Electronic Test and Measurement: Creating New Value, and Revenue Streams, with Embedded Software


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Electronic Test and Measurement:
Creating New Value, and Revenue
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Electronic Test and Measurement: Creating New Value, and Revenue Streams, with Embedded Software

  1. 1. WHITEPAPER Electronic Test and Measurement: Creating New Value, and Revenue Streams, with Embedded Software
  2. 2. Electronic Test and Measurement: Creating New Value, and Revenue Streams, with Embedded Software 2 Flexera Software: FlexNet Producer Suite Whitepaper Series Electronic Test and Measurement: Creating New Value, and Revenue Streams, with Embedded Software Introduction More than ever, embedded software is playing a central role in intelligent device manufacturers’ go-to-market strategies. This trend is especially apparent in markets such as telecom, test and measurement, healthcare, and industrial automation – where manufacturers are under increasing pressure to innovate, rapidly enter new markets, control costs, maximize incremental revenue from existing customers, and deliver a competitively differentiated customer experience. As embedded software has become more integral to their business, more and more manufacturers are discovering the power of software licensing. With licensing, manufacturers can turn device features and/or capacity on and off as appropriate. This allows them to charge customers for the capabilities they want, while not charging them for capabilities they don’t want. Licensing thus enables manufacturers to more effectively use embedded software as a means of managing and monetizing the features and functionality they provide in their devices. By adopting the right licensing models, test and measurement manufacturers can: • Produce different products on the same hardware chassis. This drives down costs by eliminating the need for additional production lines and minimizing the number of SKUs that have to be kept in inventory. • Create innovative products on existing hardware chassis. This reduces the cost and time it takes to bring differentiated products to new or existing markets. • Up-sell existing customers by simply activating additional device capabilities or capacity. This makes it easier to capitalize on incremental revenue opportunities. • Meet evolving customer needs without requiring them to swap out hardware or otherwise disrupt their operations. This makes for a more positive ongoing customer experience. These examples highlight why software monetization is such a compelling best practice for intelligent device manufacturers. In fact, in today’s highly competitive and fast-moving markets, the skill with which manufacturers structure the monetization of their embedded software – and the diligence with which they manage their customers’ entitlements – may well turn out to be what separates market leaders from other players. Today, manufacturers are applying software monetization principles to manage a wide range of functions in hardware ranging from medical devices and location intelligence equipment, to devices used in telecommunications, supply chain automation, automobiles, test and measurement, and storage management. This whitepaper outlines key trends and opportunities influencing intelligent device manufacturers today, and how FlexNet® Producer Suite for Intelligent Device Manufacturers can help these companies to fundamentally improve their business. In addition, the whitepaper illustrates the power of software monetization solutions with a customer implementation scenario. Trends and Opportunities in Electronic Test and Measurement At a macro level, complementary business issues are driving the software-based differentiation of intelligent devices—all of which can be capitalized upon with software monetization solutions: • Changing economics of intelligent device manufacturing: The underlying hardware and core operating system software in many devices is being commoditized, as manufacturers seek to gain economies of scale by using more standardized components. Intelligent device manufacturers are increasingly buying, versus building, core subsystems and system software. As a result, their role is evolving to more of an integrator,
  3. 3. Electronic Test and Measurement: Creating New Value, and Revenue Streams, with Embedded Software 3Flexera Software: FlexNet Producer Suite Whitepaper Series and less of a manufacturer. Manufacturers seek better ways to differentiate themselves; software is a key means to creating competitive advantage and driving incremental revenue. • Growing revenue contribution from software: As a corollary to the commoditization of hardware, many intelligent device manufacturers are focusing more resources on software development. As such, software enables new revenue sources and provides a way to deliver a superior, differentiated customer experience. • Software-enabled supply chain transformation: With the underlying hardware becoming more powerful and at the same time commoditized, manufacturers can now build fewer base configurations and deliver more functions. Product capabilities, capacity, versions and price points can be created and modified based on functions that can be turned on and off by licensing of the embedded software. This dramatically streamlines the supply chain and manufacturing processes, as well as lowering inventory carrying costs. The challenge for the intelligent device manufacturer is to quickly bring to market devices that are tailored to meet the unique needs of a particular segment or new market, while keeping manufacturing costs low to meet margin requirements. Licensing-based approaches allow intelligent device manufacturers to enter new markets with a full-function device, and then create lower price points with the same device by enabling a subset of capabilities/capacity if lower-priced competition enters the market. • Brand and revenue erosion from grey market abuse: As underlying device configurations become more standardized, grey market theft can be perpetrated more easily. For example, demonstration models of products increasingly find their way into the grey market via channels for selling used equipment. These devices are running improper software and typically do not function correctly, posing a serious threat to the customer experience. In addition, grey market sales jeopardize maintenance revenues, as