't invested in some underpinning to handle that, I'm going to struggle. 

"For a small company, one of the real benefits is that you can gain competitive advantage through your ability to respond."

Tip #3: If you're going global, you're going to need both control and flexibility.

"You absolutely need to do this when you have an international audience," says Bryden. 

"Because we sell our software to more than 110 countries around the world, we wanted to make sure we had a secure way of distributing that was also easy for customers to install."

For Cordovez, the global pain was even more acute. "You’d be surprised how differently some countries treat intellectual property," he says. "For us, most of the action is in Asia -- particularly in China. When you go to emerging markets, it's very difficult to have a little bit of trust. Those markets are less structured.

"We were put in a position where there was misuse of the software. Instances were both accidental -- that was the case most of the time -- and deliberate. We were challenged, particularly as we expanded into emerging markets. We needed a solution that allowed us to address both issues. 

"Plus, we have people using our software in different time zones: San Jose versus Israel versus Beijing. We needed a solution that would be flexible, because customer needs are very different. You need to define their needs, but you can do zero overhead solutions. 

"A customer might say, 'I want one license worldwide, and I have 10 users in 10 different countries.' Well, I can control all of that through a license solution like Flexera's."

Tip #4: If you're smart, you'll sell your control as a user benefit.

Sentinel-IC Technologies also has fairly high ticket prices and varied license terms. Licenses can be perpetual or time-based, though Cordovez says he prefers time-based, typically sold as one year including support. Sentinel-IC sells a lot of different bundles, and initial invoices run anywhere from $10,000 to $150,000.

And, like GEO-SLOPE, Sentinel-IC is selling to an industry where security features are relatively common. Still, the security aspect isn't sold as an anti-piracy measure; it is presented as feature that lets the customer get the most economical and efficient package.

"The way that we sold it wasn't that we don't trust you," says Cordovez. "Instead, we told them that with this system, both of us -- Sentinel-IC and the customer -- will be able to more accurately control the feature set, and therefore the amount of the money you spend. If you use less, we'll be able to give you a more appropriate package and that will cost you less."

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