How to Achieve a Cloud-Connected Experience Using On-Premise Applications

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1 How to Achieve a Cloud-Connected Experience Using On-Premise Applications WHITEPAPER The cloud is influencing how businesses wish to use and be charged for the software they acquire. Pay per use, metered pricing, or utility pricing are all considered consumption-based pricing models which align more closely with the desired customer experience and the way people wish to use their software today. Whether using software delivered as a service or traditional on-premise applications, end users are demanding the flexibility that the cloud has to offer. This paper explores cloud adoption trends and how these trends have impacted the evolution of end-user expectations for all software. It also presents ways that software vendors can leverage pricing, packaging, and licensing, as well as usage collection tools and techniques to deliver a truly next-generation software consumption experience without having to re-invent their on-premise software offering as a service. Cloud Adoption Trends Alongside social, mobile, big data, and the Internet of Things, cloud computing is a major trend in today s market. It makes sense then that the number of software vendors wishing to take advantage of the cloud to deliver their software as a service is also growing. New statistics about the growth of cloud and SaaS are being presented every day, such as IDC s recent prediction that cloud software will grow to $76.1 billion by 2017, growing at a rate about five times faster than the overall software market. Or Forrester s claim that nearly 15 years after the appearance of SaaS startups such as salesforce.com, NetSuite, and Google, SaaS is nearing its tipping point. Forrester forecasts that SaaS adoption is poised to surpass the 50% mark within the next 12 months. If we look at this trend from a development perspective, a recent SIIA /SafeNet survey of software publishers found that upwards of 65% of new commercial software applications are being developed specifically for the Cloud and that number will increase to 75% over the next three years. When considering the entire product portfolio, those publishers surveyed cite that by 2015, 25% of their product portfolios will be delivered as a service. Cloud-Connected Experience Using On-Premise Applications Whitepaper 1

2 From an end user organization perspective, IDC reports that 91% of new application spending is for software delivered as a service and 34% percent of replacement applications are being delivered as a service. With that being said, IDC predicts that greater than 80% of global 2000 companies will still have more than 70% of their IT systems operating onsite in What this means to software publishers is that even though cloud based services are gaining traction, there is still plenty of on premise software being used alongside cloud-based service models. For this reason, mixed product portfolios with a combination of on-premise and SaaS software will dominate the software industry for the next three to five years. What s Driving Software Publishers to the Cloud? The vast majority of software developers are heading to the cloud in search of new revenue. Publishers see the cloud as a way to reach new and more niche market segments while also allowing quicker time to market. Software companies want to simplify their operational processes and offer customer self service to improve the overall user experience. In addition, software publishers desire the ability to track usage of their software in an effort to gain valuable insights to fuel future business and product decisions. Source: The State of Software Monetization Survey 2013 SafeNet and the Software & Information Industry Association (SIIA) Though traditional software vendors offering on-premise products see the potential that service-based offerings can offer their organizations and their end users, many are challenged by how to change their organizations to also meet the needs and reap the benefits of clouddelivered software. Evolving End-User Expectations The software industry is rapidly making its way to the cloud and this not only impacts expectations on how software applications should be delivered, it also dramatically changes how users expect software to be packaged, controlled, and maintained. For instance, software usage is being increasingly associated with users as opposed to devices, consumption-based business models are a growing preference, and vendor-customer transparency is a necessity. These three things alone present a tremendous challenge for ISVs using traditional software pricing and licensing models. According to IDC research, buyers expect cost efficiency from the cloud. Buyers also expect services that can be deployed more quickly and that allow self service. ISVs need to be able to offer their buyers a standard product catalog with metered pricing that enables them to scale up or down based on need at any given time. Cloud-Connected Experience Using On-Premise Applications Whitepaper 2

