By Cassandra Balentine
To protect and profit from their offerings, software providers must make software license management a priority. As software moves to a decentralized, “cloud” distribution model, it is important license management is not pushed to the back burner, but instead leveraged to maximize software monetization and intellectual property (IP) protection.
“Maximizing revenue opportunities and profitability is a complex issue, and many software firms fail to realize the amount of money left on the table when inadequate licensing and entitlement tools are used,” suggests Shlomo Weiss, GM, software monetization, SafeNet. He explains that a solution must not only be robust, but also offer the flexibility required in today’s dynamic markets. “This includes the ability to create new licensing models that add inherent value to offerings in order to deepen penetration and attract new segments. It also means support for new sales and distribution models that will allow ISVs to reach broader markets through both direct and indirect channels, including the Internet,” says Weiss.
The Right Mix
Several considerations come into play when ISVs decide to invest in third-party licensing/IP solutions to ensure license compliance for its user base.
When seeking a license protection solution, the criteria is influenced by the specific industry and application category. Common capabilities expected of a commercial licensing solution include node-locked and concurrent floating licenses, licensing of features, time-limited and usage-limited licenses, auditing and reporting, permutations of license models and features, and software feature usage tracking and analytics, lists Vinay Sahbarwal, CEO/CTO, Agilis Software LLC. As part of the selection process, considerations first include a customer’s capabilities, cost of development and maintenance, cost of operations, scalability, and reporting and analytic offerings.
Weiss suggests using a protection, licensing, and entailment solution that adapts to deliver licensing models that meet changing market demands and track usage at a granular level.
Tara Holt, senior product manager, Iron Mountain, notes that when choosing a license protection solution, savvy ISVs rely on a combination of legal advice to establish covenants and agreements, take precautions with physical and digital asset controls, and rely on independent, trusted third parties to help support the creation and collaboration of the IP they create.
Mathiew Baissac, VP of product management, Flexera Software LLC, says that the cloud and virtualization—enablers of cloud deployments—are the number one reason enterprises accidentally fall out of software license compliance. To ensure compliance, ISVs need to consider implementing a licensing/compliance solution that supports the full software-licensing spectrum. “With that, they need to give themselves the flexibility to enforce licensing in virtual environments with customers in less trusted geographies and the ability to implement a usage-based, trust-but-verify licensing approach for trusted customers, where the ISVs allows the enterprise to freely run applications (apps) in closed virtual environment and then charge based on actual usage,” he suggests.
The cloud plays a large function in the future of software license and protection. As the landscape changes, licensing software evolves to focus on new areas and meet new subscription-based needs for cloud-based products, such as usage-based measurement models. Even though it has been around for quite some time, the cloud is a disruptive technology in that it leads to new customer expectations and demands and its adoption is growing at a rapid pace.
Holt admits that the cloud affects licensing models. In fact, she points to research from IBM’s annual report stating that 85 percent of new software is built for the cloud. “This is a tectonic shift in how software is being delivered,” she attests. “The Gregorian calendar term of BC will take new meaning as Before the Cloud,” she quips.
SafeNet’s Weiss says that effective cloud licensing solutions enable software vendors to define service catalogs and business models, provision service agreements, control use authentication, and measure service usage. “These solutions must also be able to manage any application—cloud-based or otherwise—delivered to any device,” he adds.
One key benefit of cloud licensing—for users and software vendors alike—is the self-service and automation capabilities. Users update preferences at the click of a button via a Web interface, and vendors get those updates immediately. “The remote control functionality simplifies and speeds up license provisioning, updates, and renewal/cancellations. Cloud licensing solutions can automate back-end processes, providing optional efficiency, while at the same time, users get their apps the way they want them—faster,” he adds.
Alexander Krivov, CEO/managing partner, jProductivity, LLC, suggests that flexible licensing and IP protection that easily extend to support cloud offerings are strategic investments for development companies.
Sahbarwal cautions that the challenge for licensing solution vendors is the perception by cloud service vendors that there is no need to use any licensing solution. He explains that the reasoning behind it is that since a cloud service vendor hosts its own server—whether directly or via a hosting service—there is no need for node locking, and that the vendor needs to implement a monthly subscription management logic and hook it up with a payment gateway. “The fallacy behind this logic is of course that licensing is more than node locking, and subscription management done right is non-trial functionality that should be provided out of the box by licensing solution vendors,” he says.
