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TRANSCRIPT
Are Application
Producers in
“Climate Change” Denial?
A Report by
Are Application Producers in “Climate Change” Denial? – Page 2
Contents
Introduction ............................................................................................................................. 3
Part 1: Evidence of Business “Climate Change” – Environmental Risk Factors Posing for
Producers ................................................................................................................................ 3
Opportunities and Risk of Emerging Technologies............................................................... 3
What Impact Will IoT, Cloud, Virtualization and Mobile Have on Producers’ Climate Change
Readiness?.......................................................................................................................... 5
Shifting Customer Demand Creates Instability in Producers’ Revenue Models .................... 9
Enterprise Customers’ Tech Environments Are Also Shifting ............................................. 11
Ignoring the Signs of Business Climate Change, Producers Are Not Adequately Managing
Customer Licenses and their Software Entitlements .......................................................... 13
Likewise Ignoring the Signals, Producers also are Not Adequately Automating License
Management ...................................................................................................................... 14
Part 2: Impact of Business “Climate Change” on Producers .................................................. 16
Climate Change is Contributing to Software License Non-Compliance, Contributing to
Revenue Leakage.............................................................................................................. 16
Software Company Mergers & Acquisitions, Create Disruption for Customers ................... 18
Producers Report Wide Array of Business Climate Challenges ......................................... 20
Producers Are Lagging in Offering Flexible Software Monetization Options ....................... 21
Conclusion ............................................................................................................................ 23
Infographic ......................................................................................................................... 24
Survey Background ............................................................................................................... 25
Methodology and Sampling ................................................................................................... 25
Survey Demographics ....................................................................................................... 25
Location of Respondents ................................................................................................ 25
Respondents’ Vertical Market ......................................................................................... 26
About Flexera Software ......................................................................................................... 29
Are Application Producers in “Climate Change” Denial? – Page 3
Are Application Producers in “Climate Change”
Denial? A Report by Flexera Software
Introduction The environment in which application producers create, sell and manage their software is in a state of dramatic and accelerating change. Survival for these producers experiencing this business “climate change” depends upon their ability to read the writing on the wall and address these challenges head-on. To thrive in a dramatically different business climate means adapting business models and operations accordingly, and applying best-in-class people, processes and technology. For producers – business operations revolve around Software Monetization. How do producers adapt to changing technology environments, license their software to maximize profits, protect their intellectual property and keep customers happy amidst the whirlwind of constant and buffeting change? This report examines the new and emerging technology trends that are having the greatest climate change impact on application producers, the struggles they’re facing in the face of software climate change, and some solutions that could make a difference for those producers ready, willing and able to adapt.
Part 1: Evidence of Business “Climate Change” –
Environmental Risk Factors Posing for Producers
Opportunities and Risk of Emerging Technologies
Preparedness is a measure of assessing opportunity and risk, and then acting on the best
information. The impact of new technologies is an essential element of this measurement.
At a strategic level then, a good leading indicator of business climate change preparedness
can be gleaned by examining the trends and technologies in which producers currently see
opportunity and risk. We asked respondents to consider the benefit and risk of a host of
emerging technology trends that are being widely discussed today.
In terms of opportunities – It should not be surprising that producers see the greatest potential
in such categories as providing mobile applications (51 percent), supporting virtualization (45
Are Application Producers in “Climate Change” Denial? – Page 4
percent), offering subscription based licensing (43 percent), embracing public cloud computing
(41 percent) and the Internet of Things (IoT) (37 percent), to name a few.
In terms of risk, security topped the list of producers’ concerns. Given the growing instances
of data breaches, security vulnerabilities and reports of malicious code found on corporate
networks, this should also not be surprising. According to the survey, 48 percent of producers
view security as a significant risk. In comparison, other tech trends seem to pose much less
business climate risk to respondents. For instance, only 20 percent of respondents see risk
associated with Bring Your Own Device (BYOD), only 18 percent see risk in providing mobile
applications, and only 17 percent see risk in public cloud computing.
41% 45% 43% 40%30% 24%
37%51%
25%
41% 35% 37% 39%44%
34%29%
35%
32%
18% 20% 20% 21% 25%41% 35%
14%
43%
0%
20%
40%
60%
80%
100%
Do the following technology trends pose opportunity, risk, or both for the future of your
software company?Opportunity
Great opportunity Some opportunity No opportunity
Are Application Producers in “Climate Change” Denial? – Page 5
What Impact Will IoT, Cloud, Virtualization and Mobile Have on Producers’
Climate Change Readiness?
