The Case of in-house Licensing Solutions

A surprisingly big number of software vendors rely on software audits instead of a real licensing solution in order to prevent over-usage. I call this the reactive approach. The majority does opt for a proactive approach. Nevertheless, instead of integrating a professional solution, it chooses to develop an in-house solution (let’s call this solution EasyLic). Typical arguments for an EasyLic approach are:

  • Our developers can handle this
  • We must keep this critical know how in house
  • A third party tool might not provide the necessary functionality and flexibility for future changes

An EasyLic approach might indeed be meaningful for B2C software without significant complexity, a fixed business model or a short lifecycle. Nevertheless, for more complex products with editions, regular updates and business customers, EasyLic typically evolves in the following way(s):

  • EasyLic 1.0 requires a considerable amount of development resources, but ultimately fulfils the initial requirements
  • EasyLic is based on license keys
  • EasyLic does not provide maximum protection, since the developers are not security experts and EasyLic is not their main priority
  • As the core product grows, so do the licensing requirements: trials, pay as you go, partner/reseller, named and/or concurrent users
  • Administrative and development resources are assigned to license management. Customers have to contact the vendors for trivial issues such as hardware migration or edition upgrade/downgrade
  • The CTO is frustrated by the fact that precious development resources are assigned to EasyLic, slowing down the progress of the core product
  • The CEO is frustrated by the fact that new business models cannot be unleashed due to licensing restrictions
  • After some time, developers and managers realize that an EasyLic 2.0 is necessary to address the growing requirements. This does not only cost time and money, but poses serious distribution challenges regarding existing customers, since license keys have to be replaced
  • The vendor extends his offering with a second product. Unfortunately, EasyLic is unable to address the new requirements since it is tailored for the vendor’s first product -> EasyLic 3.0

Needless to say, not every point might be relevant for your company, but you get the point!

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