october 17-18, 2006 l santa clara, ca software usage analysis an enabler for new licensing models...
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![Page 1: October 17-18, 2006 l Santa Clara, CA Software Usage Analysis An Enabler for New Licensing Models Rick Ingram, President License Tracker Inc](https://reader036.vdocuments.us/reader036/viewer/2022062516/56649daa5503460f94a97eeb/html5/thumbnails/1.jpg)
October 17-18, 2006 l Santa Clara, CA
Software Usage AnalysisAn Enabler for New Licensing Models
Rick Ingram, PresidentLicense Tracker Inc.
![Page 2: October 17-18, 2006 l Santa Clara, CA Software Usage Analysis An Enabler for New Licensing Models Rick Ingram, President License Tracker Inc](https://reader036.vdocuments.us/reader036/viewer/2022062516/56649daa5503460f94a97eeb/html5/thumbnails/2.jpg)
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Outline
• evolution of licensing models• usage analysis - technical considerations• usage analysis - contractual considerations• other considerations• summary• questions
![Page 3: October 17-18, 2006 l Santa Clara, CA Software Usage Analysis An Enabler for New Licensing Models Rick Ingram, President License Tracker Inc](https://reader036.vdocuments.us/reader036/viewer/2022062516/56649daa5503460f94a97eeb/html5/thumbnails/3.jpg)
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Evolution of Licensing Models
Pay-Per-Use Models(Rented Access)
Traditional Client – Vendor Relationship (Fixed Access, named user, floating, duration)
(Unlimited Access)
Remix Models(Flexible Access)
Increased value to technology consumersEnhanced customer relationship for software vendors
Technology Partnerships
Increased risk to technology consumersDecreased commitment to software vendors
Usage Analysis Enabled
License Models
Classification Models(Variable Access)
![Page 4: October 17-18, 2006 l Santa Clara, CA Software Usage Analysis An Enabler for New Licensing Models Rick Ingram, President License Tracker Inc](https://reader036.vdocuments.us/reader036/viewer/2022062516/56649daa5503460f94a97eeb/html5/thumbnails/4.jpg)
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Traditional Models
Evolution of Licensing Models
Pay-Per-Use Models(Rented Access)
Traditional Client – Vendor Relationship (Fixed Access, named user, floating, duration)
(Unlimited Access)
Remix Models(Flexible Access)
Technology Partnerships
Classification Models(Variable Access)
![Page 5: October 17-18, 2006 l Santa Clara, CA Software Usage Analysis An Enabler for New Licensing Models Rick Ingram, President License Tracker Inc](https://reader036.vdocuments.us/reader036/viewer/2022062516/56649daa5503460f94a97eeb/html5/thumbnails/5.jpg)
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Traditional Licensing Models
• single user, single license– named user– node locked
• multiple users, shared license– concurrent use license manager– dongle controlled
• fixed duration– evaluation– annual lease– short term requirements
![Page 6: October 17-18, 2006 l Santa Clara, CA Software Usage Analysis An Enabler for New Licensing Models Rick Ingram, President License Tracker Inc](https://reader036.vdocuments.us/reader036/viewer/2022062516/56649daa5503460f94a97eeb/html5/thumbnails/6.jpg)
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Pay-Per-Use Models(Rented Access)
Traditional Client – Vendor Relationship (Fixed Access, named user, floating, duration)
(Unlimited Access)
Remix Models(Flexible Access)
Technology Partnerships
Classification Models(Variable Access)
Business Issues Drivingthe New Models
Evolution of Licensing Models
![Page 7: October 17-18, 2006 l Santa Clara, CA Software Usage Analysis An Enabler for New Licensing Models Rick Ingram, President License Tracker Inc](https://reader036.vdocuments.us/reader036/viewer/2022062516/56649daa5503460f94a97eeb/html5/thumbnails/7.jpg)
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Motivation for New Models
• for users– balancing productivity and efficiency
– long term needs are not always known when making initial purchases
– mid-year requirements can be satisfied with operating budgets
• for vendors– competition requires licensing
innovation to enhance customer relationships and increase market share
– users’ needs are vendors’ opportunities
Cap Ex Op Ex
January
Cap Ex Op Ex
July
![Page 8: October 17-18, 2006 l Santa Clara, CA Software Usage Analysis An Enabler for New Licensing Models Rick Ingram, President License Tracker Inc](https://reader036.vdocuments.us/reader036/viewer/2022062516/56649daa5503460f94a97eeb/html5/thumbnails/8.jpg)
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Classification Models
Evolution of Licensing Models
Pay-Per-Use Models(Rented Access)
Traditional Client – Vendor Relationship (Fixed Access, named user, floating, duration)
(Unlimited Access)
Remix Models(Flexible Access)
Technology Partnerships
Classification Models(Variable Access)
![Page 9: October 17-18, 2006 l Santa Clara, CA Software Usage Analysis An Enabler for New Licensing Models Rick Ingram, President License Tracker Inc](https://reader036.vdocuments.us/reader036/viewer/2022062516/56649daa5503460f94a97eeb/html5/thumbnails/9.jpg)
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Essentials of Classification
• an extension to named user licensing
• users are placed into categories based on usage requirements
– restrictions on which features can be used
– restrictions on duration of use
– restrictions on number of sessions
• usage analysis for monitoring, compliance and “true-up”
