As the tech world changes through natural growth, consumer trends, and global developments, more companies are relying on commercial Software Licensing Management (SLM) and Entitlement Management Systems (EMS) solutions such as the Sentinel Platform offered by Thales Software Monetization.
Frost & Sullivan market research consulting firm recently studied the factors that are both driving and restraining the growth of SLM and EMs. They found five major trends that are pushing the Software Licensing Management and Entitlement Management markets forward now and over the next seven years.
Below are the five trends that Frost & Sullivan said are making all the difference:
1. Changing Needs Generate Growing Demand
Shifts in work locations, the prevalence of cloud-based technology, and the proliferation of connected devices have changed customers' expectations and the way they relate to software. In addition, workforce shortages have pushed companies to begin to rely on automated alternatives. These factors have contributed to the changing needs of SaaS providers and their customers. In fact, Frost & Sullivan expects these factors to continue to drive an increased need for Software Licensing and Entitlement Management over the next seven years.
The Driver in Action: SLM Makes a Quick Shift to Remote Access
Oxford Instruments has long been a leader in research technology used by academic institutions, private R&D departments, and government agencies. It prides itself on its cutting-edge research tools and pioneering research software.
Oxford Instruments uses a robust commercial License and Entitlement Management system from Thales Software Monetization. The platform allows them to monetize software by providing their customers with instruments using the same software but with differing access to certain tools and data depending on what they purchased. Oxford relied on Thales SM to help drive its monetization efforts because they are the market leader and because of Thales SM’s deep history in software security.
Originally, the company's software was hosted on-site at their customers' locations, lowering the likelihood of data breaches. However, with the onset of Covid-19, the on-premises hosting became impractical. Luckily, Oxford Instruments was already using Thales SM's Sentinel Platform, which meant they could pivot quickly to make their tools accessible through the cloud. Within just a few days, Thales SM helped Oxford Instruments adjust its whole system to allow for remote access. Had Oxford Instruments been using a homegrown SLM and EM system, and not Sentinel, this could have taken months, resulting in dramatic revenue losses and very unhappy customers.
2. Increased Popularity of Software Embedded Devices
Software-embedded devices, from airplanes and factory machinery to private cars and dishwashers, have become a central part of modern life. All signs point to this trend growing. The result is that customers expect their devices to do more, so both B2B and B2C companies are compelled to expand their hardware device’s functionality with embedded software.
Device companies are beginning to understand that Software Licensing and Entitlement Management gives them the capability not just to sell software, but also to fully monetize it.
Frost & Sullivan projects that this trend will remain important over the next five years as the market for software-embedded devices grows. In five to seven years, it's likely to become less influential as we settle into a device-heavy reality.
The Driver in Action: Hardware Companies Expanding to New Revenue Streams
Even companies that produce iconic products still need new, diverse streams of revenue.
Known for its durability and reliability, the Go-Pro camera has been essential to adventurers and filmmakers for years. As the IoT took off, Go-Pro realized that they needed to expand by also providing software. Hence, the Go-Pro app, which lets users create short videos, was born.
With both hardware and software in hand, Go-Pro needed a way to monetize the app. They introduced Go-Pro Plus, a tiered subscription service that provides users with a cloud-based storage system. This helped their users solve the problem of storing data-heavy videos and provided the company with a new stream of revenue.
3. Data from Usage Allows Deeper Insight
A firm grasp of how your customers are using your product is crucial data in any business. This is especially true in the SaaS world where companies must react quickly to changing circumstances and needs on the ground.
Software Licensing and Entitlement Management systems are built to provide companies with information about how their users are interacting with the software. With this information, companies can see low customer engagement early and pre-empt possibility of churn. On the flip side, understanding which features are popular, points to upsell opportunities.
Frost & Sullivan currently ranks this trend as "medium" importance and projects it to rise to “highly important in the next five to seven years. The data that Software Licensing and Entitlement Management systems generates will become increasingly granular – and valuable. Putting a purpose-built licensing and entitlement system in place will keep you ahead of the trend to ensure your long-term growth.
The Driver in Action: Knowing When to Prove Relevancy
Picture a medical device vendor that provides equipment, such as ultrasounds and MRI machines that run on connected software.
The software enables specific functionality of a variety of features and captures all of the usage data. The manufacturer’s EMS allows them to see if a technician is using a particular feature more frequently. Armed with this information, the company may choose to charge more for this feature, and create a new revenue stream.
