Survey Reveals Software Publishers Are Losing Up to 50% of Revenue
March 31, 2013 08:00 AM
Inadequate Licensing Models, Piracy, IP Theft, Lack of Usage Insight, and Back-Office Dysfunction All Hinder Software Monetization Potential
Senior Vice President
Software monetization leader, SafeNet, and the Software & Information Industry Association (SIIA) has released the results of a joint survey of more than 620 software developers and 194 enterprise software end users, revealing that developers continue to struggle with how to secure their critical intellectual property (IP) without disrupting their business. As a result of not implementing the right licensing models and security as a foundational pillar of their business, software developers are finding that they are losing revenue, seeing diminishing profitability and increasing the risk to their brand and overall reputation.
Participants cited inflexible licensing models, insufficient software protection, and inadequate operational procedures as the main impediments toward fully monetizing their software, protecting their company’s most critical intellectual property and fully integrating software monetization into their business model.
Some of the highlights of the survey include:
- One out of two (53 percent) software publishers surveyed said they would have driven higher revenues for their software if they had more licensing flexibility.
- Nearly one out of two (48 percent) software publisher respondents admitted that competitive IP theft had a significant impact on their business.
- In addition to licensing and piracy issues, nearly one out of two (46 percent) software publishers now report that dysfunction in their back offices has had a significant impact on their business, with nearly two out of three (60 percent) admitting that they struggle with back-office licensing processes.
“These survey results highlight the tremendous need for a change in how software developers approach and execute their software monetization strategies,” said SafeNet Senior Vice President Prakash Panjwani.“Developers need solutions that address the four key elements of software monetization
Tipping Point for Licensing Models
More than half (53 percent) of software publishers surveyed said they lost revenue opportunities due to the limited flexibility of licensing models, which negatively impacted their business. In addition, 61 percent of publishers admit that they struggle with the ability to price and package their applications at the feature level. Almost half (49 percent) of respondents admit that re-packaging offerings without engineering involvement is a challenge, and that they struggle to support the license models their customers are demanding. Given the issues faced by software providers, it is not surprising that inflexible licenses were cited as the biggest software licensing headache by more than a third (35 percent) of end-user
Revenue and Brand Reputation Increasingly at Risk
Beyond licensing flexibility problems, nearly half of all respondents also reported that lack of control over their software was a major contributor to revenue loss 48 percent of software publisher respondents thought that competitive IP theft had a significant impact on their business, and 42 percent thought that lost revenue due to software piracy had a significant impact. This result is not unexpected, considering that 70 percent of respondents reported challenges with piracy prevention, 63 percent reported challenges with reverse-engineering protection, and 51 percent reported challenges with code-tampering prevention. The responses from software end users justify concerns about the business impact of software misuse
Back-Office Dysfunction Leading to Operational Inefficiencies and Revenue Loss
In the past, when the software industry discussed revenue leakage, the focus was on piracy. As the industry has progressed, software publishers increasingly recognize other revenue barriers. Forty-six percent of software publishers now report that dysfunction in their back offices has had a significant impact on their business. This is consistent with the finding that nearly 60 percent also admitted they struggle with back-office licensing processes, and only 31 percent of respondents said they have integrated entitlement management processes. More than half of publishers said they face the following operational challenges
Lack of Usage Visibility Restricting Business Intelligence
Business intelligence is critical for decisions related to new markets, product packaging, and efficient internal resource management. Therefore, software publishers’ ability to track who is using their software
An Effective Software Monetization Strategy is Needed for Maximizing Value
Despite the challenges software publishers face, they recognize that an effective software monetization strategy can help them maximize the value of their IP. In fact, more than 84 percent of respondents say that an effective software monetization strategy could boost their revenue by up to 50 percent.
Software developers are experiencing the evolution of software monetization. While strong security still tops the list of important software monetization solution features (63 percent of respondents), it is followed closely by other key features, including flexible packaging/bundling functionality (52 percent), automated provisioning and enforcement (51 percent), and minimizing the burden on engineering (49 percent).
The industry finds itself at a critical tipping point as software publishers look for more innovative and effective ways to maximize the value of their IP,” said Rhianna Collier, Vice President of the SIIA’s Software Division. “They need to better align their software monetization strategy with their business objectives and drive those strategies very early in the product development cycle. That way, they can develop software packages to meet their customers’ current and future needs, and build licensing into their software and back-office systems.”
About SafeNet Software Monetization Solutions
SafeNet has more than 25 years of experience in delivering innovative and reliable software licensing and entitlement management solutions to software publishers, technology vendors, and cloud service providers worldwide.
Easy to integrate and use, innovative, and feature focused, the company’s family of Sentinel Software Monetization Solutions are designed to meet the unique license enablement, enforcement, and management requirements of any organization, regardless of size, technical requirements, or organizational structure. SafeNet clients are able to address each and every aspect of the software monetization lifecycle from copy and intellectual property protection to product catalog management and ongoing end-user experience improvement. With a proven history of adapting to new requirements and introducing new technologies to address evolving market conditions, SafeNet’s more than 25,000 customers around the globe know that by choosing Sentinel, they choose the freedom to evolve how they do business today, tomorrow, and beyond.
The Software & Information Industry Association (SIIA) is the principal trade association for the software and digital content industry. SIIA provides global services in government relations, business development, corporate education and intellectual property protection to more than 700 leading software and information companies.
Founded in 1983, SafeNet, Inc. security companies in the world, and is trusted to protect the most sensitive data for market-leading organizations around the globe. SafeNet’s data-centric approach focuses on the protection of high-value information throughout its lifecycle, from the data center to the cloud. More than 25,000 customers across commercial enterprises and government agencies trust SafeNet to protect and control access to sensitive data, manage risk, ensure compliance, and secure virtual and cloud environments.