A less obvious issue with this reasoning is that traditional licensing does in fact play a role in cloud service environments, partially for B2B cloud services.
Sahbarwal explains that the opportunity for software license vendors is to offer a new generation of licensing solutions that are themselves cloud-enabled and are offered to cloud service vendors as well as conventional packaged software and embedded systems vendors as a low-cost Software as a Service (SaaS) subscription. In addition, they should encourage enterprise licensing over the Internet, with support for remote node locking of desktops and mobile devices, as well as floating licensing over the Internet.
Marcellus Buchheit, president/CEO, Wibu-Systems USA Inc./co-founder Wibu-Systems AG, says that it becomes more difficult to securely manage licenses for apps residing in the cloud for many reasons. First, there is confusion about the term cloud. “Some think of SaaS as cloud computing. Others think of infrastructure as a service. Others wonder if licensing will happen in the vendor clouds or in their customers’ clouds,” he explains.
When investigating a cloud licensing solution, there are many factors to consider. Connectivity is one. Buchheit says some ISVs’ clients have secure networks that are not allowed outside access. In those cases, ISVs may have to provide licensing for a customers’ private cloud. They also need to consider whether the customer needs constant connectivity or just a login to use a license locally. Another variable is whether licenses will need to be accessed from mobile devices, he points out.
Some warn against getting caught up in the cloud hype, as some scenarios are not majorly affected by cloud adoption.
Wyatt O’Day, founder/CEO, wyDay, comments that the term cloud is simply a buzzword for decentralized computing, which has been around for more than 40 years. “The only thing new about cloud computing is that now every grandma knows ‘cloud’ means something other than condensed water vapor floating in the atmosphere,” he jokes.
As far as it relates to software licensing, O’Day says there is nothing special going on. “Properly designed licensing is hardware-locked licensing. That means if a customer buys a piece of software, the software will be limited to run on a specific number of machines. “My point is this; hardware-locked licensing requires the transfer of information between the customer’s computer and the software company’s servers. The cloud makes this transfer of information fast and painless. But if you wanted to transfer this information back and forth using non-cloud methods, then you certainly could,” he explains.
Several companies are committed to providing software license and protection solutions that meet and exceed the latest software licensing and protection demands.
Agilis offers cloud-native software licensing solutions that provide protection from software piracy, reduce operational costs associated with license compliance management, provide insight into usage of software features, and enable monetization through subscription/usage/feature management. The company’s platform-agnostic solutions are applicable to enterprise and desktop apps, embedded systems, and cloud-based SaaS services. The solutions are especially suited for small- to medium-sized agile companies with complex licensing requirements.
Flexera offers support for the full software-licensing spectrum, from strict enforcement to usage-based trust-but-verify offerings, enabling software protection, monetization, and compliance of on-premise, SaaS, cloud, virtualized, mobile, and embedded apps.
jProductivity offers its Protection! Licensing Toolkit and License Manager. Protection! Licensing Toolkit contains Protection Developer, which provides the ability to add licensing support into apps and develop custom, back-end implementations as well as basic licenses generation functionality; Protection Enterprise, a turnkey solution designed to bring value to software publishers by providing full automation of licensing processes together with the management of licensing, customers, and evaluators; Protection Sales, which offers advanced functionality for license generation, maintenance, and license delivery; and Protection Licensing Server, enabling users to distribute licenses on demand and track use according to the named or floating user license models.
IntelliProtector licensing service offers several protection schemes covering the most used behaviors and more. The company offers online, semi online, and offline schemes, and plans to soon launch a protection scheme. The company also provides a protection mechanism with API, multilingual sinkable pop ups, license types, renewals, resellers, automations, and customer newsletters.
Iron Mountain’s Intellectual Property Management products and services help engender trust between licensees and licensors by providing software escrow and business continuity solutions for on-premises and SaaS apps. The company also offers software verification testing to validate and ensure the integrity and recoverability of escrowed source code and IP.
Reprise Software’s Reprise License Manger (RLM) is a flexible and simple license manager with the power to serve enterprise users. RLM enables flexible license delivery for publisher’s products.