manufacturers lose track of device ownership and thus the maintenance relationship. • Customer preferences: In today’s ultra-competitive business environment, customers are demanding more flexible pricing models, easy access to upgrade features, and a superior customer experience. Software licensing and monetization capabilities allow manufacturers to meet all of these customer requirements by enabling important capabilities such as field upgrades and a consistent, streamlined customer experience across products. Turning to Flexera Software for Answers As electronic test and measurement manufacturers address these trends, they increasingly recognize that they face similar issues as software companies. Today’s intelligent device manufacturers are looking to Flexera Software to help them: • Reach new markets by creatively packaging and pricing embedded software • Build revenues by better monetizing capability and capacity • Cut manufacturing costs by using software to differentiate capabilities on devices, and thus reduce the number of unique SKUs • Accurately track customer entitlements and usage • Track channel partner activity, and maximize service and maintenance revenues • Prevent unauthorized use of capabilities without cutting off legitimate customers • Reduce the operational costs associated with shipping software upgrades • Cut customer support costs by offering customers and channel partners self-service and keeping them current on the latest version • Make better development and marketing decisions based on device usage data FlexNet Producer Suite Addresses Intelligent Device Manufacturers’ Unique Needs FlexNet Producer Suite for Intelligent Device Manufacturers leverages Flexera Software’s 25 years of industry experience, helping to maximize revenue, cut costs, and eliminate manual processes. It is optimized for intelligent device manufacturers, including: • Small footprint, embedded client: offers a licensing toolkit that is highly modular, supports several license models, and has a very small footprint (under 50K). This allows intelligent device manufacturers to keep costs low by using licensing of the embedded software to configure capabilities and capacity on a device while producing a minimum number of device types (SKUs). • High configurability: allows key elements such as security and binding to be configured or replaced as needed. This provides additional flexibility to fine-tune the solution to meet exact requirements or take advantage of existing device capabilities, while keeping the footprint small. • Hands-free activation and silent trials: provides hands-free activation and silent trials that don’t require registration. This transparent in-product activation improves the customer experience and increases upgrades/up-selling by enabling easy trials for new capabilities.
  4. 4. Electronic Test and Measurement: Creating New Value, and Revenue Streams, with Embedded Software 4 Flexera Software: FlexNet Producer Suite Whitepaper Series • End-to-End licensing and entitlement management and delivery: provides a single view for you, your customers and your channel partners to view and manage embedded software on devices and enables you to electronically turn on and off functionality. Case Study: The FlexNet Producer Suite Helps a Global Network Test Equipment Manufacturer Reach New Customers and Achieve Operating Efficiencies A global network test equipment manufacturer recently looked to Flexera Software for an electronic software monetization solution to cost-effectively differentiate its high-end products, directed at a telecommunications service provider audience, and penetrate a new, lower-end enterprise market. Flexera Software’s FlexNet Producer Suite for Intelligent Device Manufacturers helped the network test equipment manufacturer achieve these goals, and more. Through the FlexNet Producer Suite the company has: • Significantly lowered its manufacturing and inventory carrying charges • Enabled field upgradeability of the entry-level product • Monetized its maintenance program • More effectively enabled dealer demonstration devices Flexera Software FlexNet Producer Suite enables product differentiation An internationally known brand, the network test equipment manufacturer needed to reach a broader client base. The company wanted to take advantage of its well-established reputation on the high end of the network monitoring and diagnostic market, and offer a range of products to address the needs of both service providers and enterprises. Because its products are used on networks that have Internet connectivity, the network test equipment manufacturer took advantage of this fact to deploy the FlexNet Producer Suite to offer different product configurations, manage entitlements and offer self-service to dealers and customers. FlexNet licensing was used to build a management console that enables device capabilities based on entitlement. The console communicates with the entitlement management system over an Internet connection. Rounding out the solution, licensing technology was embedded in the network management device’s firmware, to enforce and monitor each device’s configuration upon registration by the customer. After registration, customers could execute upgrades and renew maintenance remotely. Flexera Software reduces manufacturing and inventory costs by half Prior to adopting the Flexera Software licensing and entitlement management solution, the network test equipment manufacturer used traditional manufacturing methods to mass-produce a fixed number of two variations of its core network management product. Model A is the low-end enterprise device and Model B is the high-end device for service providers. Model A contained all of the components necessary to deliver Model B capabilities; Model B is created by invoking different configuration parameters. The network test equipment manufacturer’s previous manufacturing methods created fluctuating shortages of one model and excess inventory of the other. The FlexNet Producer Suite allows the company to assign variable license certificates (Model A or Model B, plus multiple variations within each) during the manufacturing process. The device is shipped to a customer with product configuration instructions embedded in the electronic certificate. When the network management device is powered on and initialized, it self-configures. FlexNet Producer Suite allows the network test manufacturer to achieve