october 17-18, 2006 l santa clara, ca software usage analysis an enabler for new licensing models...

October 17-18, 2006 l Santa Clara, CA

Software Usage AnalysisAn Enabler for New Licensing Models

Rick Ingram, PresidentLicense Tracker Inc.

October 17-18, 2006 l Santa Clara, CA 2

Outline

• evolution of licensing models• usage analysis - technical considerations• usage analysis - contractual considerations• other considerations• summary• questions


Evolution of Licensing Models

Pay-Per-Use Models(Rented Access)

Traditional Client – Vendor Relationship (Fixed Access, named user, floating, duration)

(Unlimited Access)

Remix Models(Flexible Access)

Increased value to technology consumersEnhanced customer relationship for software vendors

Technology Partnerships

Increased risk to technology consumersDecreased commitment to software vendors

Usage Analysis Enabled

License Models

Classification Models(Variable Access)


Traditional Models




(Unlimited Access)





Traditional Licensing Models

• single user, single license– named user– node locked

• multiple users, shared license– concurrent use license manager– dongle controlled

• fixed duration– evaluation– annual lease– short term requirements




(Unlimited Access)




Business Issues Drivingthe New Models



Motivation for New Models

• for users– balancing productivity and efficiency

– long term needs are not always known when making initial purchases

– mid-year requirements can be satisfied with operating budgets

• for vendors– competition requires licensing

innovation to enhance customer relationships and increase market share

– users’ needs are vendors’ opportunities

Cap Ex Op Ex

January

Cap Ex Op Ex

July


Classification Models




(Unlimited Access)





Essentials of Classification

• an extension to named user licensing

• users are placed into categories based on usage requirements

– restrictions on which features can be used

– restrictions on duration of use

– restrictions on number of sessions

• usage analysis for monitoring, compliance and “true-up”

Full User

Class A

Class B

10 / day

10 / wk


PPU Models




(Unlimited Access)





Essentials of Pay-Per-Use

• vendors provide non-owned copies of software to users

• use of all software (owned and rented) is recorded in usage logfiles

• once per billing cycle the logfile is sent to the vendor for analysis

• an invoice is prepared based on actual usage of non-owned software

License Manager

License ManagerLogfile

License Control File


Time Based Pay-Per-Use

• technology consumers are charged for the amount of time they used non-owned copies of software

• on site availability of rented software ensures no lag between detection of need and use of software

Standard Concurrent Use Chart

Owned License Limit

Times of Non-owned License Use


Transaction Based Pay-Per-Use

• usage charges occur because a software module has been used, duration of software use is irrelevant

• most applicable for consistent duration functions

• usage of each module or function is logged and billed accordingly


Remix Models




(Unlimited Access)





Essentials of Remix

• software purchases are viewed as purchases of a technology pool, not just individual licenses

• consumers have the right to “remix” their active set of licenses to satisfy current needs

• normally used in conjunction with pay-per-use

Initial Pool

Needs Change

After a remix


Periodic Static Remixing

• this model makes use of existing application software and license manager

• periodically (every 3 or 6 months), the license file is updated to reflect the new state of “remixing”

• usage analysis provides information to make informed remix decisions

Under-utilized Licenses

Highly utilized Licenses


Continual Real-time Remixing

• end users purchase licenses of a token-feature not the actual software features

• when features are checked out the corresponding number of licenses of the token-feature are checked out

• Pay-Per-Use can be easily added

• moving a current product family to this model requires either:– modification of the application source code– using a token licensing enabled license manager

Feature - X (3) Feature - Y (4)Feature - X (3)Feature - Y (4)

License Manager

Pool of “Token”Licenses


Unlimited Access




(Unlimited Access)





Essentials of Unlimited Access

• multi-year contract providing unlimited access for a fixed annual fee

• the fee is adjusted annually based on usage during the year

• removes the revenue/cost uncertainty associated with pure rental arrangements


Enabling New Licensing Models

Technical Considerations



(Unlimited Access)




License Models



Sources of Usage Data

• license manager logfiles

• software vendor proprietary logfile or database

License Manag

er

License ManagerLogfile

Optional VendorUsage Logger

Vendor ProprietaryUsage Data


Logfile Issues - Existence

• is logging turned on?

– ensure proper configuration

• overwriting or deletion of logfiles

– overwrite or append on restart

– encourage proper file management policies


Logfile Issues - Integrity

• ASCII versus binary

– ASCII can be edited

– binary is secure,but is it availalable?

– ASCII limits customer base

• completeness of data

– license sharing

– detailed session matching


Logfile Issues - Access

• automated or manual

– firewall and “phone-home” issues

• privacy concerns

– “anonymizer” may be required

• multiple vendors’ data in a single file

– “extractor” may be required



Business Considerations



(Unlimited Access)




License Models



Rental Mode : Decision #1

• basic time units for rentals(seconds, minutes, hours, days, weeks, months, years)



• elapsed time or calendar periods– is a day midnight-to-midnight or is it an arbitrary 24 hour period

from the start of first rental

Is this a 1 day rental,

or 2?

Time

Mon Tues Wed



• single period or multiple period rentals– typically, smaller time units are single period and longer time

periods are multiple period

Is this a 1 unit rental,

or 2?



• simple or combination rental modes– rate capping (i.e. hourly_capped_monthly)

– volume discounting

$

Time

Rental total climbswith usage

Until it hits the cap

It then resetsat the next period



• minimum session length– ensures that license checkouts for which no business value

could be realized are ignored

Should these sessions be considered?

Or not



• minimum overlap period– minimum period of time for a rental, shorter periods are

forgiven

Should there be a chargefor this period?

Or not



• pricing– typically defined as a percentage of either perpetual license or

annual license fees

– optional components

• access fee

• billing period minimum

– set pricing to create the desired win:win scenario

• provide reasonable cost access for minor use on-demand

• price such that high use encourages perpetual license purchase



• applying rentals to future purchases

– what percentage, if any, of rentals can be applied as a discount to perpetual license purchases



Other Considerations



(Unlimited Access)




License Models



Pay-Per-Use Cost Monitoring

• vendors need to analyze usage data once per billing cycle

• end-users must monitor costs on a continual basis– ensuring budgets are

not being exceeded

– detecting and correcting improper license use

– making mid-period purchases if rental usage is higher than expected


Usage Analysis in ASP Operations

• in an ASP environment usage analysis of standard logs can support– accounting and invoice generation for the vendor

– cost and usage monitoring by customers


Summary

1. Traditional licensing models do not adequatelyaddress the needs of end-users and therefore of software vendors.

2. Usage analysis enables license models that address these needs in a win:win relationship.

4. Pay-per-use models provide on-demandaccess for peak periods, or in support of ASPs.

5. Remix models meet changing users’needs while protecting overall investment.

6. Technology partnerships providemaximum value for long-term commitments.

7. Usage data characteristics and the capabilities of the analysistools must be consideredwhen drafting contractterms.

8. Monitoring of costs must be done by end users to maintainthe win:winscenario.

3. Classification models provide the revenue modelof named users with discounts for restricted user access.


Questions?

www.licensetracker.caRick Ingram

[email protected]

(403) 923-7334

“You can only optimize -what you understand…

…and you can only understand -what you track!”

october 17-18, 2006 l santa clara, ca software usage analysis an enabler for new licensing models...

Documents

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santa clara

user licensing users

ca software usage analysis

duration of use restrictions

user class

licensing innovation

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