When Licensing Metrics Must Change

Everyone knows that technology changes quickly.  So it’s surprising (at least to me) that licensing metrics for software are so difficult to change.  Purchasing contracts, license agreements, and license enforcement tend to lag technical milestones.  Sometimes this is a good thing – for instance, everyone waited out the predicted move to 64-bit servers during the development of the Itanium processor.  At other times, licensing metrics are not compatible with IT practices that develop due to technology – you license per-Ethernet port and they buy per-device.

Consumer packaged goods don’t usually have to keep pace with technical changes.  Cars are licensed per unit, not per cylinder, seat, or window.  In many ways software is licensed “per cylinder” which makes it susceptible to fundamental changes.  Think of the impact hybrid technology or turbo chargers would have on a per-cylinder vehicle licensing model during the current green movement.

What to disrupt when you’re disrupted

Usability and people skills are the key to catching the Wave

When you open the top of a soft drink and look under the cap, chances are you’ll see a code that you can text in or type into a web site for the privilege of entering a loyalty club or contest.  Years ago, that same cap used to tell you if you were an instant winner.

Soft drink companies made a choice about usability and culture – do you have far fewer entrants, but collect more information, or do you make more people instant winners and hope it builds anonymous brand loyalty?

How many of you have texted in one of those codes on a cap using T9 entry?

That’s what I thought…

So, usability and culture are intertwined (e.g. “do I want to go through the effort of texting” and “what are they going to do with my phone number?”).  The reward has to be tremendous to get over the “activation energy” of user inertia and suspicion.

Enter Google Wave.  Technically speaking, it has got some pretty incredible components underneath it.  No, I was not one of the 100,000 preview invitations to Wave, but I do think it shares the same soft drink cap adoption conundrum.

Google is looking for passionate digital natives right now (they build a tribe, the tribe can structure a community etc.), so a long explanation (an 80 minute intro video) makes sense.  But, if Wave requires a culture change or a large shift in user habits, there is a long road ahead for it.  Ray Ozzie has some great insight into this conundrum.  He should know a thing or two about collaboration as the founding father of Lotus Notes and Groove.  I like that guy.

In New York City, there are 2,375 mentions of “Facebook” every minute

Windows Home Server and the 12 hour undelete

A thoroughly scary and disappointing thing happened to me this weekend that made me reevaluate my cavalier way of doing IT work at home (you know, where the data is actually important).

I admit I was over-confident about certain things.  Heck, the thing we were doing worked before, so why shouldn’t it work again?

Here are some of the lessons and quirks that I uncovered:

You’ve got 720 minutes

Windows Home Server (WHS) does some really great things.  It mirrors your files so that in case of most hardware failures, your content is safe.  It backs up your other computers so that you’ve got peace of mind when your computers start making funny noises… but what’s backing up your WHS box (I would link in JungleDisk here, but they just pulled their WHS backup beta until further notice)? 

What if you make a mistake (or something else does), and you lose some files?

Web sites vs. beer – guess who wins?

It’s time for an update.  Vacations and a flurry of event activity has gobbled up most of my time recently.  And that’s a good thing!  Further pricing discussion will wait another few days while I write about the launch of a new idea that’s been hatching over the past few months.

SAP for Utilities 2009

This is a top-notch event.  This year I was lucky enough to be involved in the mechanics of a new extension of the event itself – a new, utility-centric collaboration and social networking community.  The event’s theme was “Collaboration Fuels Innovation”.  More specifically – cross-company collaboration. Nobody has to reinvent the wheel or solve the same problem twice if they work on common problems.

The event itself draws a very high level audience.  At the event itself, CxO’s, chief architects, and anyone involved in creating the next generation (pun intended) utility company all rub shoulders and share stories.

Utility companies (generation, transmission and distribution, retailers, and operators of all types) show up to talk about their plans for working with new demands in the marketplace as well as any new governmental mandates.

Our objective was to keep those conversations going beyond the event.  So, we created the UtilityCollaboration community.  The idea was first envisioned by the event organizer, Eventure Events.  I just helped figure out how to do it with them.

Pricing topics round up

It’s time to look back at the ground we’ve covered in order to establish the road ahead.  In a series of strategy posts, I talked about the fact that if you don’t know where you’re going, any road will get you there.  I also said it was important to have a sense of purpose and continue to review the goals that you started with in order to see if they’ve changed.

Let’s review what has been covered so that readers can easily catch up with anything they’ve missed and also to plot the next post.

