My Book on All

1. quot;The Benefits of Hosted Licensing Solutionsquot;
a Visual White Paper
Learn more at: www.nitrolm.com
Copyright 2008 - Simplified Logic, Inc. - All Rights Reserved
Contact Info: lmsales@simplifiedlogic.com - USA: 317-875-0000 ex 708

2. Copyright 2008 - Simplified Logic, Inc. The Problem!
Are you satisfied with this?
Source: BSA & IDC Global Software Piracy Study Results - 2006
The Benefits of Hosted Licensing Solutions Page 2 of 9

3. Copyright 2008 - Simplified Logic, Inc. Current Protection & Piracy Methods
Protecting your Software is CRUCIAL! When Customers have Control - They STEAL!
Your Innovation, Intellectual Property and Investment are at Risk Typically due to a 'casual' interpretation of 'purchase' vs. 'license'
Most Common Methods of Protecting Software Most Common Methods of Stealing Software
Peer-To-Peer Networks
The Internet is used to locate and download
already licensed or cracked software
Distribution of 'Key-Codes'
emailing or otherwise publishing license strings and
e
installation information can be distributed to others
nu
ve
Hardware Keys / Dongles
Re
Easily misplaced, require time, effort, and cost
to implement, deliver, and support! Install / 'De-Install' / Re-Install
st
Customers 'say' they de-installed software,
Lo
but never actually did - often repeated over MANY computers
Home-Grown Solutions
Often local or remote key-generation
or client license server based solutions
(typically a hassle to customers)
Cracks found on Internet
Lost Revenue The more expensive or 'cooler' your software is
the more likely a 'crack' exists on the Internet
Typical Commercial Licensing Solutions
Often require complex integration -and- require customers
to adapt their system to install, manage and use it Lo Virtual Machines!
(very easy to find 'cracks' for them on the internet) st HOT Technology for running an entire 'virtual' computer
Re inside a user's computer, enabling your software to be in their
ve 'sandbox' and out of your visibility and control!
nu
e
Computer 'Clock' Games
The old-school approach of resetting a computers
date to allow your software to startup and run
Piracy Complacency
You know it is happening, but make excuses Social Engineering
for not implementing proper security and controls Calling in as an quot;unhappy customerquot; to extract
(complete idiocy) free use of your software licenses beyond an
evaluation, purchase or license period
These 'solutions' give customers too much control All of these are easy to do, require less skills,
and limit your understanding of their behaviors and easily bypass most commercial solutions
The Benefits of Hosted Licensing Solutions Page 3 of 9

4. Copyright 2008 - Simplified Logic, Inc. Protecting Revenue Streams at the 'Source'
Protecting your source code is just as important as properly licensing your application.
This is especially true for commercial applications which use interpreted languages (e.g. Java)
or Rich Internet Applications (e.g. Adobe Flex/AIR).
Common Approaches to Application Protection
NO PROTECTION
Result: They eat
YOUR Lunch!
Application Hacker/Competitor
iler
Your Hacker/Competitor
(Bytecode) Decompiler
mp
Source Code Application
Co
Does it Taste, Feel, & Work the
OBFUSCATION
same for customers/support?
Obfuscator
Needs to be verified that it is as
good as the original code!
Your Your Obfuscated
Your Source Code Application Hacker/Competitor Very difficult to debug
Source Code Source Code
(Obfuscated) (Bytecode) Decompiler cryptic error messages!
Pu nc
bl ryp
E
ic te
K r
ey
ENCRYPTION
Your Source Code Application Hacker/Competitor
(Encrypted) (Bytecode) Decompiler Your Source Code
(Still Encryped - Unusable)
The Benefits of Hosted Licensing Solutions Page 4 of 9

5. Copyright 2008 - Simplified Logic, Inc. Revelation: The Internet Exists!
Conventional Software Vendors The need to 'Understand' more!
Legacy Approaches, 'n+1' generational improvement model Profitability means you must 'control' and 'understand' your customers
Most commercial license solutions have not changed The Internet has changed everything!
much over time; they have been patched/mended The dramatic increase in 'access' to the Internet
as required, but not significantly improved significantly reduces the need to force customers
beyond their core capabilities. to 'install' and track licenses internally
The Result: Over time, your 'Customers' will find Customers should only need an internet connection
find it harder to install and use your license solution. to get and manage their software license purchases.
This presents a (very) negative quot;firstquot; impression! Software Developers should
(especially in larger organizations with more strict aggressively enable that process!
security and installation requirements) (this results in direct reductions in support costs)
The Benefits of Hosted Licensing Solutions Page 5 of 9

