When your organization begins developing a strategy for software monetization, there are several factors to consider. While offering a quality product that customers want to use and flexible licensing terms are important, perhaps no other factor is as important as usage monitoring. Keeping track of who is using the software — and how — allows you to not only ensure that your product is being used appropriately, but it also allows you to make strategic and effective developments and improvements to future products.

Prevent Unauthorized Usage

The whole point of embedded software licensing is to protect your product from unauthorized or inappropriate usage. Software licensing in this day and age is absolutely essential. To make the most of your licensing process, a monitoring system should be implemented as well.

In addition to preventing users from accessing software or features that they have not paid for, usage monitoring allows you to gain the maximum value from each customer. If you know what your customers are using, you can bill them more appropriately; this feature is appealing to your customers as well as your accounts receivable department. When a customer’s exact usage statistics are tracked, they only pay for what they use, and avoid paying for unnecessary features or access. It also helps prevent customers from inadvertently using more licenses than they paid for and features that they didn’t, maintaining your bottom line and the integrity of your product.

Develop Appropriate Features

The fact that usage monitoring allows you to know exactly what your customers are using holds benefits beyond appropriate billing. By tracking the features that are used most often, you can develop future product strategies that allow you to give your customers exactly what they want and need. Instead of offering a “one size fits all” product loaded with capabilities that your customers neither want nor need, you may be driving potential business to a competitor that offers more flexible and affordable options.

Instead, thanks to the data you gain from usage monitoring, you can develop a baseline product that includes the most popular features, and offer additional capabilities at a premium. This strategic approach allows you to maximize your investment, attract new customers and gain more value from those customers who are willing to pay for enhanced features.

Plan for the Future

Software usage monitoring allows software developers to effectively plan future investments. Knowing how the features of a particular program are being used allows developers to determine where to invest — for example, if users aren’t using a particular feature of the software, developers can investigate further to determine whether the feature is simply unnecessary or if a flaw in the design or functionality of that piece is causing the lack of use. This allows for planning of developments and reallocation of investments from unwanted features into improving other features or adding functionality.

How Usage Monitoring Works

Software usage monitoring takes place at the licensing level. Embedded within the software license, the usage monitor tracks the number of activations, feature usage (including time spent and processes completed) and demographic information about the user (as provided by the user) and creates reports for both you and the customer. A usage monitoring feature can also notify customers when their licenses are close to expiring, allowing them to seamlessly renew their licenses and retain functionality while you retain a customer.

Ideally, usage monitoring creates reports that can be used by both the software developer and the customer. Customers can review usage reports to identify potential waste (licenses that are not being used), productivity issues (inappropriate use or problems with the software), opportunities for training and education and areas where consolidation or reallocation may be necessary. This type of reporting creates added value for customers who are looking to maximize their investments and productivity.

Developing an effective software monetization strategy involves paying close attention to a number of factors. While some might argue that product quality is the most important step to an effective strategy, usage monitoring is possibly the most effective means to creating long-term plans and maximizing your investments. Knowing who is using your product when and how allows you to work to your strengths, minimize your weaknesses and identify new markets and opportunities within an increasingly competitive marketplace.

About the Author: Cheryl McDougall covers software monetization and licensing for several tech blogs and websites. She holds a master’s degree in computer science and is certified in Internet Security.