Considering the pervasiveness of trends such as the IoT, cloud, virtualization and mobile, we wanted to drill down beyond benefit and risk to examine what sort of impact these trends are having on various aspects of producers’ businesses and operations. Awareness of the impacts is necessary before producers can put into place the necessary systems, processes and technology to leverage the opportunities and mitigate the risks. For instance, is the IoT bringing in new competitors? Helping in the creation of new markets? Affecting product innovation and services offerings? Is the cloud impacting customer satisfaction or security concerns? Is virtualization creating new IP protection concerns? Is mobile impacting producers’ business models or supporting new lifecycle processes? According to the survey, 32 percent of producers said that today the IoT is having a high impact today on customer satisfaction, and 30 percent said it is having a high impact on security. In the next 12-24 months, 16 percent of respondents say that the IoT will cause significant impact around supporting new business models.
17%8% 11% 10% 12%
20% 15% 18%
48%
56%
41% 41%60%
44% 34% 41%47%
36%
28%
51% 49%
30%44% 46% 44%
35%
16%
0%
20%
40%
60%
80%
100%
Risk
Great risk Some risk No risk
Are Application Producers in “Climate Change” Denial? – Page 6
With respect to the cloud, 38 percent of respondents said a high impact today is around security concerns. In 12-24 months, 15 percent of respondents say there will be cloud impacts around supporting new business models and lifecycle processes. Concerning virtualization, the largest percentage of respondents, 29 percent, say security concerns are the high impacts today. In 12-24 months, 13 percent say that they will feel impacts around supporting new lifecycle processes. Finally, with respect to mobile, the high impacts today felt by producers include customer satisfaction (34 percent), new product innovation (33 percent) and security concerns (33 percent). In 12-24 months, 17 percent of respondents say they will feel the impact of mobile in both the security arena and supporting new business models.
Are Application Producers in “Climate Change” Denial? – Page 7
Please indicate the level of impact that these technology trends are
having on the following aspects of your business:
19% 18%25% 25% 23%
32% 30%25%
17% 14%
24% 27%
27% 27% 26%
21% 23%22%
25%25%
48% 45% 38% 39% 39%39% 38% 45%
42% 47%
9% 10% 11% 9% 12% 8% 9% 8%16% 13%
0%
20%
40%
60%
80%
100%
Increasednumber of
competitors
Creation ofnew markets
New productinnovation
Newsolutions
innovation
Newservicesofferings
Customersatisfaction
Securityconcerns
IP protectionconcerns
Support newbusiness
model
Support newlifecycle
processes
Internet of Things
High impact today Some impact Today
No impact and none expected No impact but expected in 12-24 months
25% 26% 28% 27% 26% 27%38%
28%20% 16%
30%35%
37% 37% 40% 38%
29%
33%
35%35%
33%28%
26% 27% 22% 22% 22% 32%
29% 34%
13% 12% 10% 9% 12% 13% 12% 7%15% 15%
0%
20%
40%
60%
80%
100%
Increasednumber of
competitors
Creation ofnew markets
New productinnovation
Newsolutions
innovation
Newservicesofferings
Customersatisfaction
Securityconcerns
IP protectionconcerns
Support newbusiness
model
Support newlifecycle
processes
Cloud
High impact today Some impact Today
No impact and none expected No impact but expected in 12-24 months
Are Application Producers in “Climate Change” Denial? – Page 8
16% 17% 19% 21%16%
26% 29%24% 21% 17%
36% 35%37% 34%
36%
33% 27%26% 27%
29%
40% 40% 37% 35% 37%33% 35%
41% 40% 40%
8% 8% 8% 10% 11% 8% 9% 9% 11% 13%
0%
20%
40%
60%
80%
100%
Increasednumber of
competitors
Creation ofnew markets
New productinnovation
Newsolutions
innovation
Newservicesofferings
Customersatisfaction
Securityconcerns
IP protectionconcerns
Support newbusiness
model
Support newlifecycle
processes
Virtualization
High impact today Some impact Today
No impact and none expected No impact but expected in 12-24 months
27% 27%33% 31% 30% 34% 33%
23% 21% 21%
31% 29%26% 30% 30%
33%26%
29% 33% 30%
26% 31% 25% 22% 24%19%
24%34% 29% 33%
16% 13% 16% 16% 16% 14% 17% 14% 17% 16%
0%
20%
40%
60%
80%
100%
Increasednumber of
competitors
Creation ofnew markets
New productinnovation
Newsolutions
innovation
Newservicesofferings
Customersatisfaction
Securityconcerns
IP protectionconcerns
Support newbusiness
model
Support newlifecycle
processes
Mobile
High impact today Some impact Today
