More and more of the things we use and touch in the world are being run with software. Many traditional hardware vendors now consider software to be their competitive differentiator and have transformed themselves into companies where software is now a core competence and a key pillar of the business.

Perpetual pricing has dominated much of the software space in the past and there is a clear shift towards models that allow the customer to consume software value in smaller slices: subscription and usage-based license models. Subscription-based pricing is increasingly demanded both by customers and CFOs of software companies. Usage-based pricing is the next frontier, as people want to pay only for what they consume. Hardware vendors are striving to deliver more value through software and are expanding from standalone, perpetual licenses to subscription, concurrent user, named user and usage-based license models.

One of the largest cost areas in the licensing domain is in supporting manual license key generation. The lack of automated systems results in costly headcount, slow delivery times and a poor customer experience.

Most software companies have at least one license enforcement technology in their products resulting in the customer needing license key in order to unlock the software. As companies grow, they tend to acquire multiple types of licensing technologies requiring varying tools and business processes.

As companies grow, so does the need to have a well-defined set of software licensing policies with the goal of standardizing licensing implementation across your product line and delivering a consistent and repeatable user experience.

Many software products have embedded technology designed to help the end customer stay compliant. These technologies are commonly in the form of license keys that unlock the product and monitoring software that tracks usage.

It is common for vendors to sell and deliver products and services through a network of channel partners that could include distributors, VARs and retailers. The channel can pose significant challenges to vendors who use license keys to ensure compliance. Most channel partners need a clean and easy way to move software entitlements through the fulfillment chain and vendors want insight into the end-customer usage of the licenses.

A good customer experience usually involves giving the customer instant access to download the software to which they are entitled. This includes downloading software associated with new products as well as software updates to products already deployed.

With the trend in the marketplace towards consumption-based license models like pay-per-use, vendors need to be able to bill customers for their software usage. It is common for companies without automated usage billing capabilities leverage third party cloud billing solutions like Aria Systems.

A mature licensing system needs to be able to support a seamless customer experience when your customer renews their maintenance contracts or subscriptions. The updated renewal information factors into allowing the customer to get access to updated software and license keys.

Giving your customers and channel partners online access to viewing entitlements, downloading software, activating and managing their software licenses can greatly increase customer satisfaction while reducing operating expense.

One of the most powerful features of a license management system is the information you have at your fingertips. Reporting from the entitlement and licensing system can give insight about how your products are deployed and which features are used most. Your customers can benefit from getting license deployment and usage information on demand.