Ramblings on Best Practices for Entitlement Management and Software Licensing

In the world of consulting in entitlement management and software licensing (or any other field for that matter), the term "best practice" is often used to describe the best process, method or approach for performing a particular task. It’s intended to represent the prevailing wisdom on a particular topic based upon experience and business results. It’s a term often used by both consultants and customers to describe a proven approach to solving a problem.

Best Practice is both powerful and misleading. Many best practices can be broadly applicable and should be adopted, while many are not. It’s important to realize when to use a prevailing best practice and when to not simply adopt what’s worked for someone else.

Some processes or approaches don’t need to be constantly re-evaluated as they are not important to the mission of the business. Processes like those involved in accounts receivable are not often mission -critical (and subject to audit scrutiny), so it’s most efficient to simply adopt prevailing best practices.

Over time, other best practices may evolve due to how companies manage changes in business regulations (SOX auditing, FASB compliance), technology (SaaS, Virtualization, Cloud Computing), market forces (economic conditions leading to a shift from Capital Expense or CAPEX to Operational Expense or OPEX), the competitive landscape (shift in license models by competitors), or other factors.

Having watched software licensing and entitlement management evolve for 15 years, it’s interesting to see how companies view best practices, especially when it comes to establishing powerful market positions.

Ironically, I often see companies struggle with extensive market research and analysis about what their competitors do in order to identify and adopt an existing best practice in an area where they should be looking for differentiation. We recently worked with one client who wanted to know what the prevailing best practice was for the "license metric" in their market. The license metric is the most important attribute of a software license – it’s the characteristic that drives pricing (e.g. counted user, per seat, per-minute of usage, etc). In a sense, they wanted to adopt what the market viewed as a standard way to price software, which is typically an area companies look for a competitive advantage. It really isn’t a surprise this company was not doing particularly well in the market.

On the other hand I have worked with and for companies who actually create best practices. These are the ones who are looking for specific competitive advantages or to accomplish certain strategic objectives and didn’t care too much about existing standards. I remember working with one small company who had an informal mantra of freakishly friendly – we spent extensive time with the executive leadership team developing software license models and an entitlement management process to create an extremely positive customer experience. As a result, they set a new highbar on best practices for customer experiences.

In some upcoming blogs I’ll be exploring some software licensing and entitlement management best practices. I’ll look at when it’s best to adopt prevailing best practices because it’s the most efficient approach. More importantly, I will discuss when it’s time to seek out and find competitive advantages by adopting and evolving best practices.

Categories: Entitlement Management, General, License Models, Software Compliance

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