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The Software Licensing Newsletter
Reprise Software
 
December 2008
 
In This Issue
Locking to PC Fingerprints

RLM Customer Story: KineoCAM

RLM V6 Sneak Peek

Maximize Recurring Revenue


Past Newsletter Topics

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Locking PC Software Licenses to Machine Fingerprints


Software vendors have been increasingly perplexed as to what unique hardware identifier to choose (see "Choosing a HOSTID".)

Thwart Opportunistic Users
Perhaps a better alternative to using a single hardware element of a PC for identification is to use a composite, or "fingerprint" identification mechanism for PCs.  Rather than relying on a unique but easily-changed parameter, such as MAC address, fingerprint identification is based on several parameters, run through a proprietary algorithm.  Using a fingerprint for hardware locking makes it harder for rogue users to intentionally manipulate elements of a PC in an effort to gain extra licenses.

"Change can Happen"
The advantages of such an approach are clear.  Since many parts of the PC are examined to programmatically calculate its "fingerprint," a unique host identifier (used to lock licenses) can be created for every PC, regardless of the actual hardware or software components that are installed.  Also, since the fingerprinting algorithm is tolerant of a modest amount of PC reconfiguration, when a single hardware component is replaced or upgraded, the new machine fingerprint may not disable the license.

Reduce Administration Costs
Using this kind of host identifier for PC-based licenses benefits software vendors and their customers; the end user need not fret that some pending hardware change will invalidate licenses for critical software, necessitating an interaction with their software vendors' tech support.  And the ubiquity of a fingerprint will leave end users at ease about having the correct configuration to support their vendors' choices for unique hardware ID.  Again, every PC has a "fingerprint."

PC Fingerprinting is new in RLM v6
As a leading vendor of licensing technology, we've heard our customers' and prospective customers' requests for this kind of fingerprinting technology.  RLM v6, currently in beta release, is to be shipped around the end of calendar year 2008. (see the v6 new feature list in the article below). It will employ technology for uniquely identifying PCs running either Windows or Linux.  Feel free to contact us should you have any questions about this forthcoming technology addition to RLM.

RLM Customer Story:

Kineo Computer Aided Motion "Kineo CAM" is an independent software developer and the leading provider of  technology for Automatic Motion and Path Planning, KineoWorks (tm).

Kineo CAM's main market is PLM (Product Lifecycle Management). Being focused on the development of the most efficient solutions, off the shelf software and dedicated services, Kineo CAM addresses a wide range of industries such as automotive, aerospace, defense, medical and handling equipments, nuclear power plant construction and decommissioning, etc.

Its portfolio of tools aims to serve the most advanced uses of automatic path planning for industrial needs such as mounting and dismounting system analysis, human tasks and robotic feasibilities in constrained 3D environments. Through its Motion and Path Planning expertise, Kineo CAM enables digital mock up users to save money, shorten development time and increase quality in Product Design (validation of mechanical mounting/dismounting) and Process (simulation of operations in cluttered 3D environments) with off the shelf software, commercial plug ins, standard middleware libraries, customized developments and customer consulting.

Licensing Challenges
One of the challenges Kineo CAM has been facing is to have an efficient and safe electronic license management solution enabling the generation of node locked, floating, perpetual, short term, trial, demo and rental licenses.

Kineo CAM chose to migrate to the RLM system because of the overall value that Reprise Software was offering. RLM is simple, stable, and it is priced attractively. Reprise Software's support and sales teams are very responsive.

Find out more about Kineo CAM at http://www.kineocam.com
Reprise License Manager v6 - Sneak Preview

Lots of cool new stuff in v6, such as:
  • Detached Demo: n-day trial license can be installed w/out internet or activation, detached demo license cannot be reinstalled on the same host. Encourages users to share your product trials with their friends. Users can load-and-go without connection to the Internet or calling in to your support/sales staff to get a license.  Licenses expire n-days after install. Does not expose your "private key" to hacking. Follow the link to learn more about trial licensing best practices from a previous newsletter.
  • Generic Server: Build RLM only on the platforms on which you support your products, but enjoy the freedom to deploy the RLM license server on any licensed RLM platform. Support RLM license servers even on platforms that you don't have in house. For example, allow your customer to deploy the RLM license server on Linux or Solaris, even though you are a Windows-only shop.
  • UPGRADE: Upgrade all or a subset of your customer's licenses to later versions. Allows customers to pay for upgrades on part or all of their license inventory.
  • Minimum license checkout time: Use for short duration apps, encourages customers to buy more licenses.
  • Java JNI: RLM Java support expands to include Windows 64bit and Linux.
     
