Licensing and Subscription Management to Grow Revenues in the Cloud<br />June 2011<br />Dr. Richard Northing<br />VP of Gl...
Agenda<br />Cloud Computing Market Segments<br />Cloud Revenue Growth Strategies<br />Pure-Play SaaS<br />Packaged Softwar...
Cloud Computing Market Segments<br />Intelligent Device Manufacturers<br />Virtual Appliances<br />Pure-play SaaS<br />Pac...
Pure-Play SaaS<br />Revenue Growth Strategies<br />4<br />© 2011 Flexera Software, Inc.  |   Company Confidential<br />
“Pure-Play” SaaS Providers<br />Business Challenges<br />Leaving money on the table because of a “one size fits all” appro...
1 – 56% of SaaS ISVs Miss Revenues Due to “One Size Fits All” Packaging and Pricing<br />What is your estimate of revenues...
STRATEGY 1: Package and Price Offerings to Match What Customers Want to Buy<br />7<br />© 2011 Flexera Software, Inc.  |  ...
2–User-Based License Models are Vulnerable to Credential Sharing Abuse<br /><ul><li>In this example, the SaaS offering is ...
Customer purchases 1 credential but 3 users share it</li></ul>SaaS Services<br />Machine ID: C<br />Machine ID: A<br />Mac...
STRATEGY 2: Prevent Revenue Leakage Due to Credential Sharing Abuse<br />Machine Identity + Credentials<br />SaaS Services...
3–Transitioning to Tiered Packages Requires Tracking and Enforcing Customer Entitlements<br />A SaaS CRM Application<br />...
X 3 License Models
X 2 Metrics</li></ul>Features (5 tiers)<br />Leads<br />Marketing content<br />Opportunities<br />Support Incidents<br />R...
4 – 38% of SaaS ISVs Use Spreadsheets or Homegrown Tools to Track Entitlements<br />Which approach best describes how you ...
4 – Homegrown Backoffices and Spreadsheets Fail to Deliver Revenue Opportunity from Tiered Offerings<br />For one SaaS pro...
“True-up” conversations are almost always painful and rarely recover the full revenue potential</li></ul>Source: Analysis ...
5 – Tiered Offerings Require On-Going Tweaks<br />13<br />© 2011 Flexera Software, Inc.  |   Company Confidential<br />How...
SaaS providers will need to evolve pricing / packaging approaches</li></ul>Source: SoftletterSaaS Report 2010, http://www....
5– Homegrown Backoffice Systems Cannot Keep Up and Get in the Way of Revenues<br />Costs of a homegrown back-office for ma...
Takes resources and focus away from feature releases
Inflexible to changing pricing/packaging needs</li></ul>Source: Flexera Software analysis of customers<br />14<br />© 2011...
For a SaaS ISV with $10M in revenues, this translates to $50K-$150K
Opportunity cost: Resources pulled away from feature releases
On-going costs are about 20% of the initial costs which also comes at the expense of  feature releases</li></li></ul><li>S...
16<br />© 2011 Flexera Software, Inc.  |   Company Confidential<br />Business Challenges and Strategies<br />BUSINESS CHAL...
Packaged Software Incumbents<br />Cloud Business Models and Growth Strategies <br />17<br />© 2011 Flexera Software, Inc. ...
Cloud Computing Will Allow Packaged Software Producers To Grow Revenues And Lower Costs<br />18<br />How would you describ...
© 2011 Flexera Software, Inc.  |   Company Confidential<br />Four Monetization Strategies for Software in the Cloud<br />1...
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Licensing and Subscription Management to Grow Revenues in the Cloud

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Flexera Software Presentation from the Cloud Computing World Forum June 21-22, 2011, London

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  • SaaS providers are leaving money on the table because of a “one sizes fit all” approach to packaging offeringsTransitioning to tiered packages requires tracking and enforcing customer entitlements. Leaving entitlements in spreadsheets is unlikely to grow revenues.Packaging approaches require on-going tweaks. Homegrown backoffice tools, being inflexible, get in the way of revenues.User-based license models are vulnerable to credential sharing abuse
  • articulate why a CRM system can&apos;t handle complex entitlements – CRM focuses on account management, not the complexities associated with rights management, transfers, updates, upgrades, suite changes, etc.
