Presentation to the Microsoft UK partner Group outlining the commercial opportunities of transitioning business models to the cloud, the monetization challenge and how smart licensing can help.

1. Microsoft ISV Partners & The
Cloud
Managing & Monetizing the Business Transition

2. Executive Summary
• This presentation is intended for a business and
management audience in the ISV community
• This presentation has particular relevance to Microsoft
Partners and ISVs building applications in .NET
• It looks at:
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the importance of the cloud for ISVs,
what the transition means for them
how they might best harness the cloud for their business
how they can mitigate against the “double edged sword” of a
cloud transition (short term costs / potential revenue lag)
– with strategies for better monetization of their products

3. The Transition to Cloud Computing
What it means for Microsoft ISV Partners

4. The Importance of the Cloud
“....By 2012, 80% of fortune 1000 enterprises will be
using some kind of cloud service, and 20% of
enterprises will own no IT assets...”
“...early adopters are finding serious benefits...cloud
computing is real and warrants your scrutiny as a
new set of platforms for business applications...”
“...the global market for Cloud-based applications
is going to be worth approximately $17billion in
2010 with a projected annual compound growth rate
through to 2013 of 24%...”

5. Microsoft ISV Partners & The Cloud
• Twenty million businesses and over a billion people
already use Microsoft Cloud services
• 90% of Microsoft’s engineering staff are working on
cloud-related projects
• There is a significant services opportunity for ISVs for
every $1 of Microsoft & related cloud software sold
• ISVs can increase their market reach for existing products
& services as well as develop new product & service
offerings around the cloud

6. What is cloud computing?
• Traditionally, organisations have owned and/or managed their own
IT infrastructure
• This presents 2 fundamental problems:
– It’s expensive (to buy, rent, run & maintain hardware & software)
– It’s inflexible (scaling it up or down according to your changing needs)
• Cloud computing changes this model. Organisations no longer
own and/or manage IT. They simply access computing resources
on demand, over the web, from highly optimized data centres
• It’s like moving from having a well in your yard...to having a tap in
your kitchen

7. Benefits of Cloud Computing for the
Enterprise
• Reduces Costs
• Improves Computing Power & Storage
• Increases Automation & Reliability
• Improves Flexibility / Elasticity
• Facilitates Worker Mobility

8. Top 4 Concerns for Enterprises about
the Cloud
• Security
• Privacy
• Reliability
• Operational Control

9. Cloud Computing Models
• Cloud deployment models
– Private cloud – dedicated cloud on a private network
– Public cloud – multi-tenanted model, offers the highest level of
efficiency & shared resources
– Hybrid cloud – combines features of both, some resources are shared,
others are dedicated
• Cloud service models
– IaaS (Infrastructure as a Service) provides computing power & storage
capacity from the cloud
– PaaS (Platform as a Service) provides a platform, or runtime
environment, with which to create & deploy applications
– SaaS (Software as a Service) provides ready-to-go applications that use
a combination of cloud based compute and storage services

10. Microsoft Cloud Strategy – IT as a
Service
Source; Kevin Turner, COO, Microsoft Corp.

11. Microsoft Cloud Strategy – IT as a
Service
Source; Kevin Turner, COO, Microsoft Corp.

12. Why should the ISV be interested in
the cloud?
• Because your customers want to
move to the cloud
• Because it will change the software
business completely. It’s up to you
to determine if the impact on your
business is positive or negative
• Because it opens up numerous and
varied opportunities for developing
your business

13. Transition to the Cloud:
Strategies the ISV can use to harness Cloud Computing
• Move data storage to the cloud. Why?
– Cost Savings
– Reliability
– Data security & Integrity
• Move data processing to the cloud. Why?
– Elasticity; sometimes you just need more horsepower.
– Efficiency in collaborative apps
• Create a SaaS version of your application. Why?
– Drive sales
– New types of customer
– Revenue assurance

14. The Windows Azure Platform
• Microsoft’s flagship cloud platform technology
• Competes with Google App Engine, Amazon Web
Services, Force.com etc.
• Build or buy decision has been made for the ISV,
allowing them to concentrate on their core business
• Azure is a natural evolution path for an ISV moving to
the cloud
• Massively scalable, secure, robust, highly available
• Suck-it-&-see options
• Pay-as-you-go model

15. The Windows Azure Platform
Source: David Gristwood, Microsoft DPE

16. Transition to the Cloud:
Why would you move your application to Azure?
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If your application needs high reliability
– e.g. medical diagnostics or airline ticketing
•
If your application is collaborative
– e.g. scheduling, rostering, gaming
•
If your application needs scale
– e.g. Social networking, e-commerce
•
If your application has peaks and troughs
– E.g. Online ticketing
•
If your application is purpose or event specific
– E.g. Marketing campaigns or mobile apps
Some Source Material: Dave Chappell: Cloud Platforms, A Perspective

17. Transition to the Cloud:
Why would you move your applications to Azure?
• If your application needs external storage
– e.g. An application that archives data
• If your typical customers
– Don’t have their own data centre
– Want to avoid IT spend
• If your application must fail or scale fast
– e.g. Start-ups / large ISVs with high levels of innovation
• If your application has a diverse range of clients
– e.g. Mobile or tablet applications
Some Source Material: Dave Chappell: Cloud Platforms, A Perspective

