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How Entitlement Management Ensures Proper Royalty Payments in Software Licensing

September 13, 2013

The transition to an always-on environment, where we have access to the latest technologies regardless of our location, has been well received by the busy consumer. For the software company that relies on software licensing to drive revenue, the adoption of the Software as a Service (SaaS (News - Alert)) platform changed the playing field. Now, entitlement management must be deployed to ensure royalty payments are honored.

A recent Flexera Software blog explained the process, as Vikram Koka, Vice President of Engineering for Producer Solutions shared the important role software licensing plays in intelligent devices. This technology ensures proper royalty payments for device manufacturers on software components in the transition from pure hardware providers to solution providers.

A number of these companies are leveraging embedded software to achieve differentiation and a competitive advantage and there is a full range of software licensing models. Some are using high trust post-pay models, lower trust pre-paid models and everything in between. Regardless of the method, all models must include the right licensing to ensure accurate royalty reporting.

Traditionally speaking, according to Koka, manufacturers would ship physical components, like boards or scanning equipment, which were built into end business or retail systems. Through this method, they could simply track the unit number shipped and track all components back to their manufacturers. These companies would then be compensated appropriately for the devices or components shipped.

In today’s environment, components are no longer components. The level of trust in relationships must increase, which can be a challenge for all parties. At the same time, the manufacturers can’t always control where the components are used, how they are used and especially how they are tracked. Those companies concerned about the value of their brand will pay attention to the proper royalties and entitlement and turn to companies like Flexera for help.

With a focus on entitlement management, Flexera has the core elements in place to track royalty payments both in the post-paid and pre-paid models, helping to build a deeper level of trust between the parties. By offering support of all models or a blended environment, Flexera can deliver value on both ends and serve as an important business partner for future market expansions.

Edited by Blaise McNamee
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