Full User
Class A
Class B
10 / day
10 / wk
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PPU Models
Evolution of Licensing Models
Pay-Per-Use Models(Rented Access)
Traditional Client – Vendor Relationship (Fixed Access, named user, floating, duration)
(Unlimited Access)
Remix Models(Flexible Access)
Technology Partnerships
Classification Models(Variable Access)
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Essentials of Pay-Per-Use
• vendors provide non-owned copies of software to users
• use of all software (owned and rented) is recorded in usage logfiles
• once per billing cycle the logfile is sent to the vendor for analysis
• an invoice is prepared based on actual usage of non-owned software
License Manager
License ManagerLogfile
License Control File
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Time Based Pay-Per-Use
• technology consumers are charged for the amount of time they used non-owned copies of software
• on site availability of rented software ensures no lag between detection of need and use of software
Standard Concurrent Use Chart
Owned License Limit
Times of Non-owned License Use
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Transaction Based Pay-Per-Use
• usage charges occur because a software module has been used, duration of software use is irrelevant
• most applicable for consistent duration functions
• usage of each module or function is logged and billed accordingly
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Remix Models
Evolution of Licensing Models
Pay-Per-Use Models(Rented Access)
Traditional Client – Vendor Relationship (Fixed Access, named user, floating, duration)
(Unlimited Access)
Remix Models(Flexible Access)
Technology Partnerships
Classification Models(Variable Access)
![Page 15: October 17-18, 2006 l Santa Clara, CA Software Usage Analysis An Enabler for New Licensing Models Rick Ingram, President License Tracker Inc](https://reader036.vdocuments.us/reader036/viewer/2022062516/56649daa5503460f94a97eeb/html5/thumbnails/15.jpg)
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Essentials of Remix
• software purchases are viewed as purchases of a technology pool, not just individual licenses
• consumers have the right to “remix” their active set of licenses to satisfy current needs
• normally used in conjunction with pay-per-use
Initial Pool
Needs Change
After a remix
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Periodic Static Remixing
• this model makes use of existing application software and license manager
• periodically (every 3 or 6 months), the license file is updated to reflect the new state of “remixing”
• usage analysis provides information to make informed remix decisions
Under-utilized Licenses
Highly utilized Licenses
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Continual Real-time Remixing
• end users purchase licenses of a token-feature not the actual software features
• when features are checked out the corresponding number of licenses of the token-feature are checked out
• Pay-Per-Use can be easily added
• moving a current product family to this model requires either:– modification of the application source code– using a token licensing enabled license manager
Feature - X (3) Feature - Y (4)Feature - X (3)Feature - Y (4)
License Manager
Pool of “Token”Licenses
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Unlimited Access
Evolution of Licensing Models
Pay-Per-Use Models(Rented Access)
Traditional Client – Vendor Relationship (Fixed Access, named user, floating, duration)
(Unlimited Access)
Remix Models(Flexible Access)
Technology Partnerships
Classification Models(Variable Access)
![Page 19: October 17-18, 2006 l Santa Clara, CA Software Usage Analysis An Enabler for New Licensing Models Rick Ingram, President License Tracker Inc](https://reader036.vdocuments.us/reader036/viewer/2022062516/56649daa5503460f94a97eeb/html5/thumbnails/19.jpg)
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Essentials of Unlimited Access
• multi-year contract providing unlimited access for a fixed annual fee
• the fee is adjusted annually based on usage during the year
• removes the revenue/cost uncertainty associated with pure rental arrangements
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Enabling New Licensing Models
Technical Considerations
Pay-Per-Use Models(Rented Access)
Traditional Client – Vendor Relationship (Fixed Access, named user, floating, duration)
(Unlimited Access)
Remix Models(Flexible Access)
Technology Partnerships
Usage Analysis Enabled
License Models
Classification Models(Variable Access)
![Page 21: October 17-18, 2006 l Santa Clara, CA Software Usage Analysis An Enabler for New Licensing Models Rick Ingram, President License Tracker Inc](https://reader036.vdocuments.us/reader036/viewer/2022062516/56649daa5503460f94a97eeb/html5/thumbnails/21.jpg)
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Sources of Usage Data
• license manager logfiles
• software vendor proprietary logfile or database
License Manag
er
License ManagerLogfile
Optional VendorUsage Logger
Vendor ProprietaryUsage Data
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Logfile Issues - Existence
• is logging turned on?
– ensure proper configuration
• overwriting or deletion of logfiles
– overwrite or append on restart
– encourage proper file management policies
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Logfile Issues - Integrity
• ASCII versus binary
– ASCII can be edited
– binary is secure,but is it availalable?
