Written by Joe Poh – Doctoral candidate at UOW Malaysia KDU
Published on 7 April 2021

Among all software licensing and monetization (SLM) tools in the market, there are three key elements in general that are crucial to form the tool. Even though there are many functionalities that are provided from the end-to-end from vendors to vendors. We will explain more examples from Thales Sentinel as Matrix Invent MSC is a distributor of Thales Sentinel’s product in the region. Below are the three main elements explained:

Envelop” for Protection

One of the strongest secure protection method for software Intellectual Property (IP) is by protecting the original programming codes before it is sent to the customer. The common malicious code hacking activity is via the process of reverse engineering. There are even tools available to download publicly from the internet to reverse compiled codes, as IP and algorithms of the original codes are often exposed if unprotected. Therefore, an important element is needed to perform obfuscation of these vulnerable codes commonly known as “Code Dressing”. This means assuming the hacker is able to view the original code after reverse engineering the software codes. The obfuscated codes will not be understood by the hacker, especially for software written in Java, C and Microsoft .NET framework. As for Thales Sentinel, Envelop is the functional module to perform obfuscation and also encryption on the software codes. This is the reason that tool has been designed to accommodate different scenarios like protection methods to become a generic tool in the industry.

The subject of protection will be used frequently in this research; however, it will not be in detail as the research is from the angle of social science rather than technical research.

Entitlement” Management System

Another key element in a SLM tool will be “Entitlement”. For this element, the main goal will be entitling a customer’s right or license to use a software, device, or embedded software. Entitlement process is to facilitate vendor to design their multiple pricing and packaging strategy. Therefore, licenses can be entitled and delivered to the customer based on the package purchased. Agility is a key element as the vendor will be able to flexibly pre-set models like perpetual, feature, time subscription and pay-per-use. Once a model is defined, it can be issued and used in different platforms like IOT, mobile devices, embedded devices, cloud, and the traditional computers. This is like a workflow which is designed once and repeatedly used (one-to-many concept).

An Entitlement Management System should be able to support license issuing and renewal in both manual and automated mode. Online mode can be integrated to web portals via Application Programming Interface (API) for product activation or renewal. Vice versa for offline mode, licenses can be enabled via hardware dongle or software-based license for the customer even without an online connection. Entitlement Management System also allows users to manage customers’ licensing information and channel partners information for the vendor. As some vendors are selling direct to customer and some are selling via resellers or distributors, it is like a centralized database for all licenses issued.

Business Insights”

The third element is becoming increasingly important in recent years, as it is designed to study the usage behaviour of customers. The goal of this element is to allow vendors to collect the customer usage information of their software. It is predicted that by 2022, 50% of software solution vendors will use anonymized collected data with their software monetization tool to analyse, benchmark and enhance their offerings to customers. This is an important development marking a huge step where vendors can not only understand the needs of their customers, but also the strengths and weaknesses of their software.

How It Works – The General Concept of a Software Licensing and Monetization (SLM) Tool

As discussed, above are the three important elements that form the basis of a commercial SLM tool. But how exactly does it work? Figure A below shows a reworked and simplified diagram from the guide of Thales Sentinel and Wang et al. (2019) who shared information with their understanding on Sentinel LDK production process. The three main steps are important with sub-steps until a license is delivered or renewed.

Step 1 – Protection (Protect the vendor’s software code via obfuscation or encryption)
Step 2 – Entitlement (Define product catalogue, select license model, entitle license, renewal)
Step 3 – Track and Evolve (Track usage and revisit strategy if needed)

Figure A – Guide of Thales Sentinel LDK Production Process
Figure A – Guide of Thales Sentinel LDK Production Process

An example of a use case:

Company A intends to use Thales Sentinel tool for their software monetization strategy. Company A will need to first use Sentinel LDK’s Envelop to protect its software. Following decided to only offer their software package with subscription model on minimum 12 months basis. Company A will then use Sentinel LDK to issue a software license together with its software to the customer. The customer will use the software in a designated computer. The usage data may be collected with consent back to Company A. Company A will then analyse the usage and make necessary adjustment to their software if needed.