Featured Article from Software Monetization

Trimble (News - Alert) Navigation has been steadily transforming the way it licenses and monetizes its offerings. The company, which specializes in positioning technologies including GPS, laser and optical, is striving to keep its licensing practice agile in a changing and challenging technology environment. Trimble is working with Gemalto (News - Alert), which specializes in software licensing and monetization, as it transforms its licensing and revenue strategies.

We discussed some of the challenges inherent in transforming revenue models in the first article of a three-part series, “The Long But Rewarding Road to a Recurring Revenue Model.” The series is based on a recent LicensingLive event, “Crossing the Licensing Chasm – How to Transition to a Recurring Revenue Model Today,” following Trimble’s journey as the company transitions to a recurring revenue model and examining some of the steps involved in achieving that transition. Today’s article will focus on Trimble’s licensing and revenue model transformation and how it has impacted the company.

Trimble, which was founded in 1978, played successfully in the hardware space for a very long time. The company has been expanding into new markets and moving toward a software and SaaS (News - Alert) approach, which presents both benefits and challenges to them. According to Bill Graber, marketing director at Trimble, close to half of the company’s revenue is now derived from software, and Trimble has been working with Gemalto on a platform for license management and entitlement at the enterprise level.

“For us to move to the SaaS model, to the subscription model, is something that’s just going to take time,” said Graber of the company’s transition. “But, the whole idea is to stabilize or normalize your revenue versus your costs and so we get that. Now a lot of our software is perpetual with a maintenance contract and some of that will stay that way forever but we are definitely trying to get more subscriptions and we’re trying to get more prepaid.”

He added that Trimble is also moving to a hosted and cloud model, which is another big change for the company. A lot of their software is multi-user and shared, so the cloud model makes sense from a management and monetization standpoint.

One of Trimble’s largest use cases is measuring mountains to look for changes in elevation and GPS coordinates, using the company’s GNS Receivers. The devices are typically hardware-based, but Graber said the company is moving towards a software-based process that would allow accuracy variables. This would be offered on a subscription basis, since sub-centimeter accuracy is a lot more expensive than centimeter or meter-based accuracy. The software and subscription model would allow customers to dial accuracy up or down based on their specific monthly needs, while also enabling them to share data via applications.

An additional example of a transitioning revenue model for Trimble is the company’s aerial photogrammetry team, which uses a drone to capture specific points within a specified area. The result is roughly 10 GB of data generated during 35 minutes of flying time, a substantial amount. And while the drone software is very specific, the data can be hosted and processed in the cloud as a service. Graber said it typically takes a high-end laptop two days to process the data and generate a 2D or 3D map, so offering that process as a service option would be valuable for many customers.

A final use case for Trimble involves the dynamic impaction system at a new airport being constructed outside Beijing. The impaction system for the runways is being constructed using a 30-ton drum, which is dropped on massive sections of ground to compact the soil. Trimble’s solution includes a hardware and software kit that generates large amounts of data throughout this process. The company is planning to offload that to the cloud, as well as offering SaaS-based monitoring and management.

Trimble’s examples show how the transformation to a recurring revenue model can be achieved even in traditionally hardware-based industries. The full presentation of this discussion is available on LicensingLive. Stay tuned for a final article discussing the exciting road to a recurring revenue model.