Earthquakes and Entitlements
No one wants to think about earthquakes. Especially if you live in an earthquake-prone area, in an aging (but charming!) townhouse built well before the advent of earthquake-resistant construction.
Unfortunately, that's exactly my situation. For years, experts have predicted that a major earthquake will hit our area. I know that my home, with all its character, could sustain major damage. But I was in deep denial.
Then a few weeks ago, a friend pushed me to attend a local city council meeting about earthquake preparedness levels in the city. And to my great relief they introduced a plan that would solve the exact problem I was facing.
The council explained our area is being zoned for major structural improvements. Ingeniously, the plan doesn't require rebuilding our property. Instead, they will reinforce homes and buildings using steel rods embedded into the building façade and bolted into the foundations. The result is modern strength and resiliency at a fraction of the cost of rebuilding and with minimal disturbance to our lives.
For legacy software providers, digital transformation can feel something like an impending earthquake. The ground is shifting, and providers are racing against time to upgrade their offerings and remain competitive.
Yet, for a host of reasons—from the high reengineering costs to the risk of revenue impact to the complexities of a large install base—many software providers don't want to make major changes to their products.
At the same time, the added benefits that connectivity brings to your monetization strategy are undeniable. Customers actively seek out SaaS-like features such as subscriptions and instant updates. Vendors acknowledge that it would be significantly easier to scale for growth if their products fully embraced connectivity. And for many businesses, recurring revenue has tremendous allure. So, what's a transforming business to do?
The answer lies in the Sentinel Platform. Like the steel rods, Sentinel’s meticulously designed licensing and entitlement platform provides reinforcement to software products that were built before connectivity was given. How does it work? Read on.
Entitlements as a Key Driver of Growth
The Sentinel Platform is a core enabler of modern software experiences.
Instead of thinking of licensing as a siloed technology that enforces contractual obligations, Sentinel creates a central hub for information about customer rights to use, using what we call entitlements.
Software vendors set up entitlements to control a customer's access to a service, product, or feature— essentially, what they are allowed or “entitled” to use, where, when, how many, and for how long.
Now take a second to think about the implications of controlling rights to use.
Using a consistent API-based integration between your products and the Sentinel Platform, a central entitlement hub allows you to tap into a single source of truth when you need to make decisions about how you offer and control your product.
Instead of selling your product once with a perpetual license, you use entitlements that control granular access to your product. Packaging, license model, and deployment variations are all managed through the entitlement.
For example, you could set up an entitlement that allows a customer to access a new feature or product. Or, you could increase the scope, expanding the customer entitlement to include more users, more devices, or added functionality.
Even more importantly, with the Sentinel Platform, entitlement information exists in a single pane of glass. Creating and modifying bundles on the fly and notifying customers about new offerings are all part of a typical day with the Sentinel Platform. Once you control entitlements, you will be able to change how you sell. You can implement a subscription program and pay-per-use. You can even tailor an offering based on the customer profile.
All of these elements have a common denominator. They ensure your offering remains practical and competitive for years to come.
What are some of goals veteran software providers can achieve with their newfound control thanks to entitlements? There are many. Here are some of the most pressing that we've heard from conversations with hundreds of transforming software providers.
The Wish List
Predictable Annual Recurring Revenue (ARR)
B2B businesses have been moving from perpetual revenue to recurring revenue for some time now, prompted by the significant growth margins experienced by companies who make the shift.
In a perpetual revenue model, even a million-dollar company may start its year at zero. With no guarantee of starting revenue, its forecasts are based on previous experience. In contrast, a company with recurring revenue begins the year with a predictable source of income.
In the past, veteran companies used to rely on service packages to keep their ARR (Average Annual Returns) stable. That strategy supplied some level of AAR comfort and predictability, but not enough.
Many have been making the shift to subscriptions because they provide a revenue stream that a company can reasonably rely upon, For instance, Adobe, an early adopter of a recurring revenue model, went from $100 million in recurring revenue to over $5 billion in recurring revenue.
But the shift to recurring revenue doesn't have to be relegated to huge market players. Thales Software Monetization has helped companies of all sizes layer subscription offerings onto existing product lines, supplying a predictable revenue source and financial security.
More and more, the world is moving towards automated self-service systems. Users have come to expect easy, frictionless interactions for everyday purchases. Grocery stores offer self-checkout. Even customized products like prescription glasses are bought online. B2B software is no different.
Zero-touch processes are becoming increasingly prevalent, and the Sentinel Platform connection helps you supply the experience your customers want.
While connectivity ends some interactions, interestingly, it usually improves the ongoing relationship with your customers. Updates and frictionless integration can become the source of a more in-depth relationship. For instance, the data collected could help you stay one step ahead of your customers' needs, making it easy to anticipate a solution before they know they need one.
Once the exclusive domain of SaaS providers, layering on this benefit means positioning yourself as a trusted partner in your customer's success.
Economical product upgrades and updates
One of the most important goals of a transforming software company is being able to push instant upgrades and updates. This saves the costly time and labor needed to update each customer separately. At the same time, it provides the customer has a smoother, faster, and more SaaS-like experience.
An update is no longer an ordeal but just a regular part of software usage. For instance, you may have been distributing updates by sending physical images to your customers —a costly, labor-intensive, and time-consuming process.
With Sentinel, you can push updates through the cloud automatically, inexpensively, and without the need for extra labor. More importantly, it is just as easy to downgrade a customer in this transparent and automated manner.
Access to customer usage data
Access to user and usage data is one of the most important aspects of a SaaS system: by connecting your product to the cloud, you've given yourself access to information that helps your level of service. You can extract data on how your product is used, for how long, and in what way. Thanks to the cloud connection, the data extracted could be essential to your roadmap for updates and new features.
It can also help you figure out how to improve the experience for individual customers: cross-sell and upsell those customers who need more of your solution and reduce churn by finding customers struggling with your product.