New software delivery models mean a change to customer relationships

The move to new business models for software, such as subscription services and SaaS, will require suppliers to better understand their customer relationships and offer improved usage data, says a new report.

The study from Flexera suggests that with subscription and usage-based models comes a demand for consistent, persistent level of customer engagement, supported through compliance and transparency.

Suppliers are choosing models that require more engagement, with 31 percent of respondents currently using subscriptions for more than half of their licensing and almost half (48 percent) planning to increase subscription licenses in the next 24 months. 25 percent currently use usage for more than half of their licensing and 43 percent expect to increase usage models in next 24 months.

While some customers (20 percent) already have full transparency on their usage, an even larger group (48 percent) is asking for better utilization data. Customers are looking for clarity into how much usage is allowed and how much they have used.

"It is clear: software suppliers that place their customers front and center will be tomorrow's winners. In today's evolving software economy, vendors can't hide behind a single perpetual transaction or interaction with a customer. With flexible subscription and usage-based models, supplier success depends on customer growth, which leads to renewal and advocacy," says Nicole Segerer, vice president of global enablement at Flexera. "Even with evolving complexities, most suppliers realize that customer relationships; open and transparent communication; and continuous delivery of real, tangible value in products drive business success."

Suppliers need to clearly define terms of use, such as number of users, volume of service, sign-ons, etc. Though overuse and non-compliance have long been possible through other monetization models, the models growing in popularity present new challenges. Audits will be added by 19 percent of respondents, which may be the result of limited visibility into usage and, for a small percentage of companies, might be due to a significant loss of revenue due to overuse. By contrast, five percent of respondents are removing audits.

You can read more in the full report which is available from the Flexera site.

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