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.

The Benefits of Voluntary SAM & Licensing Reporting

First of all, it has been an interesting journey during my SAM career to get to write this post…because I have spent so much time helping companies and organizations “clean up the house” and get compliant, manage their applications and protecting them in the way of being always ready for software audits. But like the best things in life the journey does not have an end and is the ride that makes it great.

In the SAM World the ultimate efficiency is to manage applications from the deployment of images to usage control with compliance in between. It is precisely on this SAM ultimate efficiency that allow us to be more proactive in order to not only be ready for software audits but also to advance the reporting to a vendor before reaches to audit… I know, I know, sounds sacrilegious.

Let us put together this scenario: one organization uses a SAM governance management for all applications, policies and procedures are well-defined, smooth and there is compliance control. To “cleaning up the house” is easy and give it a year to achieve the optimal position. It is now a matter of maintaining, adapting and advising. It is then that risks are fully controlled towards software audits. And the services are rendered by a certified and recognized independent SAM consulting firm, not by a reseller. Imagine then that the organization reports voluntarily their compliance that includes deployment information.

Benefits:

  • Vendor does not have to list the organization on the black list
  • The organization tracks reports delivered to provide “good faith” to auditors and avoid their time-consuming engagements
  • The organization is motivated and keeps SAM governance live, active and constant maintaining compliance to optimal levels
  • Vendors provide funding for voluntary reporting, services by the SAM consultant may be partially covered if not paid in full.
  • SAM consultants can focus on the upcoming projects, working with IT architects and other to prepare for changes and ensure healthy delivery and compliance as per the established road map.

What we need is an alignment between the vendors, the SAM consultants and the customers. It has to be driven by the Vendors primarily, creating clear programs of audit protection by voluntarily reporting, enabling independent SAM consultants to provide a level of trust and optimal reporting acceptance. And this is out of the scope of the True Ups and Renewal typical reporting,,, Cloud subscriptions actually fit well on this model as usage can be controlled by the access to the applications from the vendor, but more than ever, the reality of Hybrid Cloud could benefit this approach tremendously, increasing the trust between all parties involved.

Just a thought…

The Cloud and the New order of Licensing and Software Asset Management #WPC14

July is an important time for Software Asset Management (SAM) as the Microsoft World Partner Conference (WPC) kicks off with announcements and news. Microsoft licensing is definitely a great influencer to all vendors on compliance rules.

There is expected content on SAM processes according to Microsoft to discuss on this 2014 edition of the conference and one or two expected announcements on Azure and other Microsoft Cloud.

We are arriving to a time of Cloud offerings consolidation. After observing constant changes on office 365 and additions to services offer through Azure it is time to finally elaborate transition plans for licenses to be moved to the Cloud, reconcile with SPLA (Hosted-Service Provider Licensing Agreement) and traditional Volume Licensing investments that have the reign for the last two decades.

As consuming IT is the actual trend and desire, it is expected for the licensing models to quickly offer transitions for compliance towards all Microsoft Cloud products.

The expectation is to finally observe consolidation on subscription models and more governance of SAM dedicated to Cloud offerings.

As the partner ecosystem also evolves to develop Cloud solutions of their own, licensing models like SPLA are getting more and more licensing in production environments. At the same time is not any more about going Cloud but about securing, developing and managing the Cloud. These has made SAM more relevant than ever as Application Management has to respond to the different scenarios that companies use today, a mix of applications in the Cloud with Private/Hybrid and Public Clouds.

The Licensing Guru will update after WPC on findings and relevant information to the readers.

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Save time, reduce costs and get compliant with Application Management

We live in an Application driven IT world.  Whether its our Cloud-based phone apps, our computer apps, or the applications in our servers and hosted datacentres, everything is moving towards applications that will improve our productivity.  Technical complexity is increasing rapidly and we are consuming more applications than ever before.

I have come to understand the value of application packaging.  Initially, I thought it was simply creating an automated process of imaging applications to be delivered. However, I have to come to realize that its a lot more than that.  Application packaging:

  •        Allows one to conform to standards despite their edition and version.
  •        Provides the ability to test applications before moving to production.
  •        Delivers the same application, yet tailored to specific needs or departments.
  •        Provides process and characteristic documentation without having to spend hours writing and collecting screen shots.
  •        Enables a licensing person, through the process, to control and manage assets (Software Asset Management (SAM)).

For this reason it is now part of what I envision to provide my clients.  That vision is to deliver a robust strategy that not only takes care of SAM inventory and reconciliation, but also goes to the root and applies application packaging best practices.

Ask me how: @mslicensing, @amtrasolutiuons

Cleaning the house – Microsoft LSP (LAR) uncertain future

In different geographies Microsoft has asked LSP (Licensing Solution Providers) previously known as LAR (Large Account Resellers), to answer RFPs to maintain their status to transact Enterprise Agreements, and other higher licensing agreement transactions.

The idea behind is to recognize those partners that have done investments on Services offerings that can provide value to Microsoft customers beyond the transaction. Passing the test will mean the continuity of operations as LSP, failing means “out”, at least is what I get from my conversations with LSP friends across the globe facing this situation or from the ones that faced it recently.

I wanted to share some of the comments from this Microsoft partners:

  • Revenue expectations pushed for volumes of sales beyond any services: The targets are aggressive, nothing new, but drive the behaviour of selling and upselling instead of consulting and servicing
  • Cloud open to other reseller types is very competitive: VARs and others can help clients subscribe and get fees even when there is an LSP transacting an agreement. This also means that VARs better prepare for professional services offerings can be very competitive and if their alliance is with a competitor LSP then the relation with the customer may be at risk
  • Global LSPs seem to be more attractive to Microsoft than national LSPs: selling agreements across borders is becoming a common practice especially when savings on price lists are so different between countries.
  • Hardware Surface revenue target attempts are “distracting”: Some folks are wondering what kind of partner Microsoft has truly in mind in the new shift to a Device+SaaS company model.
  • Fees cuts patterns, cadence and CRM type registration programs: For many years LSPs did not have requests to register deals and obtain fees from entering opportunities and properly track them on Microsoft CRM systems. Also LSPs have experience reduced fees for the same revenue as the partner programs have changed.

The common topic I heard is that the future of LSP as it is today is uncertain, if the new Microsoft RFPs and expectations changes will look for global LSPs then there was not much need for IT services afterall, and the Cloud has broken the boundaries between LSPs and the rest of partners in order to fulfill licensing needs specially in the shift to subscription licenses.

Interesting times!!!… for the LSP community