Software Monetization Featured Article

Software licensing solution can help a business support new revenue streams, prevent revenue leakage, and inform sales when customers are due for renewal. But lack of a clear software licensing strategy, and execution of it, can be a barrier to business success. So businesses that want to get the most value out of their software offerings should evaluate existing licensing processes and solutions, and consider how they might be improved and what business value that would deliver.

That last bit is key, as Liam Kiely, vice president of technology strategy at Extreme Networks, explained at the recent LicensingLive! event. Extreme Networks (News - Alert) is a billion-dollar Silicon Valley company that sells network infrastructure equipment and cloud services to service providers and enterprises.

For the past two decades Extreme Networks has sold hardware appliances. It even built custom ASICs for those boxes, says Kiely, adding the company doesn’t do that anymore. Today Extreme Networks and every one of its competitors uses the same basic components in their gear, so there’s very little differentiation in hardware, says Kiely.  

“We needed to shift to recognizing the value we’re creating is in the software not in the hardware – and to get people off the perpetual and on to a subscription,” says Kiely.

The company has done that. Today 80 percent of Extreme Networks’ R&D investment is in software.

In working on IoT efforts at Extreme Networks, Kiely learned that some of the biggest impediments to future company success and growth were business- as opposed to technology-related. So he got interested in licensing.

There was decent awareness at the time about what software licensing is and what Extreme Networks was doing with it, he says. But the company, which has done several acquisitions over the years, was using a collection of software licensing processes and solutions. And nobody at the company had ownership of software licensing – instead, everybody had a finger in the pie, as Kiely puts it.

So Kiely began working to create a unified licensing strategy. He says the most important thing in doing that was to understand the goals of the C suite and board, and how a licensing strategy can help reach those goals.

“You have to start top down with your sales process and your buy-in process,” he adds. “That means you have to connect your process to what’s strategically and fundamental to the company.”

For Extreme Networks, that was business transformation – moving from hardware- to software-centric solutions. So Kiely sold the software licensing strategy based on that business imperative. Once he got buy in from top leaders, he explained to each key stakeholder in the business what was in it for them and their department.

He started small, decided what to execute on first, and then used that success and ROI story to gain further buy-in on the project. “It has to be tangible, executable, actionable,” he says. “You have to have some concept of how you’re going to operationalize this thing.”

Kiely adds that software licensing project execution should also include creating a champion role. That person should understand the strategic goals, decision-making process, and steps needed to succeed. That individual also needs to coordinate work involved with multiple departments, including IT, and systems.