6. Copyright 2008 - Simplified Logic, Inc. Understanding: Customer 'Touch-Points'
'Touch-Points'
A 'Touch-Point' is a specific, definable customer-driven transaction or event which triggers the
need for attention or action on behalf of your organization.
There are three types of 'Touch-Points', all of which are useful:
- Positive Touch-Point = Customer is 'out' of licenses
(i.e. demand for use exceeds purchase amounts)
- Neutral Touch-Point = Average, Expected, and Routine Information
(i.e. customer is using your software)
- Negative Touch-Point = Customer has 'not' used software in x-days/weeks/months
(something has changed inside the account)
Hosted License Providers have a unique opportunity to present you with a wealth of
information about your own customer's usage behaviors and actions with your own software -
and typically in real-time.
If these unique information capabilities are tapped into, you not only have a more complete
understanding of what your customers true needs are, but also have unique insight into other
opportunities which may be routinely missed.
Specifically, 'Negative Touch-Points' would clearly indicate transitions within the customer
that may present opportunities to turn 'negative' usage in to a 'positive' opportunity:
- New consulting/training opportunities due to people leaving or moving to new positions,
- Other priorities which may have risen to distract from using your software,
- Customer has lost interest in your tools and capabilities, or
- Worst case - a competitor's product has taken a footing inside your existing customer!
Software License Providers who offer more than a 'light-switch' approach to access-control An active monitoring of Customer license
present new opportunities for a deeper understanding of your customers behaviors and usage can help drive 'new' business
actions without needing to waste valuable sales/support efforts 'touching' the customers when
opportunities within existing Customers
they do not need to be 'touched.'
The Benefits of Hosted Licensing Solutions Page 6 of 9

7. Copyright 2008 - Simplified Logic, Inc. Hosted Licensing: New Ways of Thinking!
What does a Hosted License Service Look Like?
A Hosted License Service typically manages your entire software licensing process on-line, and in real-time.
Below is an annotated overview of what a robust license service would look like to your developers and to your customers.
A well-designed hosted license service can be integrated with your application within a few hours to a few days depending on the level of
customization you may want to do on your side (e.g. look/feel of your user interfaces, etc.).
Web-Based Step #4: Application Usage
Array/Cluster of - Download, Install and Use
Administration Interface License Servers -or-
Step #1: Account Setup (on-line) - Connect to Your Application Server and Use
- Define Products & Customers
- Define Customer/Product Relationships
- Define License Types
- Users Register and get Licenses over the Internet
- Define Notification Triggers (for sales/support groups)
#1
#2
#4
Hosted License Provider
Your
Developer(s) Your Existing Infrastructure
#2
Your
Software Account/License
Verification Your
#3 Customer(s)
Step #2: Integrate w/ Your Application Your
- Download and Include License Client in your Application Software
- Encrypted Applications are most secure!
- Create a User Interface for Login/Password
- Test the Interface and Integration
Your Servers
(Download or Application Servers)
Step #3: Deploy
- Package and Push for Download
-or-
- Package and Publish to Your Application Server
The Benefits of Hosted Licensing Solutions Page 7 of 9

