The Premier Software Usage Analysis and Reporting Toolset Pay-Per-Use : Metering Software Usage...

The Premier Software Usage Analysisand Reporting Toolset

Pay-Per-Use : Metering Software UsageToday’s Licensing Alternative

Your partner in Software Asset Management

Motivation

Today's software customers need flexible options for access to technology…

… even more so during the current economic crisis!


Motivation (cont.)

• for users– balancing productivity and efficiency

– long term needs are not always known when making initial purchases

– mid-year requirements can frequently only be satisfied with operating budgets

– in 2009, capital budgets have been greatly reduced or eliminated

• for vendors– competition requires licensing innovation to

enhance customer relationships and increase market share

– users’ needs are vendors’ opportunities

Cap Ex Op Ex

January

Cap Ex Op Ex

July


Benefits

For the Customer• improved productivity by reduction

or elimination of denials• ability to assess actual usage

requirements without making significant upfront purchases

• ability to access software with operating budgets instead of capital budgets

For the Vendor• enhanced relationship with customer• short term rental revenue• increased software usage, ultimately

leading to increased perpetual and longer term license sales

Pay-Per-Use (PPU) licensing provides significant benefits to all parties


Fundamentals of PPU

• vendors provide non-owned copies of software to users

• use of all software (owned and rented) is recorded in usage logfiles

• once per billing cycle the logfile is sent to the vendor for analysis

• an invoice is prepared based on actual usage of non-owned software

License ManagerLogfile

License Manager

License Control File


Fundamentals of PPU (cont.)

• technology consumers are charged for the amount of time they used non-owned copies of software

• on site availability of rented software ensures no lag between detection of need and use of software

Standard Concurrent Use Chart

Owned License Limit

Times of Non-owned License Use


Technical Considerations – Logfile Existence

• is logging turned on?

– ensure proper customer site configuration

• overwriting or deletion of logfiles

– overwrite or append on restart

– encourage proper file management policies


Technical Considerations – Logfile Integrity

• ASCII versus binary

– ASCII can be edited

– binary is secure - but is it available, and at a reasonable cost?

– basic ASCII limits customer base

– ASCII can be verified by using security digests (and thereby extending the customer base)

• completeness of data

– license sharing

– detailed session matching


Technical Considerations – Logfile Access

• automated or manual

– firewall and “phone-home” issues

• privacy concerns

– “anonymizer” may be required

• multiple vendors’ data in a single file

– “extractor” may be required


Business Considerations – Rental Mode Decision #1

• basic time units for rentals(seconds, minutes, hours, days, weeks, months, years)



• elapsed time or calendar periods– is a day midnight-to-midnight or is it an arbitrary 24 hour period from the start of

first rental

Is this a 1 day rental,

or 2?

Time

Mon Tues Wed



• single period or multiple period rentals– typically, smaller time units are single period and longer time periods are multiple

period

Is this a 1 unit rental,

or 2?



• simple or combination rental modes– rate capping (i.e. hourly_capped_monthly)– volume discounting

$

Time

Rental total climbswith usage

Until it hits the cap

It then resetsat the next period



• minimum session length– ensures that license checkouts for which no business value could be realized are

ignored

Should these sessions be considered?

Or not



• minimum overlap period– minimum period of time for a rental, shorter periods are forgiven

Should there be a chargefor this period?

Or not



• pricing– typically defined as a percentage of either perpetual license or annual license fees– optional components

• access fee• billing period minimum

– set pricing to create the desired win:win scenario• provide reasonable cost access for minor use on-demand• price such that high use encourages perpetual license purchase

(or pre-paid rental options)



• applying rentals to future purchases

– what percentage, if any, of rentals can be applied as a discount to perpetual license purchases


Terms in a PPU Agreement - Summary

• period and rate– is the software rented by the second, hour, day, week, month or year– what is the base rate per unit– is the rate capped to an amount at which point the rental period changes– is there a minimum rental fee per billing cycle regardless of use

• transfer of logfile by customer to vendor– how soon after billing period ends must file be sent– how is a lost or corrupted file dealt with– is there a penalty for late transfer of the file

• other terms– can a portion of the rental fees be applied to perpetual license purchases– minimum usage session length (shorter sessions are ignored)– minimum rental period length (shorter periods are ignored)


License Tracker Support for PPU

• License Tracker processes the usage logfiles generated by license managers

• the financial analytics used for PPU support are enabled by License Tracker’s support files

– license model– budget model– user model

• License Tracker does all rental cost calculations

– facilitating invoicing for vendors– enabling cost monitoring for users

License Servers

Logfiles

LicenseModel

BudgetModel

SessionDatabase

UserModel


The License Model : Defining PPU Financial Terms

• the License Model contains the information that defines the financial terms of the PPU arrangement, including

– # of owned copies– purchase cost per copy– maintenance cost per copy

(used in determining total cost to the customer for using the software in each period)– rental mode

(base rental period and capped rental period if any)– cost per period– minimum session length– minimum rental period length (to be added in ver 3.3)


Currently Supported Rental Modes

• multiple period modes– ANNUAL : if use of a metered license occurs then it is deemed to rented for the

entire calendar year and is then available for other rental periods– MONTHLY : if use of a metered license occurs then it is deemed to rented for the

entire calendar month and is then available for other rental periods

• single period modes– HOURLY : each rental period is rounded up to the next full hour and charged– SECONDS : each rental period is rounded to the next full second and charged

• capped modes– HR_CAP_MON : each rental period is rounded up to the next full hour; charges

for each rental license are summed and capped at the monthly rate– SEC_CAP_MON : each rental period is rounded up to the next full second;

charges for each rental license are summed and capped at the monthly rate


Planned Rental Modes

• version 3.3– SEC_MIN_HOUR : rental periods are rounded up to the next full second and

charged, minimum rental for any period is 1 hour


• the Budget Model lets users specify their budgeted rental expenditures on a monthly basis

• PPU Summary chart provides a breakdown of monthly and cumulative actual costs, allowing a comparison to budget

The Budget Model : Pay-Per-Use Cost Monitoring


The User Model : Revenue / Cost Sharing

• the User Model lets users associate various business grouping with the userIDs as found in the logfiles

• ISVs can require customers provide them with a minimal User Model containing userID and Location

– this can then be used to determine revenue sharing between offices for a customer globally accessed license server

• the same mechanism, the User Model, can be used by enterprise customers to perform cost splitting

– the internal User Model would be more extensive including contact information and potentially multiple business groupings for each userID


Final Thoughts

• pay-per-use can be used effectively for many reasons– providing users with extra licenses for peak demand periods– providing SMBs and consultants with occasional access to expensive tools– providing technology access through operating budgets when capitals budgets

have either been reduced, eliminated or used up– determining user needs for a new technology

• pay-per-use terms and conditions can be extremely imaginative, but– do not make them overly complicated or they will be rejected– ensure terms can be readily monitored and calculated by available tools or

invoice calculation costs may exceed PPU revenue

• ensure customers have access to tools for monitoring PPU costs on an ongoing basis to ensure there is not a “surprise” bill at invoicing time

• pay-per-use can and should result in a win:win situation for ISVs and their customers

“You can only optimize -what you understand…

…and you can only understand -what you track!”

www.licensetracker.ca

Date post:	16-Dec-2015
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The Premier Software Usage Analysis and Reporting Toolset Pay-Per-Use : Metering Software Usage...

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