Here is full article on electronic volume licensing...
(Emphasis and italics are mine)
Pump Up The Volume
By John Moore, Sm@rt Reseller
Electronic Volume licensing, that is. New programs
promise a faster, more efficient way to deliver
licenses, but standardization is needed.
For sheer tedium, it's tough to beat traditional volume
licensing. In a typical scenario, a customer asks a reseller to quote a price
for x number of seats. The reseller then calls a distributor's licensing
department for a price and then goes back to the customer. The customer
may ask the reseller about other volume pricing levels, which prompts
another trip to the distributor. Once the customer settles on price, back and
forth you go. The publisher issues a license, which moves down the chain of
commerce from distributor to reseller to customer. In the meantime, two to
six weeks have passed since the customer's original inquiry.
Emerging electronic licensing programs, however, aim to tame those unruly
transactions. New online configurators let customers examine various
licensing options, without resorting to back-and-forth price negotiations.
License generators, which create digital certificates, and electronic links
among channel partners streamline the license delivery process, saving time
and money. With Internet-age technology, a weeks-long process can be
reduced to a matter of minutes.
This efficiency boost means lower operating costs and a faster sales cycle.
As a result, the profitability of software sales can increase 40 to 50 percent,
according to some estimates.
What's more, electronic licensing "provides a real competitive advantage for
resellers that adopt quickly," says David Rubin, president of BITSource Inc.,
an electronic software distribution (ESD) and electronic licensing technology
vendor.
For the reseller, increased efficiency is perhaps the most obvious benefit of
electronic licensing, but hardly the only one. The electronic method lets
resellers offer their customers a wealth of purchasing options and extend
volume licensing to small businesses, which may not have qualified for
traditional volume programs.
Electronic licensing also could help resellers advance ESD in the corporate
market. While large enterprises seek volume purchasing, ESD primarily has
been geared toward single-license sales. But electronic delivery packaged
with electronic volume licensing could open corporate doors.
Electronic licensing's prospects, however, are not tied exclusively to ESD.
Customers that have purchased software through conventional means may
opt to update their licenses electronically. This could represent a huge
market for resellers, because 95 percent of all license transactions are
amendments to existing licenses, executives say. Richard Mirabella, vice
president of marketing at Globetrotter Software Inc., an electronic licensing
specialist, projects that more than half of all business-to-business software
purchases will be licensed electronically within five years.
But there's some heavy lifting to be done before the promise of electronic
volume licensing can be fully realized. For one, software publishers have
different volume licensing programs, and translating those programs into
electronic delivery has proven difficult. "There are no standards," says Susan
Thomas, senior manager of worldwide channel development for Symantec
Corp.
"Electronic licensing is really in its infancy," adds Draper Jaffray, vice
president of business development at Digital River Inc., an ESD vendor.
Early Entrants
Nevertheless, a handful of companies are forging ahead with electronic
volume licensing. BITSource, for one, claims to have facilitated the first
Web-based volume license transaction involving a major publisher. Last
November, Computize Inc., a Houston-based VAR, used BITSource's
SmartShelf ESD system to deliver a 300-seat license of Symantec WinFax
Pro to a $500 million software developer.
SmartShelf's electronic volume licensing technology--also known as
SmartVLP--includes a license configurator, which lets the customer browse
various purchasing options; a license generator, which produces a digital
certificate on behalf of the publisher; and an asset management component,
which tracks license information.
BITSource markets SmartShelf to resellers through such distributors as
Merisel Inc., Pinacor Inc., and Tech Data Corp., among others. SmartShelf is
offered on a subscription basis and costs about $1,000 a year per reseller
sales person. BITSource, however, reduces that fee based on the amount of
volume licensing business the reseller generates.
Resellers also can tap BITSource's electronic licensing technology without
having to purchase SmartShelf. A reseller can call BITSource with an order
and BITSource will handle the transaction for free on the reseller's behalf.
Resellers eventually will be able to access a new SmartVLP.com service via
the Web in about 60 days.
BITSource currently is authorized to generate volume licenses for Symantec,
Qualcomm Inc., Viasoft Inc., and Hummingbird Communications Ltd.
