Featured Article from Software Monetization

The digital transformation has begun. Companies and their customers are moving to software-centric solutions and on-demand usage. That calls for an entirely new way of pricing and packaging so the organizations that provide the software can get the best possible return on their product.

Software licensing and monetization solutions from companies such as Gemalto (News - Alert) allow for that and a whole lot more.

Jeffrey Kaplan, managing director at consulting firm THINKstrategies Inc., explains that software monetization solutions provide software companies with the ability to monitor, meter, and determine how to price for their software. Metering allows software companies to track customer usage of their software so they can bill for it appropriately. Monitoring enables software companies to observe how their software is being used so they can determine whether (and how) to price for and package their software in different ways to meet their own business goals and better address customer needs.

The monitoring capabilities of software monetization solutions provide a continuous feedback loop on how end customers are using software so businesses can better tune their packaging, pricing, and products to be more relevant in the marketplace, adds Jamshed Khan, vice president of professional services and business development at Gemalto.

A mix of established independent software vendors are looking to expand the way they price for and package their offerings beyond just on-premises perpetual licenses. Likewise, enterprises and hardware companies that are moving into the software arena in light of the digital transformation and the rise of on-demand services and virtualization, are employing software monetization solutions today.

“Software is showing up everywhere,” notes Khan.

For example, Aspen Technology, which provides software that optimizes process manufacturing – for energy, chemicals, engineering and construction, and other industries that manufacture and produce products from a chemical process, recently employed Gemalto technology to introduce a token-based model of payment, Khan says. Rather than asking customers to select from a wide array of software options, which can sometimes be a complicated endeavor, the company now offers tokens. Customers can use these tokens to purchase whatever Aspen Technology (News - Alert) software they require at any time. Aspen Technology provides its customers with a portal through which they can track their token usage (so the customers can get a better handle on their typical spend each month) and buy additional tokens when needed.

Software licensing and monetization solutions are also important for companies shifting from selling physical items – like automobiles, medical equipment, tires, or pretty much anything else you can think of – to models that charge for on-demand use of those items, Khan adds. For example, he says, Michelin is now evolving from simply selling tires to providing customers with the option to buy based on the kilometer for vehicles or by the number of landings of aircraft.

“This is a great example of the most unlikely candidate moving to a new way to price and package for its offering,” Khan notes.

Five to 10 years ago, Gemalto’s customer base consisted almost entirely of desktop software companies, says Khan. This group still makes up a good share of the Gemalto business, he says, but the company now is getting strong traction with hardware companies as they are beginning to act more like software companies. Hardware companies are even hiring executives from software companies to get into the right mindset, he adds.

Software licensing and monetization is about more than being defensive and protecting your intellectual property, notes Kaplan, it’s about better understanding users’ utilization of your software and their preferences, so you have the right products and packaging in the marketplace when customers want them. That requires both software licensing and monetization software, says Khan, and collaboration between your IT and operational and R&D departments. Gemalto, he adds, helps build bridges between those parts of its customers’ businesses, and to assists those businesses in establishing consistent licensing models across their organizations.