No impact and none expected No impact but expected in 12-24 months
Are Application Producers in “Climate Change” Denial? – Page 9
Shifting Customer Demand Creates Instability in Producers’ Revenue
Models
In an earlier era, the manner in which enterprise software was sold and purchased was rather simplistic – a “perpetual” license was typically purchased enabling the buyer to use that software in perpetuity according to the rules (entitlements) found within the software license agreement. While there were many benefits to the old perpetual model, there were also drawbacks. For producers, the primary drawback is that once the lump-sum licensing fee is paid, other than maintenance fees, opportunities for recurring revenue from that customer are limited. For the customer, perpetual licenses require greater up-front investment before the solution proves its value. Moreover, investment in a perpetual license is accounted for as a capital expense (CAPEX) instead of an operating expense (OPEX). Finally, the perpetual licensing model makes it more difficult for enterprises to directly link cost to value received and usage. But the business climate has changed concerning how customers want to purchase software – creating instability in producers’ revenue and Software Monetization models. Demand has evolved to include a whole range of licensing models that enterprises would like to use for their software purchases depending on the circumstances – from perpetual to subscription and usage-based models. According to the survey, producers must now respond by flexibly offering a variety of licensing models to accommodate this seismic shift in customer needs. For instance, today 26 percent of producers say that all of their revenues come from perpetual licenses. Within two years this will decrease to 14 percent. 61 percent say half or more of their revenues comes from perpetual licenses today. Within two years this will decrease to 54 percent. Today only 14 percent of producers say that half or more of their revenues comes from
subscription licenses delivered via SaaS. Within two years this will increase to 21 percent.
Today 20 percent of producers say that half or more of their revenues comes from
subscription licenses delivered via non-SaaS means. Within two years this will increase only
slightly to 21 percent.
Today 17 percent of producers say that half or more of their revenues comes from usage-
based licensing models. Within two years that will increase to 21 percent.
Are Application Producers in “Climate Change” Denial? – Page 10
16%
50%
48%
54%
9%
16%
13%
13%
6%
9%
10%
9%
4%
8%
4%
5%
5%
3%
4%
3%
8%
5%
6%
2%
5%
1%
3%
3%
7%
2%
2%
2%
7%
2%
1%
2%
8%
0%
2%
2%
26%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Perpetual
Subscription (SaaS)
Subscription (Non-SaaS)
Usage-based/consumption
What are the current and anticipated breakdowns of your license revenues across the monetization
models listed below? (Columns must add up to 100%)-- Today --
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
16%
37%
42%
41%
10%
12%
13%
17%
8%
13%
9%
12%
7%
14%
10%
5%
6%
4%
5%
5%
10%
8%
6%
5%
7%
4%
2%
3%
8%
4%
5%
3%
11%
2%
2%
3%
4%
0%
2%
1%
14%
4%
4%
6%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Perpetual
Subscription (SaaS)
Subscription (Non-SaaS)
Usage-based/consumption
-- Within 12-24 Months --
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
6%
5%
3%
Are Application Producers in “Climate Change” Denial? – Page 11
Enterprise Customers’ Tech Environments Are Also Shifting
The environments in which end user organizations are deploying their enterprise software also is a story of shifting business climate. For example, today 75 percent of producers say that half or more of their customers use their software in on-premises, physical computer systems (not virtualized). Within two years that will decrease to 67 percent. Today, 16 percent of producers say that half or more of their customers use their software in on-premises virtualized systems. Within two years that will increase to 19 percent. Today, 12 percent of producers say that half or more of their customers use their software in in a hosted environment, hosted by their software provider. Within two years that will increase to 14%. Today, 7 percent of producers say that half or more of their customers use their software in in a hosted environment from a third-party cloud provider. Within two years that will increase to 11%.