  • Difficult to management entitlements in a spreadsheet/manually as entitlements are complex, they change frequently and it is hard to control, track and understand usage and entitlement which results in companies overusing what they had purchased.
  • Netscaler is load balancer – we use for OD
  • Licensing and Subscription Management to Grow Revenues in the Cloud

    1. 1. Licensing and Subscription Management to Grow Revenues in the Cloud<br />June 2011<br />Dr. Richard Northing<br />VP of Global Services<br />
    2. 2. Agenda<br />Cloud Computing Market Segments<br />Cloud Revenue Growth Strategies<br />Pure-Play SaaS<br />Packaged Software<br />Device Manufacturers<br />Flexera Software<br />2<br />© 2011 Flexera Software, Inc. | Company Confidential<br />
    3. 3. Cloud Computing Market Segments<br />Intelligent Device Manufacturers<br />Virtual Appliances<br />Pure-play SaaS<br />Packaged Software<br />Cloud Applications<br />Software as <br />a Service<br />(SaaS)<br />Virtual Appliances for Packaged SW<br />S+S: Software + Services<br />App Development<br />APIs<br />Cloud Platform<br />Platform as a Service (PaaS)<br />App Development, Web Infrastructure, Data Warehousing<br />Cloud Infrastructure<br />Infrastructure as a Service (IaaS)<br />Servers, Networking, Storage<br />3<br />© 2011 Flexera Software, Inc. | Company Confidential<br />
    4. 4. Pure-Play SaaS<br />Revenue Growth Strategies<br />4<br />© 2011 Flexera Software, Inc. | Company Confidential<br />
    5. 5. “Pure-Play” SaaS Providers<br />Business Challenges<br />Leaving money on the table because of a “one size fits all” approach to offerings<br />Credential sharing abuse – user-based license model vulnerability<br />Challenges with Building Your Own or Using a CRM System for Entitlement Management System<br />Transitioning to tiered offerings requires tracking and enforcing customer entitlements <br />Homegrown entitlement management systems and spreadsheets fail to deliver revenue opportunity from tiered offerings <br />Tiered offerings require on-going tweaks. Homegrown backoffices cannot keep up and get in the way of revenues.<br />5<br />© 2011 Flexera Software, Inc. | Company Confidential<br />
    6. 6. 1 – 56% of SaaS ISVs Miss Revenues Due to “One Size Fits All” Packaging and Pricing<br />What is your estimate of revenues you are leaving on the table because of “one size fits all” pricing/packaging?<br />Source: Flexera Software online poll of SaaS ISVs, April 2011<br />6<br />© 2011 Flexera Software, Inc. | Company Confidential<br />56%<br />
    7. 7. STRATEGY 1: Package and Price Offerings to Match What Customers Want to Buy<br />7<br />© 2011 Flexera Software, Inc. | Company Confidential<br />Tiered packaging approach also helps to fund R&D by having customers that value premium features pay extra for them<br />
    8. 8. 2–User-Based License Models are Vulnerable to Credential Sharing Abuse<br /><ul><li>In this example, the SaaS offering is priced based on named user
    9. 9. Customer purchases 1 credential but 3 users share it</li></ul>SaaS Services<br />Machine ID: C<br />Machine ID: A<br />Machine ID: B<br />Some providers are losing 40-60% of potential users to credential sharing <br />8<br />© 2011 Flexera Software, Inc. | Company Confidential<br />
    10. 10. STRATEGY 2: Prevent Revenue Leakage Due to Credential Sharing Abuse<br />Machine Identity + Credentials<br />SaaS Services<br />Machine ID: C<br />Machine ID: A<br />Machine ID: B<br />9<br />© 2011 Flexera Software, Inc. | Company Confidential<br />
    11. 11. 3–Transitioning to Tiered Packages Requires Tracking and Enforcing Customer Entitlements<br />A SaaS CRM Application<br />In this example, a tiered packaging approach will require the SaaS ISV to track and enforce 30 possible offerings based on entitlements<br /><ul><li>5 features
