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.