Software Licensing Metrics – The Value of Simplicity

At the heart of an effective software metric system is its inherent simplicity and the ease of explanation granted to the vendor. The key to selling a product well is the first impression it makes on the customer. Although every salesperson will always say when they are talking to a potential customer they want to keep as far away from discussion of the price as possible; it is often the deciding factor in the decision by a business or individual about whether or not to purchase a piece of software or a service.

When selling software that comes with a recurring fee, a contemporary example being a cloud operations service whereby a company provides access to software and storage space on remote servers for a monthly/quarterly/annual fee. This form of software typically falls under the classification of ‘Platform as a Service’ (PaaS), ‘Software as a Service’ (SaaS) and ‘Infrastructure as a Service’ (IaaS). It is for services such as this, a market which is growing exponentially but which is also seeing a significant increase in market competition. It is a relatively easy service to set-up and operate which means that pricing is highly competitive and the simplicity of understanding for the customer is paramount.

The popularity of cloud operating systems makes them an essential part of any software vendor’s arsenal. Companies are increasingly shifting to a virtual infrastructure and the value of IaaS and PaaS contracts in now higher than ever before.

There are two things which a business will be looking for in a Cloud Service solution: maximum flexibility and best value. The license metric is intrinsic to both of these factors. The amount which a vendor charges the end-user for a recurring service (i.e. IaaS) depends directly upon their usage. Whilst some companies do offer a specific service for a set amount (i.e. 15GB for $2.99 a month) for those companies who use a Cloud Service for more than just storage, where it provides their entire network infrastructure, a set fee is not best suited.

It would be more beneficial to both the vendor and the end-user to determine a means of measuring the usage. This is where metrics can become complicated, and where it is most important for the vendor to keep the pricing as simple as possible. The varied usage which Infrastructure as a Service can often lead to an overly complex metric system where there are so many terms of measurement that it makes it almost impossible for the customer to track their usage and makes the cost calculation process longer than necessary.

The best method of execution for the software metric in these circumstances is to assess which will be the most beneficial to both parties. Where the service provided is a network infrastructure a potential example of an effective metric would be one which tracks the CPU usage of the Cloud Servers by the customer. This means that as the usage fluctuates, so will the price. It is relatively easy to measure and manageable.

Always remember, look for the simplest and most mutually efficient software license metric.

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