Categories: Monetization

Make or buy?

Secure Software Licensing: Build vs. Buy. You have successfully completed development of your new software package and now it’s time to go to market. In order to have a successful product launch you want to make sure you have flexible licensing that meets the market demands. And while having licensing flexibility is great, you also want to make sure it’s secure so that you get paid for every copy in use.

Lastly, you want to make sure that all the new code that was developed (intellectual property) remains protected so that you don’t have your competitors stealing your technology or hackers reselling your software. You go to your development team and they say “We can easily build a licensing platform and you won’t need to invest in a 3rd party solution.” This statement has been heard many times in many organizations. The reality is that the results of “doing it yourself” are usually marginally successful or more likely a brain drain on your developers that leads to high support costs and loss of revenue due to piracy. I hope the rest of this article provides a greater understanding of “the hidden costs of homegrown licensing” and why using the CodeMeter technology will streamline your secure software licensing process and enhance your opportunity for greater profits.

The developers rallying cry: “We can build it!”

Why do software companies like building homegrown licensing? Because building software is what they do! They look at this as just another software development task. Why waste money when you can use your existing engineering resources?! They want to own the system to have complete control, because they think only they can build a licensing system that addresses all their needs. And those cost savings will be truly dramatic! No need to purchase a commercial licensing system with all those ongoing costs. “We know our software code and we know how to protect and license our software titles.” The standard process is something like this: “We can create a serial number generator and each customer will receive an individual serial number for the specific name (company) and it will be protected with a cryptographic hash. And let’s go one step further by binding that serial number to a specific PC. We will get the unique MAC address of the network card and we will store this in the customer specific license file. Now that license will be bound to the specific PC and cannot be installed on other PC’s.” It all seems so good.

The reality: Not as easy as it seems

The scenario above seems flawless at first glance. But what is the reality? First, unless your team is prepared to engage the hacker community for the long term; even a well-designed home grown system will become vulnerable after a short period of time. Second, let us not forget the support costs involved (sales operations and technical support). When looking at Secure Software Licensing you have many components to consider such as License Management, Intellectual Property Protection, Copy Protection, and Flexible Licensing Models. How will you deal with version management, license updates (upgrades and downgrades), and moving licenses from one PC to another? Will you be able to remotely update your customers without the need to “touch” each process? If you are doing software activation how will you bind the license to the PC without causing an unstable license environment (which generates support calls)? Will you be able to meet market demands for license types (perpetual, subscription, rental, trialware, concurrency/network, usage counters, checking out of licenses, etc.). Will your licensing process be streamlined and easily integrated into your ERP and CRM systems? And how will you track all the transactions that take place around your licensing process? 

Lastly and most importantly: 

How do you make sure you get paid for every copy of your software in use? Even though you have a staff of developers that know how to develop software, those resources are not free when building a licensing system. 

Reassigning a developer (or hiring another developer) represents real costs to the company. 

If this developer or developers is not working on the core business which drives revenue then this is a burden to the company’s bottom line. And the developer(s) that are assigned to build and support this homegrown system certainly don’t have the core expertise that you would find from a company like Wibu-Systems. This developer has a myriad of issues to concern himself/herself with such as the items discussed above and others such as platform support (all variations of Windows, MAC, and Linux), backwards compatibility issues, knowledge of encryption, integration points, etc.

A true value: The CodeMeter licensing platform

Wibu-Systems has been doing only one thing for the past 22 years and that is providing the most flexible, reliable, and secure licensing solution to the ISV marketplace. We allow you to focus on what you do best (develop and market your software) while CodeMeter provides the solutions that enable License Management (License Central), automatic protection (AxProtector Encryption), flexible license models, and seamless integration into your business processes. Our goal is to ensure that you get paid for every copy of your software in use and that you can meet the many demands of your customers as it relates to usage of your software. We constantly strive to stay ahead of the “hacker community” with the ongoing enhancement of our protection tools. Our development is driven by customer requirements – we listen to what you want and develop accordingly. The value we provide is that you can start using CodeMeter today and “out of the box” it should meet your needs and going forward it will evolve as the marketplace evolves.

License Central is the license management tool that gives you the capability to organize all your sellable items (features, functions, modules, etc.) in one centralized location and the order process originates from here. License Central is a web service and can be fully integrated into your e-commerce shop, ERP, and CRM systems. When processing an order and creating a license it’s at this point you can determine your binding mechanism.

CodeMeter offers you the flexibility of binding your license to a physical device (CmDongle) or binding to the PC where your software is installed (CmActLicense). If you are looking for the strongest security because you are selling to Asia or Eastern Europe then you might consider CmDongles which offer unparalleled IP Protection and Copy Protection (we utilize a Smart Card Chip with substantial secure memory and fast processing speed, and the AES encryption engine is onboard the device). If you are selling to Western Europe or North America you might instead consider CmActLicense (same features and functionality as our devices) and bind your licenses to the PC where your software is installed. 

Once your customer receives and installs your software (physical delivery or Electronic Software Distribution) they either plug in their CmDongle or go through the activation process for CmActLicense (which will bind the license to that particular PC). The license information that is generated for this particular customer is stored in your database (MySQL which we bundle with License Central, or with the SQL database you already have in place). You now have base knowledge on this license and this customer which enables all future licensing management capabilities (secure license updates, annual maintenance information, etc.).

The true costs

When making the “Build vs. Buy” decision you have to examine the true costs (tangible and intangible):

  • Will it be flexible enough to meet the market demands?
  • Will it be secure?
  • Can I integrate this into my business processes?
  • Will it be backwards compatible and forwards compatible? 
  • Operational costs?
  • Support costs?
  • End User satisfaction?

Secure Software Licensing is all we do and it’s our focus and dedication to our customers that ensures we provide the most flexible, secure, and cost effective offering on the market today. We hope you give us a try!                                 

Marcellus Buchheit 
Co-Founder WIBU-SYSTEMS AG, President and CEO Wibu-Systems USA

As a software developer I know that engineers get excited to develop the next “big thing” whether that’s an exciting new feature or the new release of their product. This makes sense for your next version with new features and functions where you specialize in that market segment. But in the highly specialized world of secure software licensing it makes sense to rely on a company like Wibu-Systems which has focused on this technology for over 20 years. We have an experienced and specialized team of developers whose only goal is to enhance CodeMeter and develop to meet the new market requirements (features, functions, security, new platforms such as Cloud Computing, etc.). From a business perspective it does not make sense to pull a developer(s) off your core business to try to re-invent licensing with a homegrown solution. Will that homegrown development meet your current and future needs? The bottom line: Secure Software Licensing cannot be developed as a side project. Only with a strong partner like Wibu-Systems will you achieve the results required.


KEYnote 22 – Edition Fall 2011

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