When implementing business solutions using commercial or third-party solutions, what’s the best software delivery option? Should you look for a solution managed by the application provider? Or do you buy a license and implement it in-house, using your own staff to implement, install, and manage the solution? Of course, the answer is “it depends”. In order to determine what would work best for you, the first step is assessing the options against your priorities as a business. Here are some considerations:

At a recent conference our CEO asked: “What’s the average price of software?”

An interesting question. I started thinking about the mix of consumer vs enterprise, the uptake of subscription based and usage based pricing, and a host of other factors that left me spinning to the point I concocted a number way off the mark. I’ll preserve a little dignity and not share my answer, but ask that for a moment that you ponder the same.

I suppose the title of this article may provide a clue. So do you have your guess?

SafeNet, working with SIIA, has released the results of a survey in which software producers openly admit that they are currently losing nearly 50% of their potential revenues. To what you ask? History may tempt you to say piracy – and the latest stories of organized attacks to steal IP of several US companies only further fuels that belief. But is that the real reason? Not according to the 620 software publishers who responded to the State of Software Monetization survey.

In a recent study by the Business Software Alliance, the UK is the latest to throw a spotlight on the problem of software piracy. According to the study, 52% of small businesses in the UK have either bought or downloaded illegal software. In fact, the BSA now estimates that over half of all software in use by small and medium businesses in the UK is illegal.

That’s a shocking statistic – one driven according to the BSA by a combination of the current economic climate and a degree of ignorance towards how counterfeit goods propagate in the market. And we know from other studies, most notably the BSA’s 2011 Piracy report, that the situation in many other countries is significantly worse.

As pirates continue to attack, we are forced to spend cycle times of effort patching and plugging our code to defend against those that might steal it. With every cycle that passes, software pirates become more sophisticated, their vectors of attack harder to spot and defend against, with the skills required to do so ever more specialized and scarce.  Are you prepared, or are you fixing your software piracy problems with duct tape?

What makes the most successful Internet companies so successful?  They understand that the Internet is much more than a delivery channel – it is a customer feedback channel.  So they get smarter every day, and improve constantly.  Software companies have yet to capture this opportunity – today the Internet is reduced to the conduit for ESD (Electronic Software Distribution), or the live application (Cloud).

Software monetization can be viewed as the adoption of any variety of measures an organization takes in order to increase the profitability of their intellectual property, in this case, software. These tactics can range from sophisticated anti-piracy and IP protection techniques to creative pricing and packaging strategies. It is important to note that no individual software monetization technique is greater than the combination of multiple techniques. No matter what type of software application has been developed or how that application is being delivered to the end-user, a comprehensive software monetization strategy hinges on four key factors – how effectively the software publisher can package, control, manage, and monitor, their offering(s).

Rarely does an IT system work better in a silo, so a dialogue about the benefits of interoperability seems as redundant as making the case for world peace. Interoperability is a widely used, and often abused, term, but for those that deal with it at a practical level, with poorly integrated systems, it can be somewhat of a holy grail. This is particularly true for electronic license and entitlement management systems.

Electronic licenses and entitlements are unique in that they require coordination between IT, Operations, Product Management and Engineering. They must be integrated into the fabric of a software company’s products, and work seamlessly with order processing and fulfillment systems.

I have always talked about how important it is for software vendors to include technology with their solutions to help manage their licensing policies. This can be anything from outright enforcement and anti-piracy measures to tools to measure and monitor compliance with license agreements. The great thing about putting this kind of technology in to a software solution is that it eliminates doubt, misunderstanding and audit.

Today,  there is a wide array of technical solutions that allow software vendors to implement a licensing solution that removes ambiguity and allows flexibility, seemingly solving the primary issues for both the vendor and the customer in a licensing relationship. Companies like mine provide solutions that do that in pretty much every software delivery mode – i.e. online, packaged and embedded. The internet provides additional opportunities to ISVs and their customers, not only for the delivery of the license, but also now for maintaining, measuring, updating, and publishing compliance to both parties. This allows for an entirely open relationship and one that can virtually eliminate the issues faced between vendors and their customers.

In my last blog entry (Show Me The Money, Part 1) we looked at a number of factors that play into software revenue recognition when a vendor (ISV) introduces electronic license enforcement into their product lines.  Part 1 focused on the principles and mechanics behind giving customers access to the software upon order execution so that the ISV may recognize revenue.   Part 1 concluded by bringing another key element into the revenue recognition equation: time.  Time can affect revenue recognition in a number of ways:

• We have the time required by the customer to actually get their license keys after the ISVs claims to have given them “access” to the software.
• We have the software’s ability to run by default without a license key for a temporary amount of time.  Does that count as “access”?
• We have some ISVs selling perpetual entitlements but wanting or needing to deliver license keys that expire annually.  Does the customer really have access to what they bought?

Key Traffic Systems Ltd., the UK leader in highway and traffic management software, is also a longtime SafeNet customer. With a large and growing user base, KTS needed the ability to offer hardware or software-based licensing and secure downloads of its software to accommodate changing customer needs as well as appeal to new markets.

While Sentinel HASP HL was providing them robust protection against anti-piracy, they needed to add the flexibility that HASP SL offered.  “We want