    12. 12. X 3 License Models
    13. 13. X 2 Metrics</li></ul>Features (5 tiers)<br />Leads<br />Marketing content<br />Opportunities<br />Support Incidents<br />Reports<br />Trial<br /># Users<br />Annual Subscription<br /># GB Documents Stored<br />Day Pass<br />License Model (3)<br />Metrics (2)<br />10<br />© 2011 Flexera Software, Inc. | Company Confidential<br />
    14. 14. 4 – 38% of SaaS ISVs Use Spreadsheets or Homegrown Tools to Track Entitlements<br />Which approach best describes how you keep track of customer entitlements?<br />38%<br />Source: Flexera Software online poll of SaaS ISVs, April 2011<br />11<br />© 2011 Flexera Software, Inc. | Company Confidential<br />38% of ISVs use spreadsheets and homegrown tools to track entitlements<br />CRM systems cannot cope with complex entitlements though they are used by 46% of respondents<br />
    15. 15. 4 – Homegrown Backoffices and Spreadsheets Fail to Deliver Revenue Opportunity from Tiered Offerings<br />For one SaaS product line, 12% of customers were using more than what they had purchased ~$1.7M per year in missed revenues<br /><ul><li>Leaving entitlements in spreadsheets and homegrown systems makes it difficult to offer tiered upgrades and take advantage of up-sell opportunities
    16. 16. “True-up” conversations are almost always painful and rarely recover the full revenue potential</li></ul>Source: Analysis of Flexera Software SaaS product line<br />12<br />© 2011 Flexera Software, Inc. | Company Confidential<br />Non-Compliant Customers<br />Compliant Customers<br />
    17. 17. 5 – Tiered Offerings Require On-Going Tweaks<br />13<br />© 2011 Flexera Software, Inc. | Company Confidential<br />How do you price your SaaS offering?<br /><ul><li>No silver bullet with respect to pricing model
    18. 18. SaaS providers will need to evolve pricing / packaging approaches</li></ul>Source: SoftletterSaaS Report 2010, http://www.softletter.com/Research/SoftletterSaaSReport.aspx<br />
    19. 19. 5– Homegrown Backoffice Systems Cannot Keep Up and Get in the Way of Revenues<br />Costs of a homegrown back-office for managing entitlements<br /><ul><li>Though critical for revenue growth, building systems to track and enforce entitlements is not a core competence for SaaS ISVs
    20. 20. Takes resources and focus away from feature releases
    21. 21. Inflexible to changing pricing/packaging needs</li></ul>Source: Flexera Software analysis of customers<br />14<br />© 2011 Flexera Software, Inc. | Company Confidential<br /><ul><li>SaaS ISVs should expect to spend 0.5-0.1.5% of revenues to build an entitlement management backoffice
    22. 22. For a SaaS ISV with $10M in revenues, this translates to $50K-$150K
    23. 23. Opportunity cost: Resources pulled away from feature releases
    24. 24. On-going costs are about 20% of the initial costs which also comes at the expense of feature releases</li></li></ul><li>STRATEGY3: Dedicated Entitlement Management System to Drive Revenue and Manage Complex Entitlements<br />15<br />Provision Users<br />Entitle Customers<br />Verify Entitlement<br />Set up Service Bundles<br />Subscription and Entitlement <br />Management <br />Gather Usage<br />Renew Customers<br />Bill <br />Customer<br />Up-sell Users<br />De-provision <br />Users<br />© 2011 Flexera Software, Inc. | Company Confidential<br />