3 What Buyers Expect from the Cloud Using a 5 point scale where 5 is very important to your company, and 1 is not at all important, please evaluate how critical the following characteristics of Cloud (Public and Private) are to your firm. They are Cost Efficient 85 % They support faster deployment 83 % They let users serve themselves 81 % The can establish Standard Services 80 % They support scaling technologies 78 % They provide metering 75 % They allow flexible migration of workloads 73 % Source: IDC Research 65% 70% 75% 80% 85% 90% To put it simply, cloud offerings must be designed to help users save money and gain efficiency. It seems straightforward but it can be a tall order for a traditional ISV, delivering perpetually licensed on-premise software, trying to make a move to cloud. It can be equally challenging for ISVs which may have acquired a SaaS product or company and now have a cloud service running in parallel with perpetually licensed on-premise software. There may be overlap from a functionality perspective, but software publishers need to be able to offer their customers choice and flexibility. For example, offering each software product as either a physical or downloadable on premise package using a perpetual license, or as a cloudbased service subscription using a pay-as-you-go model. The challenge for software publishers is in how to manage it all. Moving to the Cloud 1 in 4 publishers perceive the cost and complexity of going cloud to be prohibitive. 26% believe it would be impossible to make their current on-prem software available as a service. Getting to a Cloud-Connected Licensing Experience with On-Premise Software As SaaS adoption grows, traditional software vendors need to be able to shift their software offerings to a SaaS-style delivery model. Historically it has taken four to six years to deliver a SaaS product with a true multi-tenant architecture. Some publishers have made the journey and many more are in the process. However, the SIIA / SafeNet State of Software Monetization survey revealed that one in four publishers surveyed perceive the cost and complexity of going cloud to be prohibitive and 26% believe it would be impossible to make their current on-premise software available as a service. Cloud-Connected Experience Using On-Premise Applications Whitepaper 3

4 Fortunately, there is a way for ISVs to bridge the gap using cloud-connected licensing. As an alternative to, or in conjunction with developing a SaaS product from the ground up, ISVs can deliver a SaaS-like experience today using their existing on-premise products and cloudconnected licensing. The Benefits of a Cloud-Connected Licensing Experience Cloud licensing is ideal for companies who are already providing Software as a Service and for on-premise vendors that realize that adding cloud-based delivery models to their traditional portfolio can increase their market reach, streamline operations, and improve the customer experience. The cloud has the potential to offer true differentiation and innovation for software providers looking to better serve their user. ISVs can deliver a SaaS-like experience today using their existing on-premise products and cloud-connected licensing. Cloud licensing enables you to transform your core business model and immediately open new avenues for incremental revenue. By utilizing cloud-connected licensing, software vendors can offer diverse pricing models ranging from subscriptions to pre-paid or past-paid consumption Cloud licensing will improve operational processes. Cloud licensing gives software publishers the ability to proactively notify customer about their license status, automatically renew, upgrade, and enable or disable features or modules in real time or near real time. Traditional ISVs with on-premise software that employs cloud-connected licensing no longer have to worry about virtualized environments. Cloud-connected licensing enables accurate license tracking in virtual environments which prevents revenue leakage and provides an interruptionfree user experience. Cloud licensing improves customer satisfaction. Cloud licensing significantly enhances the user experience both from an enforcement perspective by eliminating the use of hardware tokens, and from a usage perspective by enabling customers to purchase features à la carte. Cloud-connected licensing provides a smoother and much more efficient user experience. The quickest and easiest way to offer users a cloud-connected licensing experience with onpremise software is by taking advantage of technology developed for this purpose. The SafeNet Solution SafeNet Sentinel Cloud leverages the benefits of a cloud-connected license for both onpremise software and cloud-delivered services with a single back-office platform. The Sentinel Cloud solution provides usage-based pricing and enables new business models for on-premise applications enabling customers to pay as they grow. Consumption-based licensing is based on feature usage and/or quantities of stored data, transaction data, and processing time to meet end user demands for pricing which is more aligned with what they derive from the software. Sentinel Cloud Services: This is a complete cloud service offering which includes both the entitlement management component and the cloud licensing (enforcement) component. Both components are delivered via the cloud in a true multi-tenant SaaS model. Software vendors that deliver their software on premise or via the cloud can benefit from Sentinel Cloud Services. The deployment time is considerably reduced, the IT footprint is non-existent and upgrades can be accomplished seamlessly through the cloud without disrupting the user experience. Cloud-Connected Experience Using On-Premise Applications Whitepaper 4