8%
30%
61%
68%
5%
22%
14%
16%
4%
12%
7%
4%
4%
13%
3%
4%
4%
7%
3%
1%
7%
4%
4%
2%
6%
2%
1%
1%
9%
3%
1%
1%
11%
0%
3%
1%
17%
2%
0%
0%
26%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
On-premises physical computer systems (notvirtualized)
On-premises virtualized systems or local private
Hosted by the software vendor
Hosted by a third-party Cloud provider
What is the breakdown of customers currently using your software across the following types of
environments? (Columns must add up to 100%)-- Today --
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
5%
6%
3%
Are Application Producers in “Climate Change” Denial? – Page 12
9%
28%
53%
51%
6%
17%
16%
20%
8%
13%
11%
11%
4%
14%
5%
5%
7%
8%
2%
2%
11%
7%
3%
4%
7%
2%
3%
2%
10%
3%
1%
0%
12%
2%
1%
1%
9%
2%
1%
0%
18%
2%
4%
3%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
On-premises physical computer systems (notvirtualized)
On-premises virtualized systems or local private
Hosted by the software vendor
Hosted by a third-party Cloud provider
-- Within 12-24 Months --
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Are Application Producers in “Climate Change” Denial? – Page 13
Ignoring the Signs of Business Climate Change, Producers Are Not
Adequately Managing Customer Licenses and their Software Entitlements
Most world-class organizations are adept at reading the signs of the business environment and adapting. For instance, they have largely already invested heavily in automated systems essential to effectively manage and track their operations, customers and the customer lifecycle—the front and back offices. Customer Relationship Management (CRM) and Enterprise Resource & Planning (ERP) systems are the primary tools used by enterprises for these purposes. For an organization to operate without such automation in place in today’s highly automated, hyper-competitive, constantly changing business environment – would be akin to economic negligence. In the software industry, specialized Software Monetization solutions automate these functions as they apply to the software license lifecycle. This lifecycle incorporates operations, licensing and the management of customer entitlements – customer relationship management. The component of a Software Monetization solution that deals with the back office – managing customers, customer self-service, and what customers are entitled to do with the software – is the entitlement management system. Highly specialized and sophisticated, entitlement management systems provide the turnkey automation producers need to effectively manage their customers, provide them the self-service they demand to manage their purchases, and create cross-sell and upsell opportunities. Failure to put entitlement management systems in place exposes producers to myriad problems, from customer service issues to inability to maximize revenue and sales opportunities. Attempting to develop one’s own entitlement management system is akin to a non-software based organization trying to develop its own, home-grown ERP or CRM system – it’s extremely costly, time/labor intensive, requires specialized in-house expertise and ongoing maintenance – and it’s not nearly as effective as simply implementing a third-party system built by experts focusing on this technology. So to do so would be, in essence, denying the reality that specialized automation is available to do the job faster, better, and cheaper. And that is exactly what is happening. According to the survey, the majority of producers still have not automated their back offices by implementing entitlement management systems designed specifically for the software industry. Rather they are either not automating these core functions or they are trying to develop their own systems in-house. For example, most producers, 58 percent, develop and maintain their own entitlement management systems to address at least some of their need. 22 percent, do nothing. 19 percent use a proprietary, custom extension of their ERP/CRM system. Significantly, less than a quarter, only 23 percent, use a purpose-built third party commercial entitlement management system.
Are Application Producers in “Climate Change” Denial? – Page 14
Likewise Ignoring the Signals, Producers also are Not Adequately
Automating License Management
The other element of Software Monetization focuses on software licensing – the business
models producers implement around their software to make money from their intellectual
property. Flexible software licensing gives producers the ability to quickly package and
bundle their software products, and make their solutions accessible in all environments in
which customers operate, such as on premises, cloud and mobile. Licensing also helps
producers protect against revenue loss by ensuring only licensed and credentialed users can
access their software according to negotiated software licensing terms, without impacting
usability and customer satisfaction. Licensing also helps producers put into place whatever
enforcement mechanisms they like to prevent revenue leakage – from denial of service to
“pay for overage,” as two examples.
Similar to entitlement management, a producer’s ability to automate licensing by implementing
best-of breed, commercial systems helps maximize efficiency and revenue, while letting
customers buy the software using the business model that makes sense to them. Failure to
automate license management or attempting to build one’s own system, similar to the
entitlement management scenario mentioned earlier, puts producers at significant competitive
disadvantage, as they’re failing to adopt best-in-class business practices.,
According to the survey, this is also a widespread problem. For instance, 61 percent of
producers do not adopt best-in-class automation. Rather, they develop and maintain their
own licensing systems in house to address at least some of their needs. 17 percent do
nothing. And only slightly more than a third – 35 percent – use a purpose-built commercial
licensing technology.