    25. 25. 16<br />© 2011 Flexera Software, Inc. | Company Confidential<br />Business Challenges and Strategies<br />BUSINESS CHALLENGES<br />STRATEGIES<br />SaaS providers are leaving money on the table because of a “one sizes fit all” approach to packaging offerings<br />Package and price offerings to match what customers want to buy WITHOUT involving engineering<br />Prevent credential sharing abuse<br />SaaS providers are losing 40-60% of potential users to credential sharing<br />Transitioning to tiered packages requires tracking and enforcing customer entitlements.<br />Homegrown backoffice systems and spreadsheets fail to deliver revenue opportunity from tiered offerings<br />Tiered offerings require on-going tweaks. Homegrown backoffices cannot keep up and get in the way of revenues.<br />Invest in a best of breed entitlement management system<br />Reducing number of hardware variations (SKUs) to meet diverse needs<br />
    26. 26. Packaged Software Incumbents<br />Cloud Business Models and Growth Strategies <br />17<br />© 2011 Flexera Software, Inc. | Company Confidential<br />
    27. 27. Cloud Computing Will Allow Packaged Software Producers To Grow Revenues And Lower Costs<br />18<br />How would you describe your business goals with respect to Cloud Computing? (Check all that apply)<br />Source: Flexera Software Virtualization and Cloud Computing Business Model Trends Survey, June 2010<br />© 2011 Flexera Software, Inc. | Company Confidential<br />
    28. 28. © 2011 Flexera Software, Inc. | Company Confidential<br />Four Monetization Strategies for Software in the Cloud<br />1<br />3<br />4<br />2<br />Bursts of Use<br />Pay by Hour<br />Pay to Accelerate<br />Business as Usual<br />Source: Flexera Software Virtualization and Cloud Computing Business Model Trends Survey, June 2010<br />19<br />
    29. 29. © 2011 Flexera Software, Inc. | Company Confidential<br />Three Cloud Product Strategies for Incumbents<br />Product Strategies<br />Software + Services: Augmenting on-premises software with a cloud based component, which may be monetized separately. <br />Examples: Mathworks, Autodesk<br /><ul><li>Packaged Software: Allowing packaged software to be deployed in the cloud with either existing or new monetization approaches</li></ul>Examples: IBM Jazz<br />Virtual Appliances: Packaging software as virtual appliances, and monetized with either existing or new pricing models<br />Examples: Oracle<br />20<br />Use Case Variations<br /><ul><li>Standalone software vs. volume purchase
    30. 30. Pre-paid vs post-paid
    31. 31. Public vs Private Cloud
    32. 32. Virtual appliance vs incumbent packaging</li></li></ul><li>Software + Services: Example 1<br />21<br />© 2011 Flexera Software, Inc. | Company Confidential<br />CAD Software: Desktop + Cloud to add more value <br /><ul><li>Design on the desktop
    33. 33. Search for parts online (stored in Amazon S3)</li></ul>Source: Company website<br />
    34. 34. Software + Services: Example 2<br />22<br />© 2011 Flexera Software, Inc. | Company Confidential<br />Scientific Computing Software: Desktop + Cloud to Accelerate <br />Desktop System<br />Cloud Cluster<br /><ul><li>Program on the desktop
    35. 35. Compute in the cloud (Amazon EC2)
    36. 36. Accelerate results</li></ul>Local Servers Performing Computation<br />Cloud Servers Performing Computation<br />Scheduler<br />Source: Company website<br />
    37. 37. Packaged Software in Cloud: Charging by the hour for EDA software<br />23<br />© 2011 Flexera Software, Inc. | Company Confidential<br />
    38. 38. Monetizing Virtual Appliances<br />(for Device Manufacturers)<br />24<br />© 2011 Flexera Software, Inc. | Company Confidential<br />
    39. 39. Virtual Appliances<br />25<br />© 2011 Flexera Software, Inc. | Company Confidential<br /><ul><li>Oracle customers can now license Oracle Database 11g, Oracle Fusion Middleware, and Oracle Enterprise Manager to run in the AWS cloud computing environment.
