As director of global marketing and enablement at Flexera, Nicole Segerer keeps her finger on software monetization trends. Here, she shares insight about how software suppliers are using usage management and insights to create better, more profitable software.
- What are usage management and insights?
A. Software vendors collect usage data to gain visibility into how end users are using software. Usage data answers questions such as “is usage increasing or decreasing?” “What features are being used the most?” “What versions of a software are being used the most?” Usage data can also be collected from intelligent devices.
Think about counting the number of times a device is being used or how often a certain transaction is being done. Based on this data, software companies and device manufacturers derive data to further advance their business model.
Usage data is becoming table stakes for software vendors. According to the recent Flexera Monetization Monitor: Usage Management & Insights report, 91 percent of all respondents already collect or plan to collect usage data in the next 24 months.
- What are a few concrete examples of how collecting this data can benefit software suppliers?
A. Usage data is a must-have for software suppliers that want to move to consumption-based business models. Understanding which features are used the most helps product teams price them accordingly, make better roadmap decisions, and identify usage patterns that can be used to improve the customer experience. In addition, they can also find usage patterns that enable better understanding of their customer’s use cases or to find unexpected behaviour such as intentional or unintentional overuse.
- Don’t companies do this already?
A. Even though 91 percent of companies already collect usage data or are planning to do it eventually, only 35 percent do it in a fully automated way. Most vendors still use inefficient manual processes (taking up valuable engineering resources) or are still in the planning stages.
- What’s the value of collecting this info?
A. Usage data allows software suppliers to move to new business models including consumption-based models. Consumption models are seen as fair by end users because they pay only for what they actually use.
There’s also considerable value in monitoring individual usage trends. Customers who use the product extensively are realizing strong value and more likely to be long-term customers. Declining usage is a red flag that may indicate an unsatisfied customer. Understanding these trends helps suppliers react quickly to retain customers.
- What are the challenges?
A. Manual processes or basic solutions often don’t allow for the automated usage tracking. Modern software monetization platforms enable automated collection and analysis of data and an automated way to share the data with end customers. Suppliers and customers that share the same data build a relationship of trust.
Companies also struggle to define the right metrics for their business. Some metrics may seem desirable but are difficult to measure, while others may run into customer acceptance issues. The good news is, once a company establishes the underlying capability to collect usage date they can experiment with metrics knowing that when they find the right ones they can execute that model immediately.
Companies that want to implement consumption-based monetization models often see their customers struggling because consumption-based pricing models are harder to budget for. This can be overcome by hybrid models where the flat-fee includes a certain use and the end customer only gets charged for additional use, often called pay-for-overage or pay-for-burst.
- What are the downsides of not actively evaluating usage data?
A. In a very real sense, you’re flying blind without usage data. Your product teams and executives are forced to rely on anecdotal information rather than real-world data when making decisions. It’s difficult to set product direction and justify development investments if you don’t know what’s being used.
In our recent survey, 33 percent found that the biggest hurdle for aligning price with customer value is insufficient insights into usage data. With no insight into usage data, suppliers can’t develop consumption-based models that better align price with value.
- Is usage data going to be tracked more in the future?
A. Absolutely. We live in a data-driven world and software usage is no exception. Regardless of their monetization model, software suppliers will want to know as accurately as possible how their products are being used. Suppliers who don’t develop usage data collection capabilities run the risk of falling behind their competitors. With the software monetization solutions available today there’s no reason for suppliers to operate in the dark.
Nicole Segerer, Director of Global Marketing and Enablement at Flexera
