1. Making the Most (Money) with Your SaaS Offering
Webinar Series
Webinar # 3
Subscription and Entitlement Management Best
Practices for Your SaaS Offerings

2. Agenda
• Business Challenges for “Pure-Play” SaaS Providers
• Best Practices Summary
• Illustrative Scenario and Use Cases
• Flexera Software’s Entitlement Management Solution
• More to Come…
2 © 2011 Flexera Software, Inc. | Company Confidential

3. 5 “Pure-Play” SaaS Provider Business Challenges
1. Leaving money on the table because of a “one size fits all”
approach to offerings
2. Transitioning to tiered offerings requires tracking and enforcing
customer entitlements
3. Homegrown entitlement management systems and spreadsheets
fail to deliver revenue opportunity from tiered offerings
4. Tiered offerings require on-going tweaks. Homegrown backoffices
cannot keep up and get in the way of revenues.
5. Credential sharing abuse – user-based license model vulnerability
3 © 2011 Flexera Software, Inc. | Company Confidential

4. 1 – Leaving Money on the Table Because of a “One
Size Fits All” Approach to Offerings
EXAMPLE
If all customers paid the same price, they
would all pay $5 for a total of $25 revenue
If customers paid different prices,
but the provider loses revenues provider would make $35 revenue:
• $10 revenue from 1 customer paying $10
provider is missing 5 provider is getting only • $20 revenue 4 customers paying $5
$5 from 1 customer that
customers that are willing • $5 revenue from 5 customers paying $1
to pay $1 is willing to pay $10
10
Customers
5
1
Price $1 $5 $10
In this example, “one size fits all” pricing/packaging misses 40% of revenues
4 © 2011 Flexera Software, Inc. | Company Confidential

5. 1 – 56% of SaaS ISVs Miss Revenues Due to “One
Size Fits All” Packaging and Pricing
What is your estimate of revenues you are leaving on the
table because of “one size fits all” pricing/packaging?
56%
Source: Flexera Software online poll of SaaS ISVs, April 2011
5 © 2011 Flexera Software, Inc. | Company Confidential

6. BEST PRACTICE 1: Package and Price Offerings to
Match What Customers Want to Buy
Tiered packaging
approach also helps to
fund R&D by having
customers that value
premium features pay
extra for them
Note: The companies mentioned illustrate the trend but may not be Flexera Software customers
6 © 2011 Flexera Software, Inc. | Company Confidential

7. 2 – Transitioning to Tiered Packages Requires
Tracking and Enforcing Customer Entitlements
EXAMPLE A SaaS CRM Application In this example, a tiered packaging
Features (5 tiers) approach will require the SaaS ISV
Leads to track and enforce 30 possible
offerings based on entitlements
Marketing content • 5 features
• X 3 License Models
Opportunities
• X 2 Metrics
Support Incidents
Reports
Trial
# Users
Annual Subscription
# GB Documents Stored
Day Pass
Metrics (2)
License
Model (3)
7 © 2011 Flexera Software, Inc. | Company Confidential

8. 3 – 38% of SaaS ISVs Use Spreadsheets or
Homegrown Tools to Track Entitlements
Which approach best describes how you keep
track of customer entitlements?
38% of ISVs use
spreadsheets and
38% homegrown tools to
track entitlements
CRM systems cannot
cope with complex
entitlements though they
are used by 46% of
respondents
Source: Flexera Software online poll of SaaS ISVs, April 2011
8 © 2011 Flexera Software, Inc. | Company Confidential

9. 3 – Homegrown Backoffices and Spreadsheets Fail to
Deliver Revenue Opportunity from Tiered Offerings
EXAMPLE
For one SaaS product line, 12% of customers
were using more than what they had purchased
~$1.7M per year in missed revenues
• Leaving entitlements in
spreadsheets and
homegrown systems leaves
a lot of money on the table
• “True-up” conversations are
almost always painful and
rarely recover the full
revenue potential
Source: Analysis of Flexera Software SaaS product line
9 © 2011 Flexera Software, Inc. | Company Confidential

10. 4 – Tiered Offerings Require On-Going Tweaks
How do you price your SaaS offering?
• No silver bullet with
respect to pricing model
• SaaS providers will need
to evolve pricing /
packaging approaches
Source: Softletter SaaS Report 2010, http://www.softletter.com/Research/SoftletterSaaSReport.aspx
10 © 2011 Flexera Software, Inc. | Company Confidential

11. 4 – Homegrown Backoffice Systems Cannot Keep Up
and Get in the Way of Revenues
Costs of a homegrown back-
office for managing entitlements
• SaaS ISVs should expect to spend
0.5-0.1.5% of revenues to build an • Though critical for revenue
entitlement management backoffice growth, building systems to track
• For a SaaS ISV with $10M in and enforce entitlements is not a
revenues, this translates to core competence for SaaS ISVs
$50K-$150K • Takes resources and focus away
• Opportunity cost: Resources pulled from feature releases
away from feature releases
• Inflexible to changing
• On-going costs are about 20% of the pricing/packaging needs
initial costs which also comes at the
expense of feature releases
Source: Flexera Software analysis of customers
11 © 2011 Flexera Software, Inc. | Company Confidential