58%
19% 23% 22%0%
20%
40%
60%
80%
100%
Developed andmaintained in house
Developed andmaintained as anextension of our
ERP/CRM system
We use a commercialentitlement management
system
We do not use one
What system(s) do you use to manage entitlements/customer use rights?
(Check all that apply)
Response Percent
Are Application Producers in “Climate Change” Denial? – Page 15
61%
35%
17%0%
20%
40%
60%
80%
100%
Develop and maintain in house We use a commercial licensingtechnology
We do not use one
What technology do you use to monetize and protect your software products?
(Check all that apply)
Are Application Producers in “Climate Change” Denial? – Page 16
Part 2: Impact of Business “Climate Change” on Producers The first section of this report outlines the tech trends transforming the tech industry, and the failure of producers to adapt by implementing best-in-class automation to monetize and protect their software. In light of this, this section of the report examines the resulting impacts on producers’ businesses.
Climate Change is Contributing to Software License Non-Compliance,
Contributing to Revenue Leakage
Changes in the technology climate means customers now have a variety of ways they can access and use their enterprise software – that may or may not be in compliance with negotiated terms. New technologies and rapidly changing environments are making it easy for customers to inadvertently fall out of license compliance. For instance, have employees downloaded software from the Internet that hasn’t been paid for? Are enterprises virtualizing software in ways that would create additional financial obligation? Are employees sharing access ID’s? There are myriad ways in which customers can, intentionally or inadvertently, use software beyond the terms of their license agreement – software license non-compliance – which can result in revenue leakage for producers. One measure of whether producers are effectively battling the impacts of these business climate change challenges is whether or not they are actually able to identify and recoup all the revenues due them in accordance with their software license terms. Said in another way, is business climate change depriving producers of revenues? According to the survey, software license non-compliance is rampant. 63 percent of producers say that customers are out of compliance – they’re using software beyond what they’re entitled to use.
Are Application Producers in “Climate Change” Denial? – Page 17
37%
27%
13%
5%2%
4%1%
3% 2% 2% 3%
0%
10%
20%
30%
40%
50%
60%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Surv
ey
Responses
Percentage of customers using your software beyond their entitlements
Percentage of customers using your software beyond their entitlements: Percentage of
customers using your software beyond their entitlements:
Overall
52%
18%
7%5% 4% 5% 3%
1% 3% 3%0%
0%
10%
20%
30%
40%
50%
60%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Surv
ey
Responses
Percentage of customers using your software beyond their entitlements
In Virtual Environments
Are Application Producers in “Climate Change” Denial? – Page 18
Software Company Mergers & Acquisitions, Create Disruption for
Customers
When customers activate their newly purchased software and access it for the first time – the experience they have doing so creates a first and lasting impression of the software producer who created it. The experience customers have managing their licenses and entitlements on an ongoing basis – say through a customer portal – likewise contributes to that customer’s opinion of their vendor. Because software creates a unique customer experience – mergers and acquisitions can cause significant disruptions for unprepared producers. Integrating disparate software products that were created independently can often create a confusing experience for customers – who expect all software coming from a specific vendor to behave the same way. When it doesn’t, customer frustration and dissatisfaction often ensures, creating ripple effects that impact the customer relationship. Software Monetization solutions often play a critical role post-merger or post acquisition, because they enable organizations to standardize licensing and entitlement management across all products – regardless of their origins. This makes activating and accessing software a seamless experience for customers across all products – regardless of when and where the software was created. Standardizing licensing can turn a merger or acquisition, often a traumatic experience for customers, into a non-event. According to the survey, producers are having significant difficulties integrating the licensing
and entitlement management experience of their products post-merger or acquisition. Of the
producers that have merged or acquired software originally developed by other software
vendors, 55 percent say it’s challenging integrating synergistic products from disparate code
bases. 50 percent say it’s challenging creating a unified entitlement management experience
for customers across all products. And 44 percent say it’s challenging maintaining disparate
licensing technologies.
