How will On-Premise, SaaS and Hybrid models shape your requirements?
Commercial Software Vendors broadly fall into four categories:
- Traditional On-Premise
- Blended offerings of both On-Premise and SaaS, and
- Hybrid Deployments with On-Premise applications linked to single and multi-tenant backend SaaS services
Vendors continuing with On-Premise deployments have experienced new challenges to ensure their Licensing systems can support new billing and subscription models to provide customers with the choice and flexibility offered by competitors with SaaS solutions. They also see demand from customers to have self-service management to enable the allocation of licences, features, and users in a more dynamic fashion.
SaaS Vendors now range across a vast spectrum. Many are single applications with relatively simple entitlements management requirements. On the other hand, there is an increasing number with more complex requirements. This can be due to a number of factors.
As SaaS applications have matured, so too has the range of offerings within those applications. In many cases, the range of features and options for differing classes of users has expanded with a result that provisioning and managing entitlements is becoming increasingly complex.
The same is true for companies with both On-Premise and SaaS options, but in their case, the challenge is also to keep licensing and entitlements in synch between options and avoid confusing their customers.
As more companies adopt SaaS billing options such as subscription and usage fees for both On-Premise and SaaS, there is a clear need for a more integrated approach to Licensing and Entitlements and the Commercial Terms agreed with the customer. This has not always been the case. In traditional On-Premise models, typically with upfront licence and annual support fees, licensing was not as dynamic and was not an integral part of billing cycles. Now, Licensing and Entitlements must be in lockstep with the customers, commercial agreements, and billing.
Clearly, Licensing and Entitlements management must be flexible enough to support this, but more importantly, vendors need to re-assess whether their commercial systems can also meet emerging requirements. Traditional ERP systems have done an excellent job up till now but may struggle to handle more complex subscription and recurring payments. Usage-based charging models may expose gaps in terms of data capture and billing preparation where this requirement simply did not exist before.
Commercial models are constantly evolving so the situation is likely to become more complex and demanding. These changes are fundamental to the commercial operations of a software business. It is not something that can be ignored. On the other hand, ensuring that the correct systems are in place to support new models is a sound business strategy that will bear dividends.