Why SaaS Software Needs Licensing Too

SaaS software is often seen as the panacea that simplifies all licensing terms and agreements—except, it's not true.

As the product manager of an enterprise back-office product that was sold as both an on-premises and SaaS solution for more than 10 years,  I worried about licensing all the time:

  • Our back-office solution was sold as modules and we used software licensing to turn on/off the modules.
    • Our solution was worth $100s of thousand—it was critical that we protected our software IP from piracy and overuse
    • We wanted to create just one code base—yet it was important for customers to only see menus for features they had purchased and not see those they had not purchased
    • We changed our module definitions every 2-3 years—we needed to make sure customers had access to the right modules as they were redefined
    • We often previewed a new capability to a particular customer—we needed to provide the customer the ability to try it out before release for a limited time and give feedback

    These are all licensing issues.

  • We offered different meters on our price list which customers could select: # of particular transactions, dollars processed, # of users, # of gigs downloaded, etc.
    • We added new meters over time
    • We switched customers from one meter to another
    • We captured enough information and displayed it to them to "prove" our invoices were correct

    These are all licensing issues.

I'm sure we could have handled all these situations as one-off licensing issues, as they came up—instead, we choose to implement intelligent licensing. By "intelligent licensing" – I mean that we could change licensing behavior (items above):

  • without changing code
  • as an operational process instead of a technical/engineering process
  • in a few minutes
  • without huge overhead in our code

As traditional software producers will discovery quickly when they get into SaaS—they're going to need software licensing for their SaaS offerings—just like they did for their on-premises solution.

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