We wanted to know how our CodeMeter protection and licensing solution impacts the business of our clients. To answer that question, we met four selected clients for detailed interviews to compare the costs and advantages and get a meaningfully complete analysis of their ROI.
Software piracy, inefficient licensing models, the need to protect one’s intellectual property, and the wish for more flexible and innovative usage and pricing models were named as key challenges for software businesses.
With powerful encryption, special protection hardware, and anti-cracking techniques, CodeMeter offers reliable protection for intellectual property and ensures the security of software licenses. Included on board: Granular and smart controls over licensing, integrity protection during runtime, and secure update mechanisms.
The protection technology can be built into software at virtually any level to achieve the right degree of security. Back office integration allows our clients to automate their processes, and everything is flexible and scalable to perfectly blend in with their circumstances and requirements.
Our method for calculating ROI
A precise calculation of the Return on Investment (ROI) is essential when one wants to understand the real added value of modern licensing for software developers and vendors. The fundamental figures and insights gleaned from our interviews with our clients form the basis for these calculations.
We started by first adding up the initial investment needed to put in place the specific licensing system. That includes the cost of the protection software and the effort to program and integrate it into an existing process landscape.
During routine operations, there are additional costs for providing the CodeMeter license containers for each unit of software sold.
On the plus side, we find revenue increased by the reduction of illegal copies and by the effective protection of intellectual property, which helps sell more legitimate licenses. There is also the option of offering flexible pricing models, matched more to the end user’s needs. Novel pricing models can generate entire new revenue streams.
After the introductory phase, the ability to automatically roll out licenses can help save running costs. The integration of the licensing technology can also reduce development costs, because CodeMeter offers a streamlined, uniform solution, which keeps admin efforts consistent and efficient and will eventually bring down service and support costs.
A look at real-life use cases
We analyzed every one of the four clients individually. One of the two smaller customers sells a specialized simulation software while the other wants to protect their intellectual property in the form of 3D printing data. In the former case, licensing was approached by way of computerbound licenses (CmActLicenses), while the second company’s 3D data was protected with hardware secure elements (CmDongles). The third use case is a medium-sized mechanical engineering business who wanted to monetize their machine operating software, formerly simply part of the on-board package of their machine sales, in a modular business model. They chose a combination of software, hardware and cloud licenses. The largest client we interviewed sells a popular ERP software.
Costs and gains
The companies we looked at reported the startup costs shown in table 1 to get their systems up and running.
Table 2 covers all operation costs of the licensing system. Every sold and licensed piece of software needs a license container. Depending on the chosen model, these fees could either be calculated as a flat sum, chosen to mirror the client’s revenue with the software, or calculated precisely as unit costs per license container bought. Customers who want to automate license creation and deployment also order CodeMeter License Central and License Portal and sometimes need support assistance.
By introducing the CodeMeter licensing technology, the companies had a chance to markedly increase their revenue, especially by significantly reducing the number of illegal copies – approximately 15% in several markets. This is shown in table 3.
Table 4 shows how the CodeMeter licensing solution also reduced costs by a considerable margin by integrating everything perfectly with existing internal processes. The complete automation of the license creation and provisioning part led to a massive reduction in operating costs.
ROI calculation and analysis
For our next step in trying to understand the ROI, we looked at the results from the first three years after CodeMeter was introduced and compared them to the running costs. This produced the so-called net margin increase that comes from operating a CodeMeter licensing solution.
Since no one can really predict the future, we added a blanket risk adjustment factor of 20% to the net margin increase. To calculate the present value, we used an internal rate of return of 10%.
When we compare the gains against the costs, we can find a clearly positive ROI in all four cases.
Finally, our calculated ROI has revealed that CodeMeter was an extremely good investment in all four instances. The initial costs paid off within a year and significantly increased revenue in the long run, making CodeMeter the convincing choice for companies that want to optimize their software licensing and security performance.
Costs and gains over time
These ROI calculations for Wibu-Systems’ software licensing solution are impressive proof of the financial advantage that comes with choosing a professional licensing and protection system. And the added value of such a system lies not just in its ability to monetize software effectively: Companies gain far more, in the form of a stronger competitive advantage and in the form of long-term commercial health and viability.