Are Application Producers in “Climate Change” Denial? – Page 19
29%20% 17%
26%30%
27%
4%7%
7%
41% 44% 49%
0%
20%
40%
60%
80%
100%
Integrating synergistic productsfrom disparate code bases
Creating a unified entitlementmanagement experience for
customers across all products
Maintaining disparate licensingtechnologies
If you company has merged or acquired software applications originally developed by other software
vendors, indicate the key challenges:
Major challenge Minor challenge Not challenging Not applicable
Are Application Producers in “Climate Change” Denial? – Page 20
Producers Report Wide Array of Business Climate Challenges
As noted earlier in this report, producers are lagging when it comes to adopting best-in-class
Software Monetization practices to automate critical operations around software licensing and
entitlement management. The data corroborates that producers are largely suffering as a
result. For example, 58 percent of producers report difficulty enabling customers to manage
their own software entitlements. 55 percent report difficulty ensuring enforcement of their
software licenses in virtualized environments. 45 percent report difficulty protecting their
software against unauthorized use. 38 percent find it difficult to quickly package and bundle
features to create different product versions in order to accommodate changing market needs
or unique customer demands. 35 percent have difficulty managing customer entitlements.
And 33 percent find it difficult to support “try-and-by,” trial and/or evaluation licensing.
21% 17% 15% 16% 16%26%
41% 48%
27%
39%29%
41%
31% 26%
34%
30%
32%
20%
7% 9%
24%15%
23%13%
0%
20%
40%
60%
80%
100%
Quickly package andbundle software
features to createdifferent product
versions toaccommodate
changing marketneeds or unique
customer demands
Manage customerentitlements
Enable customers tomanage their own
software entitlements
Protect your softwareagainst unauthorized
use
Ensure enforcementof your software
licenses in virtualizedenvironments
Support “try-and-buy,” trial, and/or
evaluation licensing
When taking your software to market, please state the ease or difficulty with which you are able to:
Very easy Somewhat easy Somewhat difficult Very difficult
Are Application Producers in “Climate Change” Denial? – Page 21
Producers Are Lagging in Offering Flexible Software Monetization
Options
Adopting best-in-class Software Monetization strategies and technology enables producers to very flexibly package and sell their software in myriad ways to appeal to different types of buyers. Automated Software Monetization solutions, as discussed earlier, make it very easy for producers to do so. Producers that have not implemented automation – or those that have built their own systems in house – would have a very difficult time offering the myriad and evolving monetization strategies demanded in a global marketplace, and adapting to a rapidly changing, highly competitive market conditions. For instance, in some instances, the right sales strategy is to offer “freemium” options that would get software into the hands of users for free and allow them to upgrade to paid versions for additional functionality. In others, a “try-and-buy” trial strategy works best. In others, it may be necessary to repackage software to include different functions and features that may be needed to enter into new markets, such as Asia, or address niche demand. The ability quickly and flexibly to offer different licensing models to accommodate constantly changing market conditions is critical to accommodate these scenarios. In a marketplace where producers have largely implemented automation around Software Monetization, one would expect a rich array of Software Monetization strategies in play. In a market where the majority of producers have failed to adopt best-in-class automation, one would expect to see a lack of creative Software Monetization strategies in play. And that is what the survey uncovered. Barely half of producers, only 51 percent, offer “try-and-buy” options. Less than half offer variable licensing models to accommodate customer preference (49 percent). Only 47 percent package different product variants to accommodate unique market needs. Still fewer, 39 percent, offer upgrade paths to more expensive software versions. Only 23 percent offer freemium licenses. And just 20 percent offer mobile versions of their software.
Are Application Producers in “Climate Change” Denial? – Page 22
51%
23%
47% 49%
39%
20%
0%
20%
40%
60%
80%
100%
Offer try-and-buy triallicensing (i.e.
temporary license toencourage trial, whichexpires at a specified
time)
Offer freemiumlicense: (i.e. enablefree use of limited
application featuresand functions, withability to upgrade topaid-for, full-function
version)
Package differentproduct variants to
accommodate uniquemarket needs (i.e.unique customerneeds in specific
geography)
Offer differentlicensing models to
accommodatedifferent preferences
(i.e. perpetuallicense, subscriptionlicense, usage-based
license, etc.)
Offer upgrade pathsto more expensive
versions of yoursoftware
Offer mobile versionsof your software
What monetization strategies do you use to maximize your software revenues?
(Check all that apply)
Are Application Producers in “Climate Change” Denial? – Page 23
Conclusion Producers are being buffeted by changes in the business and technology climate that have an
ongoing impact on their ability to effectively make money from their software. Shifts away
from perpetual licensing to other business models impact revenue streams and predictability.
