The Premier Software Usage Analysis and Reporting Toolset Pay-Per-Use : Metering Software Usage Today’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!

Your partner in Software Asset Management 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 ExOp Ex January Cap ExOp Ex July

Your partner in Software Asset Management 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

Your partner in Software Asset Management 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 Manager Logfile License Manager License Control File

Your partner in Software Asset Management 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

Your partner in Software Asset Management 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

Your partner in Software Asset Management 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

Your partner in Software Asset Management 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

Your partner in Software Asset Management Business Considerations – Rental Mode Decision #1 basic time units for rentals (seconds, minutes, hours, days, weeks, months, years)

Your partner in Software Asset Management Business Considerations – Rental Mode Decision #2 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

Your partner in Software Asset Management Business Considerations – Rental Mode Decision #3 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?

Your partner in Software Asset Management Business Considerations – Rental Mode Decision #4 simple or combination rental modes – rate capping (i.e. hourly_capped_monthly) – volume discounting $ Time Rental total climbs with usage Until it hits the cap It then resets at the next period

Your partner in Software Asset Management Business Considerations – Rental Mode Decision #5 minimum session length – ensures that license checkouts for which no business value could be realized are ignored Should these sessions be considered? Or not

Your partner in Software Asset Management Business Considerations – Rental Mode Decision #6 minimum overlap period – minimum period of time for a rental, shorter periods are forgiven Should there be a charge for this period? Or not

Your partner in Software Asset Management Business Considerations – Rental Mode Decision #7 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)

Your partner in Software Asset Management Business Considerations – Rental Mode Decision #8 applying rentals to future purchases – what percentage, if any, of rentals can be applied as a discount to perpetual license purchases

Your partner in Software Asset Management 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)

Your partner in Software Asset Management 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 License Model Budget Model Session Database User Model

Your partner in Software Asset Management 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)

Your partner in Software Asset Management 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

Your partner in Software Asset Management 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

Your partner in Software Asset Management 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

Your partner in Software Asset Management 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

Your partner in Software Asset Management 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!”