Please feel free to contact us should you have any questions about this forthcoming technology addition to RLM. RLM v6 was released into beta test on November 26th, 2008.
License Managers help to Maximize your Recurring Revenue
 

Independent software companies are increasingly relying on innovative software licensing and pricing strategies to create steadier revenue streams. They are looking for smoother and more predictable revenue growth to make financial planning easier and to increase business efficiency and to maximize value to shareholders.

An essential tool to accomplish these goals is a license manager. It can enforce licensing policies that can promote higher recurring revenue.

Recurring revenue comes from three main sources:
  1. License subscription fees
  2. Annual support renewal fees
  3. Pay-per-use fees
Each of these can be addressed by a license manager in several powerful ways.

License Subscriptions
 
Increasingly, software vendors are offering both perpetual licenses and license subscriptions. Usually an annual term, subscription licenses are priced so that they provide a lower initial cost in order to attract both new customers and those customers who are trying to preserve short term cash. Subscriptions often seem less risky to customers too.  If the product doesn't live up to expectations, then the customer has only limited financial exposure.

Setting Prices
Prices for annual licenses, which usually include support and update services, are set at some fraction of the perpetual license alternative.  Many companies aim for a crossover point of 4 to 5 years after which the costs for the annual license begin to exceed the perpetual license fee plus the annual support costs.

The License Manager's Role
Supporting the concept of term licenses are license expiration dates. These are hard-wired dates encoded into the license that mark the end of the term. Days before the license expires, your software can query the license to display a reminder to the user that the license is about to expire. This technique improves customer satisfaction because the user is prepared for the renewal event. When the customer signs up for another term, new licenses specifying the new expiration date can be sent to replace the expiring license. License managers check for customers attempting to rollback the system clock to gain extra time on the license term.
 

Annual Support Renewals
Software vendors who rely primarily on perpetual licenses need to maximize support renewal rates to build their recurring revenue stream.  Support payments provide your customers not only with access to technical assistance from your staff, but they also determine which releases they are entitled to run. Customers are encouraged to renew their support agreements when license managers restrict access to desirable new releases. License managers have two ways to enforce access policy: version numbers and release dates.

Version Numbers
All licenses encode a version number into the key. The version number specifies the highest version that the license will support. So for example, if the version number is specified as "5.3" in the license, then requests for version "5.3" and lower will be granted. A request for a version "5.4" or higher license would denied.  The denial event presents an opportunity to remind the customer that access to that version requires a new license obtained only via a support contract extension.

Release Dates - "Born on Dating"
Perhaps a more flexible approach is not to encode a version number in the license at all, but instead to encode a "maximum release date." This date represents the maintenance coverage period. In other words, it specifies the latest software release date that can be supported by this license.  Of course, applications must be programmed to request licenses consistent with the "born on date" of its release.  Let's look at an example.

A "Release Date" Scenario
Suppose a customer buys a product license today (December 2008) for the current release (previously released June 2008) and signs up for one year of support. You would create a perpetual (permanent) license for this customer, but you would encode "2009.12" in the version field of the license to represent the maintenance contract expiration date in the format "YYYY.MM". This license would provide perpetual access to the current release and any future version that is released before the end of December 2009.  License requests for releases after that date would be denied, again presenting an opportunity to remind the customer that access to that version requires a new license obtained only via a support contract extension.

Partial Version Upgrades
Regardless of whether you use conventional version numbers or version dates, you can upgrade licenses in the field using a special license type for your products - an UPGRADE license.  This allows you to upgrade some or all installed licenses at a customer site.  So, when customers decide to upgrade, they can do so on a few licenses at a time, without affecting the total number of licenses available.
 

Pay Per Use Pricing and Post-Use-Billing
 
Some software vendors are offering yet another payment approach - pay per use or post-use billing.  What better way to stabilize your revenue stream than by charging based on actual usage.

License managers produce detailed report logs of license activity, recording data such as: product name, number of licenses granted, user name, host name, and duration.  With this information, you can periodically produce invoices that reflect your customers actual use. Popular license managers, like RLM, write the log in plain text so that it can examined directly. Also, the log is authenticated to ensure data integrity, and is "anonymized" to address potential privacy concerns.

You can test out various scenarios with this free report writer available here.

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