12. BEST PRACTICE 2: Invest in a Best-of-Breed
Entitlement Management System
Provision Users
Entitle Customers
Verify
Entitlement
Set up Service
Bundles
Subscription and
Entitlement Gather Usage
Management
Renew
Customers
Bill
Customer
Up-sell Users
De-provision
Users
12 © 2011 Flexera Software, Inc. | Company Confidential

13. 5 – User-Based License Models are Vulnerable to
Credential Sharing Abuse
• In this example, the SaaS
offering is priced based
on named user
• Customer purchases 1
SaaS Services credential but 3 users
share it
Machine Machine Machine
ID: A ID: B ID: C
Some providers are losing 40-60% of potential users to credential sharing
13 © 2011 Flexera Software, Inc. | Company Confidential

14. BEST PRACTICE 3: Prevent Revenue Leakage Due
to Credential Sharing Abuse
SaaS Services
Machine Identity +
Credentials
Machine ID: Machine ID: Machine ID:
A B C
14 © 2011 Flexera Software, Inc. | Company Confidential

15. Business Challenges and Best Practices
BUSINESS CHALLENGES BEST PRACTICES
SaaS providers are leaving money on the table Package and price offerings to
because of a “one sizes fit all” approach to match what customers want to buy
packaging offerings WITHOUT involving engineering
Transitioning to tiered packages requires tracking
and enforcing customer entitlements.
Homegrown backoffice systems and spreadsheets Invest in a best of breed
fail to deliver revenue opportunity from tiered entitlement management system
offerings Reducing number of hardware
variations (SKUs) to meet diverse
Tiered offerings require on-going tweaks. needs
Homegrown backoffices cannot keep up and get in
the way of revenues.
SaaS providers are losing 40-60% of potential
users to credential sharing Prevent credential sharing abuse
15 © 2011 Flexera Software, Inc. | Company Confidential

16. Scenario
“Best Fit” “Best Fit” “Best Fit”
Service Bundles License Models Price
SaaSuite- a
CRM Marketing
application Package Annual
$
• Leads Subscription
UPSELL • Content
Marketing
Annual
Package with $ $
Subscription
Reports
• Leads Day Pass $
• Content
Features: • Reports
• Leads
• Marketing content
• Opportunities Sales Package Annual
• Opportunities Subscription
$ $ $
• Support Incidents
• Reports
Metrics:
• # GB documents Support Package Annual
• Support Incidents Subscription
$
stored
16 © 2011 Flexera Software, Inc. | Company Confidential

17. Use Cases in the Entitlement Lifecycle
Tom - Marketing Package
SOLD TO: ACME Corp Jan - Sales Package
• 10 users on Marketing Package
• 10 users on Sales Package
• 10 users on Support Package
• 100 GB Storage
Tom access SaaSuite from his
Provision Users
home machine – allow since it
Entitle Customers is within policy
Set up service bundles
• Features Verify
Entitlement
• License models
• Usage policies Set up
Service May 2011: Acme is using 50
Bundles
Any given user can GB of storage
access the SaaSuite
Subscription and
from up to Entitlement Gather
Usage
TWO machines Management
(e.g. an office machine Renew
and a home machine) Customers
May 2011: Bill Acme for 50 GB
of storage
Bill
Customer
Up-sell Users
De-provision
Users
De-provision Jan - Sales Package
Upsell Tom to Marketing
Package with Reports
17 © 2011 Flexera Software, Inc. | Company Confidential

18. Flexera Software Solution for SaaS Providers
1 2
Login Check user’s entitlement
• User ID/Password • Service bundle
• Machine Identity • Entitlement valid dates
• License policy (e.g. login within allowed
number of machines)
SaaS
Application
4 User
• Login allowed/denied based on policies Billing data: Account,
3 Product Package or
• Application configured to service bundle
purchased Features, Hours used
5 Billing System

19. Flexera Software Solution Capabilities
• Define service bundles based on features
• Define license models (e.g. concurrent use, annual/expiring,
trials etc)
• Define license usage policies (e.g 1 user on 5 machines)
• Create entitlements for service bundles
• Provision SaaS users based on entitlements
• Automate subscription renewals, upsells and cross-sells
• Track and report usage against entitlements
• Customer insights on products and versions
19 © 2011 Flexera Software, Inc. | Company Confidential

20. Next Steps
• Visit and subscribe to our blog:
http://blogs.flexerasoftware.com/ecm/
• Contact us:
http://www.flexerasoftware.com/company/contact.htm
20 © 2011 Flexera Software, Inc. | Company Confidential

21. Q&A
21 © 2011 Flexera Software, Inc. | Company Confidential

22. Marriott San Jose ● October 24-26, 2011
SoftSummit offers a comprehensive look at the
entire software and device product lifecycle—
providing you with strategies and the know-how
to adapt your business to thrive in today’s fast-
changing market.
22 © 2011 Flexera Software, Inc. | Company Confidential

23. Thanks for Attending the
“Subscription and Entitlement Management Best Practices
for Your SaaS Offerings” Webinar
Bashyam Anant
Director, Product Management
Flexera Software
408-642-3912
banant@flexerasoftware.com
23 © 2011 Flexera Software, Inc. | Company Confidential