Software Licensing Featured Articles

There's a Better Solution to Monetization

By Susan J. Campbell, TMCnet Contributing Editor

A recent conversation with a colleague who works in graphic design centered on a new software purchase. He recalled the college years where it was common for students to share software so as to reduce the cost of purchasing said software. While this certainly broke the rules of software licensing, the poor college student generally cares little for the monetary loss of any big business. Right or wrong – this is the reality.

Unfortunately for too many software companies, this belief carried into other industries as well. The poor college student may be forgiven, even empathized with in the marketplace at large. The business owner who wants to shirk the responsibilities of the software licensing agreement, however – that’s a different story. If the same were done in return, acceptance and approval would never be a consideration.

Today, software licensing has taken on a much different look and feel. We’re no longer stacking disks in the server room to ensure we can reload the platform if a problem occurs. Now, we’re accessing solutions from the cloud, keeping costs down and gaining access to the latest and greatest options and capabilities, without having to do anything to get them. With this type of monetization model, it also means residual revenue for the software company – everyone wins.

Cisco (News - Alert) is one of those companies that has long been steeped in tradition, providing the fundamental technology backbone for companies everywhere. According to this recent Flexera blog, the company is increasing its focus on delivering products through subscription-based software licensing. This transition is a shift in strategy for this giant, but one the CFO believes will accelerate revenue. 

This revenue potential is certainly one of the reasons to make the shift, even if it means the culture also has to change. IDC’s (News - Alert) Amy Konary noted that one of the best aspects of the subscription-based model is the opportunity to build strong relationships with customers. That doesn’t mean making the shift is easy or without challenges, however. The company first needs to establish the business case for making the change and understand the challenges presented in terms of operations and interactions.

Flexera also recommends that software companies answer a few questions, such as how to handle pricing, how revenue recognition will change and what legal implications are involved. (For a full list of questions to consider, visit the Flexera blog link provided above.)

The point is, the subscription-based model can be very beneficial for companies seeking better monetization and tighter control on their licensing. The key is to establish the right approach and make the changes intentionally for the best success. By doing so, even the college student can be kept honest when accessing the solution in the cloud.