The CSP Licensing Business Model

A few years ago I had the opportunity to start a full LSP (licensing service provider) licensing business from the very beginning of licensing activities and growing the business with a licensing business model. Later on I repeated the process in MSP and VARs especially for those who had the desire to grow their Volume licensing business. And now the change towards Cloud licensing especially with the CSP program has given me the chance again to work on licensing business models transformation, for this reason I thought was relevant to comment on the CSP licensing model concepts that all CSPs should assess.

Adapting to a Cloud revenue business model is not an easy transition and sales teams, business owners and many others are reluctant to change the traditional transactional model to a subscription based model, but obviously signing to the CSP program is already a commitment towards applying the necessary changes on the business model required.

CSPs must be “licensing ready” and should assess the business to successfully plan activities: knowing about licensing is not enough, controlling subscriptions, transitions from volume licensing to subscription licensing, client ROI impact and SAM maturity, between other topics,… all is essential to all CSPs…

Some questions to resolve: has the CSP a volume licensing or hosted licensing business in place? What is the CSP licensing selling strategy? Is the CSP reactive to renewals? How successful it has been to capture net new Cloud clients? Is the CSP in a position to sell Office 365 or Azure Services? Is there sales team members knowledgeable enough to offer Cloud subscription models? Can you transition from SPLA to other cloud licensing? Is the sales team incentive align with the achievement of new monthly recurrent revenue? Has the CSP SAM services at all? Is the CSP SAM service aligned with client expectations or works just as a necessary exercise due to partnership obligations for audits? How many current clients versus net new are required to obtain to keep CSPs revenue expectations?

The end goal of any assessment exercise towards licensing sales business is to create a strategy for sales and operations that can capture clients and operate efficiently to create revenue. Some CSPs plans have not contemplated all risks, for example:

Many CSPs are finding that some sales efforts are futile with clients that transact with Enterprise Agreements via qualified resellers or LSPs (Licensing Solutions Partners), it is necessary to know how to pick the battles and be ready to fight the arguments of licensing agreements, making sure that clients don’t get involved between the subscription margin fight from the different resellers and see the services value as the true differentiator. As it is today between CSPs and LSPs with CSP expectations (all of them) the battle for the Cloud is on…

Assess, plan and get the right licensing trusted partners and distributors. Get the right SAM independent partner (you can always ask me for their names), be familiar with distributors CSPs advantages and get yourself ready to get into the wonderful world of software licensing in the Cloud era.

Let me know if you require more information for your CSP plans.

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The New Order of Software Asset Management (SAM) in the Cloud era.

The New Order

Microsoft is definitely the great influencer of Software licensing; when Microsoft develops and promotes new rules may other vendors follow. During this last World Partner Conference, that just happened in Washington DC, I observed the influence of Cloud now directly affecting the Software Asset management (SAM) approach.

Cloud and SAM

Not long ago I was questioned by other SAM peers on my approach towards Cloud and SAM, the interaction of the old licensing models affected by the new subscription models seemed for some the end of the need of the licensing advisors, however I always thought it was only an adaptation of the SAM knowledge towards new exciting models to compliantly license software.

Microsoft is going all or nothing to the Microsoft Cloud offerings, I am glad that my guess has been right for so long with respect of being aware on how to measure, what to investigate, and how to determine the right Cloud licensing solution, because now SAM has to fulfill the qualification to move the right IT budgets towards Cloud in order to fulfill the great demand and transformation that Cloud is making in organizations everywhere. SAM has now a special role in regards to Cloud, it has to monitor the usage, contemplate the rules and repurpose licenses for an optimal transition.

SAM and Services

Some SAM professionals identify their task as auditors as the more relevant with respect to the services thy offer. However I disagree, in fact SAM has to be hand in hand with technical, and business assessments to actually not only portray a licensing position but to guide any organization to transformation. The new era of SAM services has to require a true alignment between business goals, technical requirements and licensing.

 

SAM 2.0

SAM is now critical in order to govern software and identify the possibilities of Cloud computing, outsourcing databases, access to BI integrated products, assessing security tools and allowing a new perspective of IT expenditure that walk with business objectives. The New Order of SAM services will create once again a differentiation between those that will be stuck in the old reseller ways, just contemplating the exercise of an audit without any other variable added, and those that understand the new realities and needs of IT on today’s market.

 

IT is truly a great moment for SAM services that can play a significant role on the era of Cloud.

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Get ready for a Licensing Audit and get the vendor to fund it

Certified companies for SAM services like AMTRA are able to prepare companies and help them to pro-actively report their licensing status to vendors.

In the case of Microsoft, the SAM team partners with clients to get compliance ready in a friendly engagement that distance itself from the traditional audit approach that takes so many IT leaders by surprise.

Some vendors divide the exercise of hunting for compliance issues in two categories:

  • Soft Audit: just requesting general information on existing installations
  • Audit: full analysis and reconciliation of the client using the empowerment of the agreed terms and conditions (that normally no one takes in consideration until the vendor shows up)

However Microsoft has changed the pace of these engagements by allowing clients to proactively report, and experience shows that the “friendly” gathering and reconciliation of the data helps organizations to fix issues and arrive to better agreements when they willingly and proactively approach the vendor, it is called “Baseline”.

For this reason the Baseline SAM services for Microsoft could also be done using a pool of funds to help clients to fulfill these task, plus they also help clients to Assess and deploy SAM Services. Only a few companies are able to provide these services, and as mentioned AMTRA Solutions is one of them, servicing clients globally.

What is left after the exercise is a full understanding of the licensing compliance status. Now these by itself is useful for the vendor however the organizations can have these done as a starting point for a more Dynamic SAM process and assessments to truly avoid any noncompliance issue in the future.

It is key to understand and strategize SAM Baseline services as a way to get the Vendor involved and a SAM partner to help reducing typical compliance and costs risks.

For more information on SAM Baseline let’s discuss: @mslicensing @amtrasolutions