An argument against license enforcement

7 12 2009

This may seem weird as I’ve been talking about pricing and license metric development.  However, we have not yet talked about enforcement. 

To software companies, license enforcement protects the bottom line.  It prevents rampant, “entrepreneurial” software distribution throughout their customer base.  Keep in mind that this discussion isn’t a one-size-fits-all scenario.  A major enterprise software provider may choose to enforce a license differently than a single-user shrink-wrapped software provider.

To customers, software licensing is a way of steering clear of the legal issues surrounding "viral license expansion” that can happen as co-workers share their productivity practices. 

It’s simply risk avoidance – policy triumphing over value to the organization.  IT departments go through elaborate means to “control the desktop environment” of their employees both for ease of management and for license enforcement.

Viral license expansion for fun and profit

If we take away the legal and negative revenue implications of letting a software package roam free-range style throughout an organization, the result of getting more eyeballs on your product can be compelling to both parties.  This is especially true if your software has an entrenched user base in one specialized area of a company, but could bring significant value to other areas of your customer base.

Read the rest of this entry »

When Licensing Metrics Must Change

5 11 2009

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

Read the rest of this entry »

Pricing metrics and the customers that suboptimize them

6 08 2009

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.

Read the rest of this entry »

Human nature and software pricing (#1)

10 06 2009

For over seven years, it was my responsibility to price a complex software product.  I didn’t expect it to be a place to learn about the psychological interplay of rules and human relationships.

Over the next several posts, I will share what I’ve learned empirically.  No, there is no pricing magic wand.  However, if you’ve searched the product management literature and the Internet, you’ll find that very few people have discussed pricing anything more complex than single user software licenses or golf balls.

So let’s begin.

Pricing jujitsu and your evil twin

The customer is not your adversary.  Yes, you are trying to extract money from their wallet.  But your job is to quantify the value of your product so your sales force and customers can come to a long-term, mutually beneficial agreement.

This is why complex software never gets sold for list price.

Read the rest of this entry »

Economic necessity: the tyranny of “good enough”

12 05 2009

Bumper stickers say that life isn’t about having what you want, but wanting what you have.  Most companies just want what they have to work.

Yet, during an economic crunch, settling for less functional software can become compelling if the perceived costs are dramatically lower than a purpose-built application.  It seems “good enough” may be as good as it gets.

Outcomes of the “good enough” tactic can vary from letting deployed apps lie fallow to decommissioning an existing installation in favor of adapting something else to take its place.  It all depends on the severity of circumstances. Read the rest of this entry »

Flexibility is not strategy (part 2)

29 04 2009

I mentioned that by remaining open to everything, you risk accomplishing nothing.  The resulting dispersion of resources and effort can cause paralysis (or perceived stasis in your customer base).

So, what if you decide, like Hamlet eventually did after Act 3, Scene 1, to take arms against a sea of troubles, and by opposing, end them?

Come together, check your weapons at the door

First off, nobody is too busy to participate.  This isn’t a one hour lunch time meeting where you order pizza and get through it before your next big conference call.

It is a time for commitment, honesty, speaking truth to power, and putting all the assumptions or corporate mythos into play.

You are in the “cone of silence” and the “truth circle”.  If you don’t trust your players, the process will be undermined and fail.

It has to be a safe environment to air legitimate concerns and defuse feuds between leadership or divisions.  Inside these sessions, you need to show your work and shred a lot of rough drafts.

Sensitive topics will be broached and in the process of tackling these perceptions (real or otherwise) is ugly.  The process is transient and understandings will forged and dismantled many times over.

The objective is to neutralize or plot a solution to counteract threats or weaknesses.  The words and work that are said during these sessions can potentially be used (in or out of context) as weapons that could decimate morale at large.

Mind you, being iconoclastic and cavalier about other people’s beliefs isn’t the same as being objective.  Like any relationship, there may be a role for a neutral third party to arbitrate pointed issues, take down all that is said, and offer guidance to becoming “unstuck” when the topics “rathole” into minutiae. Read the rest of this entry »

Flexibility is not strategy (part 1)

23 04 2009

You can’t focus on everything and succeed.  Obvious, right?  Clearly if you don’t know where you’re going, any road will get you there (in this case, all roads do not lead to Rome).

No person or company knowingly decides to be everything to everyone.  But that’s exactly what happens when you can’t choose (and stick to) a specific goal.

Banking on flexibility is tantamount to saying yes to everything.

While it’s OK to be open to possibilities, sometimes it’s hard to tell the difference between distraction and opportunity.  Opportunity’s transient nature can lead you to chase every possible direction until you forget who you are and how you got there.

You may ask yourself, “how did I get here?”

Some companies end up backing into disperse activities through growth or acquisitions.  Acquisitions can bolster a product portfolio in an unusual direction which deviates from the company’s core competency and tenets.  Unless the company consciously adopts a new strategy. Read the rest of this entry »