Globetrotter Software Inc. is also active in electronic licensing. The company
has been focusing for the most part on direct software publishers, but has
struck an alliance with Preview Systems Inc., an ESD vendor targeting the
channel. The companies plan to integrate Globetrotter's license generator
with Preview's Ziplock ESD server. This integration--scheduled for completion
by the fourth quarter--will allow a Globetrotter-generated license to flow
through the channel via Preview's Ziplock.
Preview's ESD customers have been asking for volume licensing, according
to the company. The Globetrotter deal "brings to the channel the ability to
offer all the sophistication of electronic licensing to their customers," says
David Roman, vice president of marketing at Preview.
To take advantage of the Globetrotter/Preview technology, a reseller must
purchase Preview's $3,500 ZipLock ESD Gateway. This product links the
reseller's Web site to publishers and distributors using Ziplock ESD Server.
ZipLock ESD Gateway supports any e-commerce server through published
application programming interfaces. But Preview provides "turnkey"
integration between the gateway product and two specific e-commerce
servers: Microsoft Site Server (Commerce Edition 3.0) and Open Market
Transact 4.
At Digital River, the company's electronic volume licensing effort started when
art departments and newspapers wanted to purchase multiple copies of fonts
and images. The company, which provides the ESD engine for a network of
resellers, now lets customers set up online corporate accounts for volume
purchases. Digital River resellers offer "dynamic pricing pages" that let
customers key in the number of seats they need and obtain pricing
information, says Jaffray.
Publisher's Efforts
Although specialists are willing to handle aspects of electronic licensing,
some publishers plan to manage the process on their own.
Computer Associates International Inc., for one, is looking to make it easier
for resellers to sell its workgroup products in volume. CA has launched a
license-generating server and offers resellers a license configuration tool for
organizing deals with customers, says Yogesh Gupta, CA's vice president of
product strategy. Last month, CA hosted more than 400 resellers for training,
which included briefings on the licensing program.
Microsoft is also expected to generate its own electronic volume licensing
program this fall. Microsoft officials could not be reached for comment. In
addition to Microsoft, Lotus Development Corp. is aggressively pursuing
electronic volume licensing, sources say.
But for many publishers, electronic volume licensing is a puzzle because of
conflicting standards. With this in mind, the Software Publishers Association
and the Computing Technology Industry Association are studying ways to
cultivate universal electronic licensing standards. An SPA whitepaper is due
next month.
Industry observers believe electronic licensing will surge once standards are
established in a year or so. That lag could give resellers enough time to get a
head start in a lucrative business.
ELECTRONIC LICENSING: Where Will The Business Be?
1. AMENDING LICENSES: "Most transactions are buying more licenses of
what you already have," says Richard Mirabella, vice president of marketing
at Globetrotter Software Inc. Mirabella and other executives think that within a
few years most license upgrades will be handled electronically. What's more,
the upgrade market will drive electronic volume licensing past electronic
software delivery in sales numbers, predicts David Rubin, president of
BITSource Inc.
2. CORPORATE ESD: To date, ESD has been largely a single-license
business with predictably low sales volumes. Getting ESD linked with
electronic volume licensing may spark greater interest in ESD as a corporate
software strategy. Last year, BITSource and Computize Inc., a
Houston-based reseller, collaborated on the electronic sale of a $24,000
volume software license to Synopsys, a $500 million software developer. The
purchase involved 300 seats of Symantec Corp.'s WinFax Pro. Since that
sale, Symantec has received a couple of volume licensing deals a month
through BITSource. And Computize has installed BITSource's electronic
licensing technology in 10 sales offices.
3. SMALL BUSINESS SALES: Internet technology has streamlined volume
licensing programs to the point where small businesses can take advantage
of volume programs. In the past, the communications overhead of traditional
programs--negotiating deals and passing paper from publisher to distributor to
reseller to customer--made programs too complicated and costly to offer to
companies with fewer than 20 seats. Looking ahead, Todd Frostad, director
of business development at Digital River Inc., says the small business
potential is "absolutely huge." That could spell trouble for retail software
stores.
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