Written by Joe Poh – Doctoral candidate at UOW Malaysia KDU
Published on 6 November 2020
What is Software Monetization?
According to Thales Sentinel, “Software Monetization” is a process where companies can create more revenue opportunities by offering flexible business models, capture new revenue opportunities, minimize revenue leaks, improve operational efficiency of the supply chain, and improve customer satisfaction. Revenera defined it as “the continuous process utilized by software suppliers to extract maximum value from their product and services while protecting their applications and their Intellectual Property (IP).” Another major vendor in the market, Wibu, defined Software Monetization as “the capability to effectively maximize your software revenue by meeting market demands.”
An internal survey by Thales Sentinel provided by its business value team – with a sample of 50 customers – showed that 75% of their customers since 2018 had the intention to use Thales Sentinel’s product because of the goal to generate more revenue. Meanwhile, the remaining 15% of the customers had the goal of improving operation efficiency, and 10% to increase customer satisfaction.
Our observation stems from the three dominant market leaders with a combined market share of above 95%. The key element associated with Software Monetization is the process to continuously generate higher revenue with the agility to provide different business models for different market segment. Agility is referring to pricing or packaging of the designated product or services. Since 2006, Ferrante explained that price packing models include: Server based – referred to pricing based on number of professor available of the server; Network based – priced base on eligible distributed users connect to a centralized server; Subscription based – price based on an agreed time frame; and Utility based – customer is charged based on pay-per-use basis. Today, software and services are “Licensed to use” instead of conventional buying or selling a product. The customer does not actually own the product; it is provided by agreeing to the right to use the software and service for an agreed fee.
- Ferrante, D. (2006). Software Licensing Models: What’s Out There? IT Professional, Volume (8-7), 24-29. DOI: 10.1109/MITP.2006.147. https://ieeexplore.ieee.org/document/4042601
- Frost & Sullivan (2019) The Rise of Software-Defined Systems and IOT Applications Highlight the Need for not just better Software Licence Management but also Software Monetization.Global Software Licensing and Monetization Market, Forecast to 2025,
- Ghosh, A., Nashaat, M., & Miller, J. (2019).The current state of software license renewals in the I.T. industry. Information and Software Technology, Volume (108), 139-152. https://Doi.org/10.1016/j.infsof.2019.01.001
- Revenera (2020). What is Software Monetization? https://www.revenera.com/blog/what-is-software-monetization/
- Thales Sentinel (2020). License, Deliver, Protect Your Software to Grow your business. https://cpl.thalesgroup.com/software-monetization
- Wibu (2020). Software Monetization. https://www.wibu.com/solutions/software-monetization.html