SafeNet provides software licensing and entitlement management solutions for on premise and cloud-based software vendors. SafeNet’s portfolio of products and services address every aspect of the software monetization lifecycle—from copy and IP protection to product catalog management and ongoing end-user experience improvement. The company offers a complete portfolio of software licensing and entitlement management solutions to enable monetization of any type of software—including installed, embedded, and cloud services—using any combination of business models via any sales channel to any end user device.
The Sentinel family of software monetization products provides an all-in-one solution that enables vendors to address emerging demands for licensing models customized to meet individual needs, most often consumption-based licensing.
SafeNet’s Sentinel Cloud Licensing leverages the benefits of a cloud-connected license for both on-premise software and cloud-delivered services with a single back-office platform. The solution provides usage-based pricing and enables new business models for on-premises apps, enabling customer to pay as they grow. Consumption-based licensing is based on feature usage and/or quantities of stored data, transactional data, and processing time to meet users’ demands for pricing more aligned with what they get from the software.
Wibu-Systems offers software protection and licensing solutions. Its security is based on encryption of the executable, important functions, and other propriety IP. The company is also involved in encryption of documentation or associated media files. Its flexible licensing solutions allow ISVs to choose from traditional license models like perpetual license, pay per use, pay per time, and concurrent network licenses to more modern licensing schemes like standby licenses, pay-per-feature, consumption licenses, and even licensing in the cloud. Its flagship product, CodeMeter, is a scalable platform that provides secure license management as well as several methods to enforce license policies.
wyDay offers LimeLM, a hardware-locked licensing solution offering both online activation and floating licensing to companies that use its software. With it, companies that use wyDay licensing have the ability to sell their software and limit it to only run on a specific number of computers.
The Future of Licensing
The future of license management and IP protection requires flexibility and customization. The ability to adapt to cloud-based needs is also a priority.
Wibu’s Buchheit admits that software licensing is becoming more complex and hackers are more sophisticated. At the same time, new platforms have arrived—including embedded and mobile—and more flexible licensing is required. “The perpetual license is slowly fading away as market demands of customers require pay per time, pay per use, and features on demand,” he says.
“IDC predicts that ISVs will offer usage-based pricing models for 80 percent of their apps by 2017,” cites Flexera’s Baissac. Over the next few years he expects a wide adoption of usage-based licensing models for both traditional, on premise software as well as cloud—or SaaS—offerings. For this, ISVs will need the ability to capture usage based on any unit of measure, including but not limited to the number of compilations, number of characters translated, number of drawings rendered in 3D, number of CPU minutes, and number of data converted.
In addition, Baissac expects a continued business transformation from intelligence device manufacturers, especially those looking to leverage the Internet of Things.
Sabharwal says that licensing solutions are increasingly offered as cloud services for all categories of apps and systems. This will result in a diminished role for IT in the entitlement management and server operations functions.
In addition, in the context of cloud services, the term license management system will morph into subscription management and there will be little to no mention of software protection or licensing, adds Sabharwal.
Continuing the trend of the last few years, Weiss says users increasingly demand that software deliver the value it promises. “This will put the software vendors under more pressure to deliver usage-based licensing, which requires accurate usage monitoring,” he says.
In addition, customization and flexibility are essential. Weiss explains that a software package that works for one user may not suit the next, so flexible licensing is necessary.
Vitaliy Korzhov, CTO, IntelliProtector, suggests that as the software protection market becomes stable, main players and their strategies will not drastically change. “Multi-platform software licensing becomes a trend—product vendors aim to cover both desktop and mobile markets. In spite of managed/mobile sharing increasing, native apps will still bring considerable revenue. And the endless confrontation between software protection vendors and hackers will remain.”
Matt Christiano, CEO, Reprise Software, Inc., believes that as apps move to the cloud, the old deployment model for the license server—at the end customer’s site—will move more to the ISV’s site. “So, the publisher should choose a solution that allows license servers to be deployed in-house or as a service from the licensing vendor.”
He adds that although traditional on-premise license server models will dominate, additional options will emerge, allowing ISVs to deploy solutions tailored to their needs and blurring the lines between Internet activation services and licensing services in the cloud.
Changing Needs, Demands
As the user experience changes, so too does the way in which software is priced and rights are managed. Usage-based licensing models are in demand. ISVs that don’t accommodate new trends and demands are venerable to those that do embrace and support next-generation capabilities and expectations. SW
Jul2014, Software Magazine