major new efficiencies in manufacturing and inventory. It has effectively helped them reduce the manufacturing and inventory carrying costs by half. Creating a diverse product line to meet customer needs The Flexera Software licensing and entitlement management solution has allowed the network test equipment manufacturer to introduce new product capabilities to reach new market segments. These capabilities, which are all executed via electronic licensing, include: • Trial usage, providing full-product capability for a fixed period of time • Different device configurations for a variety of uses within the two distinct markets • Fixed amounts of use beyond a trial period but not in perpetuity With FlexNet Producer Suite, the network test company is achieving the goal of ‘mass customization,’ a manufacturing theory that allows a mass-produced product to be tailored to meet every customer’s specific needs. As a result, Flexera Software allows an international brand to maintain its elite reputation while evolving to a broader scope and a new enterprise customer base, without the investment of re-branding. Field upgradeability reduces risk and increases revenues Before deploying FlexNet Producer Suite, the network test equipment manufacturer’s equipment could only be upgraded on-site or at two service locations, which presented numerous challenges including: • The cost of deploying field service representatives to perform the upgrades • The customers’ downtime when equipment was being shipped and serviced
  5. 5. Electronic Test and Measurement: Creating New Value, and Revenue Streams, with Embedded Software 5Flexera Software: FlexNet Producer Suite Whitepaper Series • The risk of damage to improperly packed inbound devices • The cost of international shipping and customs fees • Lost revenues for the network test equipment manufacturer, due to a painful upgrade process Now, through FlexNet Producer Suite, upgrades can be easily executed by the customer, on-site: • The customer purchases an upgrade and then connects over the Internet to the entitlement management system at headquarters • A new entitlement is then downloaded to the device – in effect, upgrading the license • When the device is re-booted and re-initialized, it recognizes the new configuration parameters and the upgrade is complete By reducing customer barriers to upgrades, the FlexNet Producer Suite also allows the network test equipment manufacturer to more fully monetize equipment maintenance, which was previously sold on an as-needed, ad hoc basis. Now, via the Internet, valuable new enhancements can easily be delivered. Enhancing dealership relationships with high-performance floor models The network test equipment manufacturer is additionally leveraging licensing technology to deliver demonstration models to dealers that are specifically configured to meet their needs. Before adopting FlexNet Producer Suite, the network test equipment manufacturer had two problems: • First, they had demonstration models, which are provided at a discount, being sold on the grey market • Second, if they sent demo devices that were not viable for resale, they were not properly showcasing the network management equipment’s capabilities Using the FlexNet Producer Suite, Model A and Model B demonstration test equipment can be configured specifically for demonstration purposes, which provides full capabilities, but disables an important one – the ability to save network data. Without data-save capabilities, any potential resale value or unauthorized use vanishes. As this global network test equipment manufacturer leverages Flexera Software software monetization solutions to improve numerous aspects of its business, the power of FlexNet Producer Suite is clear: Flexera Software enables electronic test and measurement manufacturers to increase profit margins while reducing manufacturing and operations costs. Summary Electronic test and measurement manufacturers are increasingly shifting to a technology and business model that emphasizes value delivery through embedded software. Flexera Software’s FlexNet Producer Suite is the industry- leading software monetization solution for intelligent device manufacturers - unlocking revenue of embedded software and reducing operational costs while streamlining manufacturing processes. FlexNet Producer Suite also delivers unified entitlement management in both cloud and on-premises options. As competition intensifies in today’s global market, maximizing customer satisfaction, building revenues and reducing costs remain top business imperatives. FlexNet Producer Suite for Intelligent Device Manufacturers allows companies to: • Penetrate new markets through cost-effective, software- driven product differentiation • Improve customer satisfaction by offering self-service and a consistent experience for downloading, using and upgrading products • Reduce the number of SKUs that must be manufactured, carried and supported • Enable electronic upgrades • Fully monetize maintenance programs with better tracking of channel and end-customer entitlements • Allow new up-sell capabilities to be sampled and activated in the field About Flexera Software Flexera Software helps application producers and enterprises increase application usage and the value they derive from their software. Our next-generation software licensing, compliance and installation solutions are essential to ensure continuous licensing compliance, optimized software investments and to future-proof businesses against the risks and costs of constantly changing technology. Over 80,000 customers turn to Flexera Software as a trusted and neutral source for the knowledge and expertise we have gained as the marketplace leader for over 25 years and for the automation and intelligence designed into our products. For more information, please go to: www.flexerasoftware.com More information: You can learn more about this solution, download datasheets, and watch Webinars by visiting: www.flexerasoftware.com/measurement
  6. 6. Flexera Software LLC (Global Headquarters): +1 800-809-5659 United Kingdom (Europe, Middle East Headquarters): +44 870-871-1111 +44 870-873-6300 Australia (Asia, Pacific Headquarters): +61 3-9895-2000 For more office locations visit: www.flexerasoftware.com Copyright © 2015 Flexera Software LLC. All other brand and product names mentioned herein may be the trademarks and registered trademarks of their respective owners. FPS_WP_TestMeasure_Jan15