5 With Sentinel Cloud, the enforcement or licensing piece is offered via the cloud and the entitlement management component is accomplished on-premise using Sentinel LDK or Sentinel EMS. This gives software vendors the unique ability to manage their licensing through a combination of the cloud, hardware keys (dongles), or software keys. Sentinel Cloud gives ISVs the tools to seamlessly manage their software licensing regardless of which software delivery mechanism they are using and to provide the enforcement method most relevant to each segment. Adopting the SafeNet cloud-based approach to software monetization for all products regardless of whether they are being delivered as a service or for installation on premise will allow software publishers to: Support Usage-Based Pricing: Introduce consumption-based business models to win new business and stay competitive for on-premise and cloud-based applications. License Users, Not Hardware: Associate licenses and entitlements with users as opposed to machines for greater end-user mobility and a better user experience. Take Control: Enjoy real-time remote control over licenses to improve customer support capabilities and accelerate marketing and sales activities. Get Smarter: Exploit detailed feature- and product-level usage tracking information to drive product and business decision-making processes. Embrace Virtualization: Deploy software within completely virtualized environments without any fear of duplication or misuse. Reduce IT Dependencies: Eliminate the need to install and manage license servers locally to remove IT costs and shorten implementation timelines. Conclusion The cloud is transforming businesses around the world and is having a significant impact on the way buyers wish to purchase and use software. With mixed product portfolios set to dominate the software industry, the lines are indeed blurring between on-premise and cloud licensing experiences as we know them. With evolving user preferences, software publishers will be expected to deliver a cloud-like user experience for on-premise applications, and will need to easily and effectively manage their hybrid product portfolios. It may seem like an insurmountable task but with proper planning and the right tools, your software organization can take a cloud-based approach to software monetization for all your products regardless of whether they are being delivered as a service or for installation on premise. Cloud-Connected Experience Using On-Premise Applications Whitepaper 5

6 About SafeNet Software Monetization Solutions Easy to integrate and use, innovative, and feature-focused, the SafeNet family of Sentinel Software Monetization Solutions are designed to meet the unique license enablement, enforcement, and management requirements of any organization, regardless of size, technical requirements, or organizational structure. Software Licensing Products & Services: An award-winning suite of hardware, software, and cloud-based licensing solutions for protecting software applications from piracy, overuse, or code manipulation in order to maximize profitability and protect competitive intellectual property (IP). Entitlement Management Products & Services: A feature-rich entitlement management system offered hosted, as a service, or for on-premise installation, for enabling software publishers to streamline and easily manage all operational tasks associated with software licensing. SaaS Licensing & Management Services: A CODiE award-winning software licensing and entitlement management service architected from the ground up to support the unique catalog definition, provisioning, control, and usage tracking challenges of SaaS and other cloud service delivery. Software Monetization Professional Services: A full suite of consulting and implementation services to help you define, align, and deliver a licensing strategy that meets the business objectives and operational processes unique to your organization, regardless of where you are in the lifecycle of your licensing project. Try Sentinel Cloud for Free At SafeNet, we believe the best way to tell you how secure and easy our products are is to show you. That s why we provide Free Trial Versions of our award-winning software monetization solutions available at Try Sentinel Cloud today at Contact Us: For all office locations and contact information, please visit Follow Us: SafeNet, Inc. All rights reserved. SafeNet and SafeNet logo are registered trademarks of SafeNet. All other product names are trademarks of their respective owners. WP (EN)-26Sep2014 Cloud-Connected Experience Using On-Premise Applications Whitepaper 6