Analyst firm Gartner has released a report entitled Emerging Technology Analysis: Software Licensing & Entitlement Management Is the Key to Monetizing the Internet of Things that validates Flexera Software's ongoing advice to the manufacturing industry with regards to benefiting from the Internet of Things (IoT). In essence, simply selling more devices will not result in the massive spike in profits manufacturers are hoping for as they make a play to compete in the Internet of Things.
A downloadable Infographic of the report results can be found here:
https://vanillapr.box.com/s/qz82kdmnsldtplpk4k11The report highlights that in addition to selling more Internet-connected devices, manufacturers will also have to figure out how to make money from the software they develop that flexibly configures their products and powers functionality. They'll also have to leverage software licencing and entitlement management (technology that grants, resolves, enforces, revokes and administers access to entitlements) as the mechanism to capture those additional revenues.
"This report confirms what Flexera Software has been advising its most successful manufacturing customers for years - the software they create to power their intelligent devices has enormous value," said Mathieu Baissac, a software licencing expert on the IoT at Flexera Software. "By unlocking the value of that software through licencing and entitlement management - manufacturers can simultaneously generate significant new value for their customers and higher revenue for the company, all while lowering manufacturing costs."
According to Gartner's report, the key to monetising the IoT is to use licencing to turn on and off product features and capacity in different combinations to create additional value in the intelligent devices themselves and in the software that runs within them. For instance, manufacturers could provide different product tiers - e.g. basic, premium and platinum - using software licencing to unlock the appropriate features - without having to manufacture separate models. They could then quickly and easily upsell customers later by leveraging software-driven control of the product and licencing to make it easy for customers to upgrade to more expensive models.
Manufacturers can also use different licencing models - like metered or pay per use - to create demand from new types of customers or in new markets. For example, a hospital previously unable to afford an expensive MRI machine might be able to acquire one using a pay-per-scan licencing model.
"Once you build software licencing into your business model, the opportunities to flexibly configure your products and offer value added services is virtually infinite. And it doesn't result in an increase in manufacturing costs because you control this all through software licencing and entitlement management," explained Baissac. "That's why Gartner's report detailing the relationship between licencing and profiting from the Internet of Things is so significant. It's the first of its kind to provide a roadmap connecting the vision of the Internet of Things with the monetisation process that manufacturers must adopt to profit from it."
By using licencing and entitlement management to monetise the IoT, manufacturers also open up new hardware- and software-related revenue by making it easier to sell new products and services to existing customers on a regular basis, and upsell them as new product features and software versions are released.
"Licencing and entitlement management is a great way to make it easy for customers to quickly and easily access and pay for the latest and greatest capabilities a manufacturer has to offer," said Baissac. "The Gartner report succinctly lays out the processes and systems manufacturers will need to adopt in order to successfully monetise the Internet of Things and reap the financial rewards that innovating in this area promise, as well as achieving competitive advantage."