Virtualization, the cloud and mobile challenge producers’ ability to accommodate customer
demands while still protecting their intellectual property. And in the face of these climate
changes, producers have largely failed to automate software licensing and entitlement
management – systems designed specifically to provide flexibility, nimbleness, revenue
protection, profit maximization and change protection. It is as if producers are denying that all
of these changes are having any impact on the business.
But the survey speaks for itself. Producers are losing money due to revenue leakage. They
cannot quickly and effectively mitigate the impacts to their customers caused by mergers and
acquisitions. They report widespread difficulty around customer self-service, license
enforcement in virtual environments, product packaging and bundling, and supporting creative
business models like trials and try-and-buy.
One is forced to ask – why don’t producers do more to build flexibility and automation into
their business models? Are they in (business) climate change denial?
Are Application Producers in “Climate Change” Denial? – Page 24
Infographic
Are Application Producers in “Climate Change” Denial? – Page 25
Survey Background
This report is based on the 2015 Application Usage and Value survey, conducted by Flexera Software.
This annual research project looks at software licensing, compliance and installation trends and best
practices. The survey reaches out to executives at software vendors, intelligent device manufacturers
as well as the enterprises that purchase and use software and devices.
Methodology and Sampling The data contained in this report is based on three Application Usage and Value surveys, one targeted
at independent software vendors (ISVs), one targeted at intelligent device manufacturers, and one at
end-user organizations that consume enterprise software. More than 583 respondents participated,
including executives and IT professionals from 264 software vendors, 172 hardware device
manufacturers and 147 enterprise organizations.
Survey Demographics
Location of Respondents
Of the 583 respondents to the survey, 53 percent reported their division headquarters as being
located in the United States. 6 percent were from India, 4 percent from the United Kingdom, 4
percent from Australia & New Zealand, 3 percent from Germany and 1 percent from France.
Are Application Producers in “Climate Change” Denial? – Page 26
Respondents’ Vertical Market
Respondents fell across a wide array of vertical markets. With respect to Enterprise Respondents, 20 percent were from the Business/IT Consulting Services industry, 12 percent from the Government/Public Sector and 10 percent were from the education, Financial Services, healthcare, Oil/Gas/Utility industries respectively.
53%
6%4%
3%3%
2%1%1%1%1%1%1%1%1%1%1%1%1%1%1%1%1%1%1%1%1%1%1%1%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%
Respondents Division Headquarters
United States
India
United Kingdom
Germany
Australia
Italy
Canada
New Zealand
France
Netherlands
Brazil
China
Finland
Mexico
Pakistan
Sweden
Croatia
Are Application Producers in “Climate Change” Denial? – Page 27
With respect to software vendor respondents, 17 percent were from the financial industry, 16 percent from consumer, and 13 percent from Healthcare/Medical industry.
With respect to hardware device maker respondents, 23 percent are from the telecommunications/network equipment providers industry, 20 percent from the computer
2%3%
6%
12%
10%
10%
10%10%
10%
7%
20%
Which of the following best describes your organization’s vertical market?
Automotive
Aerospace/Defense
Consumer Goods
Government/Public Sector
Education
Financial Services
Healthcare
Oil/Gas/Utility
Technology
Manufacturing
Business/IT Consulting Services
10%2%
13%
17%
7%8%
5%
11%
2%
6%
6%
16%
Which of the following best describes the type of enterprise software your company develops?
Electronic Design Automation (EDA)
Human Resources Management (IncludingPerformance, Payroll and Talent Management)Healthcare/Medical
Financial (Including Accounting, Billing,Forecasting)Enterprise Resource Planning (ERP)
Customer Relationship Management (CRM)
Product Lifecycle Management (PLM)
Business Intelligence
Database Management (Including MasterDatabase Management)Project Management
Retail
Consumer
Are Application Producers in “Climate Change” Denial? – Page 28
equipment and peripherals space, and 20 percent from the industrial/manufacturing automation space.
23%
20%
20%
10%
12%
4%
5%6%
Which of the following best describes your organization’s vertical market?
Telecommunications/NetworkEquipment Providers
Computer Equipment andPeripherals
Industrial/ManufacturingAutomation
Building Automation
Healthcare/Medical Devices
Electronic Test andMeasurement Equipment
Automotive (IncludingInfotainment)
Consumer Electronics (IncludingHome Automation)
Are Application Producers in “Climate Change” Denial? – Page 29
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.
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 locations visit:
www.flexerasoftware.com