8. Copyright 2008 - Simplified Logic, Inc. Hosted Licensing: Advantages/Disadvantages
Advantages of Hosted License Services Disadvantages of Hosted License Services
Most will be common, some are vendor specific Most of these are overcome if you quot;licensequot; the technology directly
Convenience, Speed, Infrastrucutre
- No need to develop technical and physical A Third Party is Involved
infrastructures for handling software registration and - Probably the most important thing to understand
confirmation of users and customer accounts. about Hosted License Providers are summed up in
proper due-dilligence questions:
- Developers only need to focus on integrating License
- How long will they be in Business?
Client for the service, and making sure their Dialogs
- What type of customers do they work with?
and the quot;flowquot; of Registration/Login is efficient for
- Has the company been purchased/sold previously?
customers and end-users.
- How big is their infrastructure (servers/support/etc.)?
- Does the company have quot;passionquot; for this, or is it just another product?
- Customers are not required to quot;installquot; or quot;distributequot;
- Is the company growing and how have their customers done?
anything within their company, they only need an
- Is the fee-structure logical, straight-forward, and easy to understand?
Internet connection to register, procure and use their
- Does their solution perform only quot;light-switch (on/off)quot; functionality?
licenses.
- etc...
Control
- You are able to define your products and customer relationships on- - It is important to note that, most Hosted License Providers are either startups or
line and monitor and make adjustments in real time (e.g. add, remove, have only recently added this type of service to legacy license services they have
stop, bundle software specific to a customer's needs). previously provided (n+1 generational improvements - which should warrant special
consideration and review before using).
- Hosted Licensing removes ALL of the technical, machine,
geographic, and user-specific variables which can easily be Can the Hosting Providers Technology be quot;Licensedquot;?
manipulated to cause losses in your revenue stream. - Even with the perceived comfort of building and operating your own infrastructure for
licensing your software, you should ask the License Hosting Provider if their core
service/technology is available to be quot;licensedquot; to run on your own equipment/
Understanding infrastructure.
- The quality of the information that can be collected, stored and reviewed remotely is
extremely valuable for guiding product feature decisions, marketing, and levels of - Licensing a Hosted Provider's software/technology can be the best of both worlds for
support that may be required in the future. implementing a web-based licensing system with little cost of effort.
- Customer's quot;Behaviorsquot; and quot;Actionsquot; can trigger notifications to sales, technical
support, or others to help ensure that your products are being effectively used, and Some Change will be Required
more importantly to understand the potentials for recurring maintenance, subscription, - Established software companies likely have their
or upgrade revenues. existing/home-grown license solution integrated into their
business environment. Much of this legacy overhead is
Cross-Platform Development & OS Support likely not required, as some Hosted License Providers
- Most systems support the common development environments (e.g. Java, .NET, can typically expose remote reporting and manipulation
etc), only a select few support Rich Internet Application (RIA) environments like Adobe via Web Services. Some additional integration with your
Flex/AIR. business systems would be required to take full
advantage of these enhanced capabilities.
The Benefits of Hosted Licensing Solutions Page 8 of 9

9. Copyright 2008 - Simplified Logic, Inc. Trends and Other Considerations
Licensing is Crucial to Your Profitability Software as a Service (SaaS) is HERE!
Profitability is directly proportional to your ability to manage Over the next 5-10 years, conventional 'licensed' software
overhead like Development, Support, Marketing, etc. expectations will transform into a service-based model requiring
in relation to 'PAYING' Customers. more control and understanding than ever before about your
customers and how, when and where they are using your Software.
Customers Should 'Touch' You Regularly - This will require a changes in your technology
The more you understand about what your customers are doing with and how you distribute your software.
your software, the better chance you have to predict revenue streams,
make product and feature decisions and better serve existing customers -Will your license solution support this today and in the future?
Customer Relationships need to be 'Strategic'
When you understand what your Customers are doing with your software, you The 'Right' Relationship is Hard to Find
have a much better opportunity to control costs by effectively reacting to Commercial Licensing Solutions that ignore the Internet as a key
problems and paying more attention to marketing and innovation. component to your success will effectively limit a company's ability
to move in new directions quickly - specifically, new software
- Getting REAL DATA from your OWN Customers is ESSENTIAL! development and distribution models which embrace the Internet
(e.g. Rich Internet Applications)
- Effective Hosted License solutions should ENABLE this process by default.
The Internet HAS changed everything!
Hosted Licensing Services can remove barriers to installation and configuration
at your customers facility - all they need is an internet connection. As a result,
your licensing and distribution model can evolve into a truly competitive
advantage when marketing, quoting and capturing customers.
About Simplified Logic, Inc.
Simplified Logic, Inc. was founded in FY2000 and has worked primarily with Fortune 500 Corporations
on various enterprise-level development projects and selling their own specialized software applications.
Simplified Logic developed an Internet-based License Service called 'Nitro-LM' because of their own frustration with Commercial License Solutions
(expensive, difficult to implement, forced customers to adapt to the license solution's requirements, etc.). Nitro-LM started as an internal solution, and
quickly became a commercial solution when large commercial customers took note of Simplified Logic's approach and philosophy to software licensing.
Today, Nitro-LM supports Java, .NET, C/C++ and recently announced the only commercial
Adobe Flex/AIR (Rich Internet Applications) licensing solution in the world.
Additional Information about Nitro-LM can be found at the following:
www.nitrolm.com e-mail: lmsales@simplifiedlogic.com phone: usa +317.875.0000 ex: 708
The Benefits of Hosted Licensing Solutions Page 9 of 9