Sunday, December 31, 2017

Alfidi Capital at LicensingLive! 2017

I attended Gemalto's LicensingLive! 2017 conference in Silicon Valley. I have never explored the software licensing ecosystem before, so this conference opened my eyes to a different monetization approach. Please note that Alfidi Capital does not have any software available for licensing. Here's another badge selfie for all of you to admire.

Alfidi Capital at LicensingLive! 2017.

A guru dude gave the first morning's introductory talk on software monetization. One key takeaway is that software licenses are now issued by dongle, enabling a cloud connection. Take heed of the cloud, folks, because Cloudonomics now applies to software licensing. The whole point of standardizing software licensing is to simplify pricing, speed go-to-market actions, decrease customer service touch points that cause errors, and increase revenue recognition. That's a lengthy menu of advantages for smart licensing. Check out Simon-Kucher and Partners' Global Pricing and Sales Survey for more details on how licensing impacts revenue; I can't link it here but you can seek it on the Web if you think it's important.

The conference got me wondering about who in a software vendor's organization should own the licensing decisions. It should probably not be the CFO. There's a case to make for either the CMO (it's part of the sales and customer service process) or COO (some service functions are a back-office process) to own licensing. I would argue that the predominance of customer contact should place it in the CMO's office, with input from whoever in the COO or CIO touches product R+D. Whoever owns product development must have a voice in its delivery decision. If business lines influence a preponderance of IT spending, it is difficult to argue against licensing being a sales and marketing function. Alternatively, the recent trend towards creating "Chief Revenue Officer (CRO)" positions acknowledges that revenue enhancement takes place in functions outside the marketing funnel. Let's see how organizations where CROs own licensing stack up against those where CMOs or COOs own the process. Yeah, I know, it's complicated. That's business.

The subscription sign-up process has friction points that a CRM app can streamline to ease prospect conversion. Subscriptions and licensing are an obvious source of business intelligence (BI), and I suspect that many enterprises do not fully utilize this source. Managing licenses in the cloud means moving the process into CRM but keeping contact with the rest of ERP, another point in the argument for the CMO to own the process. Generic license manager descriptions sure make it sound like a CRM function. One tip I picked up from a LicensingLive! participant is for the license management team (LMT) to "ship through ERP, renew through CRM." I think that says it all. People who live that quote's wisdom moved their licensing function from the COO's ERP into the CMO's CRM. Remember that the customer's CIO is the primary IT buyer in any organization, and they own the software asset management (SAM) practice to keep cost and risk under control. The buyer's CIO should be perfectly okay with vendors who treat licensing as a marketing-owned function, because it's part of a customer service experience they can understand.

I collected some other random LicensingLive! tidbits right here, in no particular order. Subscriptions and licensing can monetize SDKs and APIs. IDC's FutureScapes reports cover software business model monetization, so licensing practitioners may find that relevant. License management systems allow metered usage, time-based licensing, expiration alerts, and upgrade/upsell opportunities. Anyone who uses an antivirus subscription service is certainly familiar with the automated account alerts that such a system generates for each of those functions. I bet blockchain will be the next evolution of license verification. Licensing BI should pull from renewal rates and usage (by device, seat count, software module function, etc.) to discover unmet opportunities.

I had never even heard of Gemalto before attending this conference. Imagine my surprise to learn that they are a big player in cybersecurity solutions and SIM cards. The company's global market leadership position is reason enough for me to keep attending LicensingLive! I am now much smarter about how licensing adds value. Pay attention to what I've said here about BI in bold text if you really care about making money from licensing. I make it so easy for everyone, thanks to LicensingLive!