    40. 40. Oracle has delivered a set of Amazon Machine Images (AMIs), that can be downloaded from the Oracle site
    41. 41. Developers can take advantage of the provisioning and automated software deployment in these AMIs to rapidly build applications using development tools such as Oracle Application Express, Oracle JDeveloper, Oracle Enterprise Pack for Eclipse and Oracle Workshop for WebLogic. </li></ul>9000 virtual appliances on the Amazon Web Services (AWS) marketplace<br />1400 virtual appliances on the VMware marketplace<br />Sources: Oracle/Amazon web sites<br />
    42. 42. How We View Virtual Appliances<br />26<br />© 2011 Flexera Software, Inc. | Company Confidential<br />Virtual Appliances<br />Example<br />Citrix NetScaler Virtual Appliances offer same functionality as NetScaler physical devices<br />A virtual appliance is a software stack packaged as a virtual machine image. <br />The software stack replaces a physical device. <br />As a result, it can be:<br /><ul><li>Deployed on off-the-shelf hardware
    43. 43. Upgraded for capability or capacity changes
    44. 44. Consolidated using virtualization technologies</li></ul>Virtual Appliances <br />Physical Appliances<br />Pay-as-You-Grow<br />MPX 15500 (15 Gbps)<br />MPX 12500 (8 Gbps)<br />MPX 10500 (5 Gbps)<br />VPX 1000 (1 Gbps)<br />VPX 200 (200 Mbps)<br />VPX 10 (10 Mbps)<br />MPX 7500 (1 Gbps)<br />MPX 9500 (3 Gbps)<br />
    45. 45. Business Challenges and Strategies- Virtual Appliances for Intelligent Device Manufacturers <br />27<br />© 2011 Flexera Software, Inc. | Company Confidential<br />Virtual Appliances enable manufacturers to protect margins, <br />enable cross-sells/upsells and flexible capacity models<br />Challenges<br />Strategies<br />Transfer hardware costs to end customers by making device capabilities available as pure software<br />Device manufacturers face eroding margins on hardware products<br />Grow upsell/cross-sell revenues by delivering capabilities as software add-ons or on a trial basis<br />Allow service providers to dial up/dial down capacity on-demand without deploying hardware, eliminating unused hardware<br />Service providers provision capacity to meet peak demand which leads to unused capacity during off-peak periods<br />Service providers want to reduce power consumption, space and administrative costs<br />Consolidate many capabilities into one device<br />
    46. 46. Summary<br />Cloud computing will transform business models for software producers and device manufacturers<br />Business model transformation has many of the needs of on-premises software:<br />Monetization of products<br />Capacity counting/ tracking<br />Authentication & authorization of use<br />Usage tracking<br />Binding to help with compliance<br />Best of breed subscription and entitlement management solutions will power the transformation<br />28<br />© 2011 Flexera Software, Inc. | Company Confidential<br />
    47. 47. FlexeraSoftware: Application Usage Management Solutions for Software Producers and Consumers<br />Application Producers<br />Application Consumers<br /><ul><li>3,000+ Software Producers and High-Tech Manufacturers
    48. 48. Over 20,000 FlexNet enabled applications
    49. 49. 1,500 of the Global 2000 Enterprises</li></ul>29<br />© 2011 Flexera Software, Inc. | Company Confidential<br />
    50. 50. Flexera Software<br /><ul><li>Top 200 Software Company
    51. 51. Solidly profitable
    52. 52. 425 Employees
    53. 53. 80,000 Customers
    54. 54. 20,000 FlexEnabled Applications
    55. 55. 200,000,000 PC’s Receiving Software Downloads and Updates</li></ul>Statistics<br />Highlights<br />Customer Base<br /><ul><li>Market Leader
    56. 56. Entitlement andCompliance Management (FlexNet Producer Suites)</li></ul>- Enterprise LicenseOptimization (FlexNet Manager Suite)<br /><ul><li>Installation and Packaging (InstallShield, AdminStudio)</li></ul>30<br />© 2011 Flexera Software, Inc. | Company Confidential<br />
    57. 57. Marriott San Jose ● October 24-26, 2011<br />SoftSummit offers a comprehensive look at the entire software and device product lifecycle—providing you with strategies and the know-how to adapt your business to thrive in today’s fast-changing market. <br />
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