– ASCII limits customer base
• completeness of data
– license sharing
– detailed session matching
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Logfile Issues - Access
• automated or manual
– firewall and “phone-home” issues
• privacy concerns
– “anonymizer” may be required
• multiple vendors’ data in a single file
– “extractor” may be required
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Enabling New Licensing Models
Business Considerations
Pay-Per-Use Models(Rented Access)
Traditional Client – Vendor Relationship (Fixed Access, named user, floating, duration)
(Unlimited Access)
Remix Models(Flexible Access)
Technology Partnerships
Usage Analysis Enabled
License Models
Classification Models(Variable Access)
![Page 26: October 17-18, 2006 l Santa Clara, CA Software Usage Analysis An Enabler for New Licensing Models Rick Ingram, President License Tracker Inc](https://reader036.vdocuments.us/reader036/viewer/2022062516/56649daa5503460f94a97eeb/html5/thumbnails/26.jpg)
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Rental Mode : Decision #1
• basic time units for rentals(seconds, minutes, hours, days, weeks, months, years)
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Rental Mode : Decision #2
• elapsed time or calendar periods– is a day midnight-to-midnight or is it an arbitrary 24 hour period
from the start of first rental
Is this a 1 day rental,
or 2?
Time
Mon Tues Wed
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Rental Mode : Decision #3
• single period or multiple period rentals– typically, smaller time units are single period and longer time
periods are multiple period
Is this a 1 unit rental,
or 2?
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Rental Mode : Decision #4
• simple or combination rental modes– rate capping (i.e. hourly_capped_monthly)
– volume discounting
$
Time
Rental total climbswith usage
Until it hits the cap
It then resetsat the next period
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Rental Mode : Decision #5
• minimum session length– ensures that license checkouts for which no business value
could be realized are ignored
Should these sessions be considered?
Or not
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Rental Mode : Decision #6
• minimum overlap period– minimum period of time for a rental, shorter periods are
forgiven
Should there be a chargefor this period?
Or not
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Rental Mode : Decision #7
• pricing– typically defined as a percentage of either perpetual license or
annual license fees
– optional components
• access fee
• billing period minimum
– set pricing to create the desired win:win scenario
• provide reasonable cost access for minor use on-demand
• price such that high use encourages perpetual license purchase
![Page 33: October 17-18, 2006 l Santa Clara, CA Software Usage Analysis An Enabler for New Licensing Models Rick Ingram, President License Tracker Inc](https://reader036.vdocuments.us/reader036/viewer/2022062516/56649daa5503460f94a97eeb/html5/thumbnails/33.jpg)
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Rental Mode : Decision #8
• applying rentals to future purchases
– what percentage, if any, of rentals can be applied as a discount to perpetual license purchases
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Enabling New Licensing Models
Other Considerations
Pay-Per-Use Models(Rented Access)
Traditional Client – Vendor Relationship (Fixed Access, named user, floating, duration)
(Unlimited Access)
Remix Models(Flexible Access)
Technology Partnerships
Usage Analysis Enabled
License Models
Classification Models(Variable Access)
![Page 35: October 17-18, 2006 l Santa Clara, CA Software Usage Analysis An Enabler for New Licensing Models Rick Ingram, President License Tracker Inc](https://reader036.vdocuments.us/reader036/viewer/2022062516/56649daa5503460f94a97eeb/html5/thumbnails/35.jpg)
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Pay-Per-Use Cost Monitoring
• vendors need to analyze usage data once per billing cycle
• end-users must monitor costs on a continual basis– ensuring budgets are
not being exceeded
– detecting and correcting improper license use
– making mid-period purchases if rental usage is higher than expected
![Page 36: October 17-18, 2006 l Santa Clara, CA Software Usage Analysis An Enabler for New Licensing Models Rick Ingram, President License Tracker Inc](https://reader036.vdocuments.us/reader036/viewer/2022062516/56649daa5503460f94a97eeb/html5/thumbnails/36.jpg)
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Usage Analysis in ASP Operations
• in an ASP environment usage analysis of standard logs can support– accounting and invoice generation for the vendor
– cost and usage monitoring by customers
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Summary
1. Traditional licensing models do not adequatelyaddress the needs of end-users and therefore of software vendors.
2. Usage analysis enables license models that address these needs in a win:win relationship.
4. Pay-per-use models provide on-demandaccess for peak periods, or in support of ASPs.
5. Remix models meet changing users’needs while protecting overall investment.
6. Technology partnerships providemaximum value for long-term commitments.
7. Usage data characteristics and the capabilities of the analysistools must be consideredwhen drafting contractterms.
8. Monitoring of costs must be done by end users to maintainthe win:winscenario.
3. Classification models provide the revenue modelof named users with discounts for restricted user access.
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Questions?
www.licensetracker.caRick Ingram
(403) 923-7334
“You can only optimize -what you understand…
…and you can only understand -what you track!”