Human behavior

It’s only natural to look for the best deal.  That’s exactly what happens when you get down to brass tacks with any business negotiation.  Humans treat everything with lots of variables as a game.  We like to play with graphic equalizers because we think we can make our music sound better when we have a greater degree of control over the gain of each frequency band.

Pricing metrics and the customers that suboptimize them

There are many truths in life.  If it didn’t sound so geeky and pessimistic, I would add to the list “customers will always suboptimize your product based on your metrics.”  It’s not very catchy.

I previously wrote about points to consider when choosing your metrics.  It was by no means exhaustive, but it did have a “salesy focus”.  That’s because your sales people play a vital role in your pricing and licensing scheme both before it is rolled out and when their boots hit the ground (and I saved one harsh reality for the end of this post).

Additionally, I brought up a few “rules” (or at least observations I’ve discovered) about choosing your metrics.  I could have added suboptimization to the list, but I’ve found there are some finer points to consider about this psychological pattern when it comes to your software’s sales, adoption, deployment, and expansion.

Pricing and the metrics that matter

Previously, we engaged the topic of the metrics you might choose as the basis of your pricing and how the evolution of technology will disrupt your well-laid plans.  This is especially true in software and hardware, but can also be found in other areas such as telecommunication or Internet services.

Businesses tend to manage new technology or legislation very closely.  Executive positions and departments rise up around a new technology and then get re-focused as that technology is commoditized.  Think about what “IT” means today vs. 20 years ago.  It might have been called IS, MIS, or “Information Systems” back then.  The role of IT used to pertain to mainframes, networking etc. but has grown to encompass cell phones, voice over IP services, laptop support, managed software deployments, cybersecurity etc.

The government can create new positions involuntarily within a business as well.  There are now “Chief Compliance Officers” (i.e. “guy in charge of going to jail”).  But, as these roles become more habitual and the variability or costs become reduced, these roles in an organization can shift or dissolve.

Licensing metrics: Rules Patterns

This is a set of observations I’ve collected over the years in studying and theorizing about what metrics to use for software pricing and licensing.  The only thing that can help deal with technological or market evolution is have a plan around changing your licensing scheme.  When you have those discussions, keeping these things in mind may help.  Here we go:

Windows Home Server + Live Mesh = Nice

What I’m about to discuss is not recommended.  I know that Windows Live Mesh is not designed to run on Windows Server 2003 or Windows Home Server.  So, if you do this, know that your mileage may vary (YMMV) and that you are taking a risk.  It is up to you whether that risk is acceptable or not.

Now, on to the good stuff…

Windows Live Mesh

If you don’t know what this free service from Microsoft is, you should check it out.  It is absolutely essential for anyone that manages multiple computers for their job.  Meaning either you switch between computers frequently (like when I go from my Tablet PC to my Netbook), or you want to ensure that multiple people have the same files on their computers without actually making any effort.

Pricing, metrics and evolution (#3)

So far I’ve talked about how pricing is a mix of several elements which involve math, science, intuition and emotional intelligence.  At some point, these things come together and you have to divide up what you’re selling and assign a suggested quantity of money that should be exchanged for each quantity of your product.

For some products, sizing or metrics may be determined by the market standards (e.g. existing products, packaging, shelf space) or by some other decision designed to garner a net impression (e.g. 100 calorie snack packs of food or beverage).  Consumer packaged goods have a whole pricing paradigm unto themselves versus pricing a “virtual” product or service.

I’ve heard that individuals will typically undervalue their own skills or services when they ask for compensation versus letting the recipient pay them.  However, I don’t believe that’s true for business transactions.  Especially when it comes to software, cable TV, and cell phone plans. 

Certainly in the software sector, many customers believe that the pricing is out of line with the value they receive.  Perhaps that’s because the licensing terms don’t match their expectations very well.

Windows copy and paste rants and raves

Ever since Windows NT 4, I have had an issue with a very simple operation… copy and paste.  It may have existed prior to NT4, but that’s the OS where it started to matter to me.

It’s not something obvious like, resuming an interrupted transfer or having the progress bar be better integrated into the status of the files being copied (e.g. indicate they are in process or in queue so you don’t accidentally edit or delete them).

I can’t necessarily call this a bug, but it certainly is a pronounced behavior that exists today in Windows Vista and Windows 7.  It’s quite simple, and I’m going to talk about some of its effects. 

The steps to repeat the behavior are easy:

• Multi-select several files (say file1.txt, file2.txt, and file3.txt)
• Copy
• Paste them into a new location