4. Moving from Homegrown to Commercial SLM Systems Grows Revenues
Many companies assume that a homegrown SLM system is the most cost-efficient way to track and control entitlements. After all, if your own engineers don’t know your product and your needs, who does? However, they soon find takes more time and effort than they expected.
This serious issue can keep companies from evolving along with the market. With commercial Software Licensing Management, however, SaaS and on-premises software companies can shift with market changes, without the headache of continually updating internal systems. Entitlement Management makes it possible for them to move licenses and entitlements between users, create tiered pricing plans, and remain agile. The ability to make those changes on the fly lets companies evolve with the market and grow revenue.
The Driver in Action: Prepare for Growth by Relying on Experts
DEOS has been a leading manufacturer of building automation systems for over 50 years. They have earned a loyal customer base with their innovative, reliable control systems.
Like any successful business, DEOS stays ahead of trends. They realized years ago that software-led revenue was the future and identified several pain points limiting their ability to pivot smoothly. They realized they needed to provide customers with the ability to download their software immediately rather than ship updates on hardware dongles. DEOS also wanted to offer tiered and usage-based pricing but didn’t have the catalog nor the system to lock and unlock certain features. Finally, they were committed to a data-driven future, but weren't sure how to make it happen.
Initially, DEOS considered developing their own cloud-based Software Licensing and Entitlement Management system. However, they quickly realized that building their own system would be difficult and inefficient. So, they turned to a commercial SLM provider: Thales Software Monetization.
With support from Thales’ Sentinel SLM and EM systems, DEOS was able to "ditch the dongles”, catalog their products, and provide usage-based and tiered pricing models. Plus, the entitlement management data gave them the customer usage visibility that they were seeking. Their digital transformation allowed them to meet their revenue goals and set the stage for continued growth into the future.
5. Anti-Piracy and Counterfeiting Will Drive the Growth of SLM
Piracy and counterfeiting are some of the primary concerns regarding cloud-based software. Knowing who is using your software and how they are using it is vital to protecting your products. The right SLM system gives you the advantage to track entitlements and licensing, and to control who is using which features of your software.
Frost & Sullivan notes that piracy and counterfeiting will remain of “medium” importance over the next seven years.
The Driver in Action: Balancing Flexibility and Security
Psmtec is a 30-year veteran of producing games and gaming machines—a time-consuming and expensive endeavor. In addition to protecting their software and hardware products from manipulation, Psmtec wanted to charge customers on a time-based licensing model in order to meet the industry’s stringent gaming time regulations. Plus, they needed to provide updates multiple times a year without compromising security and without interrupting play with downtime.
Turning to a commercial Entitlement Management provider seemed like the right choice. With Thales Software Licensing Management, Psmtec has been able to provide customers with flexible licensing options, while retaining control over its products. Additionally, the Sentinel Platform gave them a way to update their software easily within minutes.
For over a decade, Psmtec has relied on Thales for their SLM and EM to stay at the top of their game, continue to grow, and focus on what they do best: creating games.
Although the Software Licensing and Entitlement Management sector is expected to show healthy growth over the next seven years there are trends that may slow expansion.
1. SaaS providers often don’t yet realize how time-consuming, difficult, and expensive it is to set up a homegrown SLM and EM system. They continue spending time and money building and using in-house SLM and EM systems, despite their inefficiency.
2. Asia and Latin America lag the North American and European markets. There is less room for software developers to grow their customer bases in these developing economies.
3. SaaS vendors don’t necessarily understand how Software Licensing and Entitlement Management enables growth at scale, reduces churn, and builds revenue.
4. Even software vendors who understand the value of the cloud may balk at implementing yet another system.
5. Integration costs, which can seem high at the outset, may deter SaaS vendors from adopting an EM or SLM system, or push them towards trying to implement a homegrown one.
It is in every company’s best interest to pursue growth and stay ahead of market trends. That's why implementing a commercial Software Licensing and Entitlement Management system is so important.
Thales SM makes up the largest share of the commercial SLM and EM market. It has the experience, expertise, and a track record of excellent service across a wide variety of customers.
In addition, Thales SM has always made data access one of our primary goals because data-driven decisions are the key to efficient growth. For over 30 years, Thales SM has partnered with companies across many industries to help them secure their software IP and integrate robust SLM and EM into even the most complex software ecosystems.
The world is changing, and Software Licensing and Entitlement Management are becoming more vital to your ability to thrive in today’s market.
Thales SLM can help you unlock the value of your software and stay ahead in an ever-changing environment. Download the full Frost & Sullivan Global Software Licensing and Entitlement Management Market Report now.