How do you know if your home grown licensing is broken?

Many software producers and intelligent device manufacturers develop and use their own in-house licensing models for provisioning and entitlement management of their products by end user organisations.

While they do the job, do you know the signs suggesting that perhaps your home-grown software licensing system may be broken? If not, read on!

- Your CTO says to his team, "Run, Forrest run" when you ask him to make changes to the license key generator.  Homegrown licence key generators are often not well maintained and updated as they are not a core competency of an organisation.   It’s not uncommon that the licence key generator was created as a side project by a developer. 

Over time, the original developer may move onto other projects or leave the company, often without properly archiving the source code, or providing documentation on operation.  When a change is required because of a new license model, it becomes nearly an impossible task to understand how the key generator worked, especially if the source code is lost, or, an outdated development process was used.

On the other hand, commercial licence management solution key generators are constantly updated to reflect changing platform and market needs so that a company can focus its resources on the organisation’s core expertise. Also, commercial licence management solution offerings are updated to enable new market opportunities such as subscription and usage-based licensing models, technical compute environments due to mobile computing, M2M, cloud computing and virtualisation, and new development platforms such as Java and .NET.

- Your celebrity CEO is asked to sign a pirate copy of your software on a trip to China.  Often, companies create licence keys with only a minimal amount of protection, assuming that it will be used by ethical companies only.  Sometimes, such software can be pirated – illegally duplicated and resold along with a legitimate key (unethically obtained). 

Licence key generators in commercial licence management solutions provide several methods of ensuring that software can detect and prevent unauthorised usage, even in virtual environments, by properly attaching the licence rights to the customer environment using a variety of methods and processes.

- Your LinkedIn request to hire someone who knows COBOL gets 0 hits.  Licence key generators, many having been created 10 - 20 years ago, using development technology or development environments that are no longer supported.  As a result, it may be nearly impossible or very costly to update the licence key generator to meet a market need for a new licence model.

Commercial licence management solution key generators and the associated licence models that they support are regularly updated so that companies don’t have to worry about making changes without old or outdated technology and methods.

- Your CFO ends up in Brazil after appearing on the cover of the Wall Street Journal for missing quarter end revenue.  Often, key generators and associated ERP processes are designed in such a way that information about the customer environment (such as a HostID or MAC address) is required before an order can be successfully processed.  

For these situations, orders might get delayed beyond a quarter end boundary if such information is delayed – causing missed revenue for that quarter.  Commercial licence management solution providers not only provide a licence key generator, but they also provide the back-office entitlement-management systems for delivering licence keys in such a way that business processes can be created that enable rapid order processing through an ERP, and, easy-to-use customer-facing self-service portals to manage licence key activity.

- You realise that the latest spam email from Nigeria has a master key for your software.  Sometimes a “master key” is created for key generators that enable all versions of a company’s software portfolio.  These are for large enterprise customers to make it easy to deploy large amounts of software, perhaps using a licence model not supported by the software vendor. 

However, if such licence keys get into the “wild”, they can be distributed by pirates or “friends and family” to companies or individuals not entitled to use the software.  A commercial licence management solution provides both, licence key technology that can support a wide variety of licence models that make it easy for large enterprise users to consume software, and (some say more importantly), the entitlement management systems so that such licence keys can be obtained and easily distributed within a large enterprise.

- You only sell one copy of the software to China and your sales team says that the market is saturated.  Again, pirated copies of software can often lead to a loss of revenue when they are duplicated and re-sold to customers who might have otherwise bought a legitimate copy of the software.  According to BSA, piracy rates can reach 29% in certain, high risk portions of the world. 

While not all is recoverable, some can be recovered.  If a company is entering high-risk regions for the first time, it’s prudent to protect the software before initiating such efforts.

- Customers are completely happy with a non-expiring trial version of your software.  Without any means of activation or licence key technology to limit the functionality or time duration of the software, an evaluation copy of the software might be used indefinitely, reducing revenue.  

Commercial licence management solutions provide entitlement management processes and licence keys that can start and expire licence rights on specific dates, or for specific intervals to ensure that the software cannot be used outside the bounds of an entitlement.  Furthermore, entitlement management systems can deploy internal and external notifications of expiry and provide reports to help design campaigns to turn trials into sales.

- Your business is a story in Harvard Business Review: "The paradox of 100% of the customers having your new software, but the renewal rate is only 10%".   Over time, maintenance can become a significant, growing and usually high margin revenue stream for software publishers and device manufacturers.  But without effective licence technology, that revenue stream can be critically undermined.

Some licence key technology doesn’t enable software to be protected by its version, meaning that customers may be able to buy a licence for Version 1.0 of your software, and continue to access new versions without paying for maintenance.  Or the customer may have purchased 100 licences of Version 1.0 of your software, but only covered one of those 100 licences with maintenance (partial renewal).

Without effective licence technology, the customer can access new versions of software for the one licence on maintenance, and enable the other 99 users to access that new version.  An effective commercial licence management solution ensures that the licence keys and business processes support partial renewal, but don’t allow access to versions of software where the entitlement doesn’t exist.

- Your Oracle R12 migration cost exceeds the GNP of some countries.  The business processes for managing software licences and recurring revenue streams is called “entitlement management”.  These processes and experiences are similar to what you find with iTunes – a customer friendly environment to buy, update, change and renew “entitlement rights”. 

Many companies (especially smart device manufacturers) don’t realise the differences between business processes designed for an ERP-centric hardware supply chain and entitlement management systems and processes.  As a result, companies customise an ERP deployment with many manual processes and interfaces to legacy key generators, or they institutionalise limitations on how to effectively monetise software.  

Re-deploying these awkward processes in an ERP upgrade can be expensive and limiting to the business.  Entitlement management and licence key generators within commercial licence management solutions are used in conjunction with ERP, so that the ERP can be used for where it’s effective (financial processes that create an entitlement), whereas the entitlement management system is best for the digital goods revenue renewal lifecycle of activation, compliance tracking, moves/transfers, renewals and customer self-serve.  

- You think that Entitlement Management is part of the government’s ICT strategy.  Licence key generators represent technology belongs to a larger set of business processes, called entitlement management.  Entitlement management encompasses processes and systems that ensure you properly manage a customer’s rights to access, update, upgrade, move, and renew their entitlements to use software.  

If you think a licence key generator just “turns on” the software, you may miss opportunities to deliver compliant licence models that ensure that customers can get access to exactly what they are entitled to use – maximising your revenue, and, all the while ensuring that a customer is using your software in a compliant fashion.

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