In a recent NETWORKWORLD article, “Cisco Shifting to a Software Model,” it is reported that Cisco is increasing the number of products to be delivered via subscription-based software licensing. The article went on to describe how software is becoming a larger mix of Cisco’s overall revenue as more of their product offerings are being delivered “as-a-service” from the cloud. Cisco CFO Kelly Kramer further added that “…we do see the transition to subscription revenue accelerating.” Read the entire article here.
In a report from Amy Konary with IDC, “IDC MaturityScape: Subscription Business Model Management,” Amy states that ‘one of the best aspects of the subscription model is that it enables a company to build a strong relationship with its customers.’ As the subscription model continues to gain prevalence and more companies introduce a subscription licensing model into their Software Monetization strategy there are several considerations to keep top of mind.
Application producers that are rethinking their software monetization strategy need a clear definition and comparison of Software Monetization models, they need to understand the business case for adopting or adding new models as well as the pros and cons, and lastly, they need to realize the operational considerations and impacts. 11 questions they need to ask themselves include:
- How will we handle pricing?
- What will the impact be on product numbering?
- When should the subscription period begin and end?
- What is involved in the renewal process?
- How will co-termination work?
- How will revenue recognition change?
- What product changes need to be made?
- Do changes need to be made to license key generation?
- What key areas of the legal agreement should be reviewed?
- Does sales compensation need to be adjusted?
- What is the best approach to roll out to customers?
For answers to these questions and more read the Rethink Your Software Monetization Strategy white paper.
Additional software licensing resources: