Software vendors: Coping with software license management back-office complexity

With the epidemic of consolidation in the software industry many software vendors today find themselves with disparate software license agreements and a daunting complexity of entitlements to administer from their back offices. You may lack common licensing standards across all of your products. And because of that, you face a confusing muddle of back-office bottlenecks as you attempt to administer those software licenses. Other companies face increasing challenges as their business grows. In either case, ineffective software license management leads to back-office complexities that can reduce profitability and negatively impact customer service.

Software Licenses usually consist of a unique file or key tied to a computer identifier. A license generally needs to be generated from a set of information that includes the customer order, computer identification, licensing policies/terms and a description of the software being licensed. The manner in which the licensing process is handled and the license distributed will depend on the number of licenses you generate, the complexity of the licensing policies selected and the ability of your back office systems to support the licensing process.

Best practices: making sense of software license management the back-office

Software license management needs to track several pieces of valuable data that help you make better business decisions. Rather than collect reporting requirements after implementation of the licensing back office, experts recommend that software vendors include business owners and their data gathering requirements in the planning process. Look for data points such as:

• On average, how long do customers wait before they activate a product?
• Which platforms do customers use?
• Which license models are most widely used?
• Detailed entitlement history by customer

In addition, the way you handle software licensing, distribution and interaction with your customer base will vary considerably with the dollar value of the software purchased. Having a software license management system that can track this information can maximize the customer experience.

Typically, software vendors maintain close relationships with customers who spend the most money. The relationship and price point affect how you implement the licensing policies. For example, you would want to keep this customer happy under all circumstances and provide the ability for the customer to re-configure software licensing any time there is a computer failure, without allowing the utilization of additional unlicensed copies. In this case, you may want to provide easy access for the customer to collect a temporary (short duration) license to cover the period of the failure.

At the other end of the spectrum, we have the software vendor who issues hundreds or thousands of licenses a day, for relatively inexpensive software; to customers they cannot possibly know. In the case of high-volume/reasonably priced application software, the software vendor cannot deal directly with his or her customers to build a trusted relationship. Servicing, in cases of computer failures, and the customer need of utilizing other machines may require more liberal licensing policies.

Experience shows that there are many “shades of grey” between the two extremes. There are a host of issues you should investigate further when setting up a back-office for license generation, tracking and delivery. A first step to solving software license management headaches may be to investigate software licensing solutions, such as Flexera Software’s FlexNet Producer Suite for Software Vendors [link to FNPS for SVs overview] or High-Tech Manufacturers. These proven solutions can create an easy to use back-office to handle the complex range of licensing scenarios your business offers.