18. Software Monetization Strategies
Sustaining ISV Revenue in the Transition to the Cloud

19. Typical ISV Stakeholders
What are they looking for?
Business Goals:
Product Management
Finance
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Revenue & profitability
Customer acquisition
Innovation
Cost control
Brand building / mindshare
Sales & Marketing
Engineering

20. The Changing Face of the Software
Business
• The software business is rapidly evolving in
step with changes being felt across the
wider technology landscape
• Mobile computing, the cloud, virtualization
etc. herald new models that redefine how
software is built, sold, distributed,
deployed, consumed & paid for.
• Customers are demanding better value, a
clearer ROI, more flexibility and more
predictability from vendors
• The smart ISV must align with their
customers changing demands and exploit
these new emerging business models

21. Transition to the Cloud:
Potential Commercial Impacts for the ISV
Potential Costs
Potential Benefits
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Operational overhead
Development cost
Services impact
License revenue lag
Customer lock-in
Revenue uplift
Revenue predictability
New business revenue
New market revenue
Reduced cost of
collection
• Upgrades
• Customer relationship

22. Optimal Transition Strategy
Mitigate negatives / Exploit positives
Increased costs
Short term =
Revenue lag
Cloud Transition Strategies:
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Phased approach to the cloud
Hybrid approach to the cloud
Purpose-based funding
Software Monetization

23. Software Monetization
Smart Licensing Strategies
• Monetization is about maximizing the return on your
software development investments
• Smart licensing can drive monetization in 3 ways:
– Preventing Revenue Leakage
• How to maximise the return from your existing customer base?
– Reducing the Cost of Sale
• How to reduce the cost of bringing product to market?
– Driving New Revenue
• How to drive new revenue today from current and new customers?

24. Software Monetization
Preventing Revenue Leakage
• Software Piracy
– 50% of all software globally is not paid for. Pirated software has the
added risk that it can often contain malware
– With good software protection, this problem can be addressed
•
License Compliance
– Without proper tools, compliance is difficult for the ISV to track and for
end-users to achieve. This gives rise to “casual” piracy (like seat sharing
or using software after the license expiration). Addressing casual piracy
can have a dramatic affect on the ISVs revenue
• Reverse Engineering/Tampering
– A software application embodies the IP which the ISV has in the
marketplace, and it’s under constant threat. Protecting that IP against
tampering, theft & reverse engineering is critical to the ISVs success

25. Software Monetization
Reducing the Cost of Sale
• Separating Product Development from Product Configuration
– Today’s ISV needs SKU agility – the ability to package their product in
a multiplicity of ways - in order to satisfy market needs.
– It’s a market-facing task that requires continuous refining as required
– Empowering the marketing & sales teams with the tools to package &
configure, independent of development, means releasing engineering
from a task that is costly and difficult to scale
• Sophisticated License Management
– With the right license management tools – to create, assign, distribute
& maintain entitlements to their software in the market – the ISV can
align their business to achieve a lower cost and a greater ROI
– Empowering the end user to easily manage what they buy, how much
they use, and how its paid for – can reduce the operational burden
while improving overall customer satisfaction

26. Software Monetization
Driving New Revenue
• Exploit New Business Models
– A key challenge is the ability to repurpose your products for new
business models. Applications that can handle new payment models,
new licensing models and new software deployment and distribution
models will be able to reap the rewards
• The Customer of One
– As the industry evolves, customers expect more from their software
and demand more from vendors – more choice of feature & form,
more options on price & payment, more versatility & personalization.
Providing this level of choice gives the ISV a commercial edge
• Usage Analytics & Feedback
– Real time feedback on how your products are being used, when and
for how long, by whom, and which features – gives you the ability to
act on this intelligence and drive revenue accordingly

27. In Summary
• The Cloud is here. The ISV should be planning for this reality now
• Cloud is a better way of doing things, and will benefit the agile ISV
• The transition needs careful management, with risk mitigation a
priority
• Re-purposing your products to take advantage of new & emerging
business models can help drive monetization, exploit new market
opportunities & plug revenue gaps

28. Appendix: About InishTech

29. About InishTech
• Spin out from Microsoft
• Headquarters in Dublin, Ireland
• Mature, stable, proven technology platform
• InishTech helps ISVs to monetize their software products
• Enabling the ISV to easily manage and control how their software
is bought, used and consumed in the market
• Taking your most valuable asset, your IP, and turning it to revenue

30. Over 100 technology companies use
InishTech

31. InishTech Software Potential
• Software Potential is a cloud-based service that allows
you to easily manage the complete software licensing
lifecycle
• Built on the Windows Azure platform
• Designed from the ground up for the .NET ecosystem
• Unique, patented code protection & transformation
mechanisms at its core

32. Software Potential
How does it work?

33. What does Software Potential give the ISV?
Easy Management of the Complete Software Licensing Lifecycle

34. What does Software Potential give the ISV?
SKU Agility: Product Flexibility & Reduced Time to Market
Fixed Product SKU
Price
A
Price
License
Terms
Dynamic SKU Creation
Functionality
Business
Terms
New SKU generation time =
Change Code + Rebuild + Re-Test + Re-deploy
License
Terms A
SKU 1
Feature Feature
A
B
Business
Terms A
Feature
C
SKU 2
License Feature
A
Terms B
Feature Business
Terms B
D
New SKU generation time =
Issue license in minutes
Price
B

35. Summary
• Learn more about InishTech or get a FREE 30 day
evaluation of Software Potential at
http://www.inishtech.com
• Contact us at sales@inishtech.com