Software Entitlement Management: A Comprehensive Overview

What is Software Entitlement Management?

Software entitlement management is a process enabling companies to make sure that only people who have permission to use their software can access and use it.

A fitting analogy can be drawn between a library card and a user's access to a digital library.

In this analogy, the library card represents the software license granted to a user, allowing them access to the library's resources.

The process of issuing library cards with individual identities and the subsequent scanning of these cards by a computer system to verify membership and borrowing privileges mirrors the role of an entitlement management system in the software realm.

The entitlement management system controls user access, ensuring that only authorized individuals can utilize specific features or resources within the digital library based on their granted entitlements.

Software entitlement management is what an independent software vendor might use to manage their users' access to the software they develop and distribute.

This system helps the software company make sure that only people who have permission to use it can access it (usually that they have paid for the user's access to it, and not just anyone can use it for free).

What Are Entitlements in Software?

In the context of software, software entitlements refer to the specific rights and permissions granted to users or entities to access and use certain features, functionalities, or resources within the software application.

These access entitlements are typically associated with software licenses or subscriptions and define what actions or capabilities users are authorized to perform based on their licensing or subscription level.

Entitlements play a crucial role in software licensing and distribution, ensuring that users have appropriate access rights to the software product's various components based on the terms and conditions outlined in their licensing agreements.

They help software developers and vendors control and manage the usage and distribution of their technologies and products while providing users with a tailored and licensed customer experience throughout.

Main Features of Entitlement Management Systems:

There is a lot of functionality that goes into building a robust software entitlement management solution (we would know! We have been at it since 2015!).

Here are a few of the capabilities a software vendor should inspect when evaluating or when building their entitlement management solution

Authentication:

• When a user attempts to access the software or resource, they must first authenticate themselves through login credentials or other authentication methods.

Authorization:

• Determining if a user is allowed to access a specific resource or service based on their role or permissions.
• LicenseSpring allows an ISV to set authorization per device (node-locking), per user, per seat, or with floating licenses.

License Management:

• Managing and tracking the usage of software licenses and ensuring that only licensed users can access the software.
• LicenseSpring excels in this area, and its core competency lies precisely here.

Access Control:

• Managing the level of access a user has to a specific resource or service, such as read-only or full access.
• There are many parts of the LicenseSpring service that different parties interact with.
• For instance, your accounts receivable team might want to look up license, order, and customer information and would require read-only access to our vendor platform for that.
• Maybe an engineer would need write access to the products and API keys, but no access to the billing and order section.
• Assigning roles to users and determining the resources and services those roles can access. This is usually known as Role-Based Access Control (RBAC).
• With our entitlement manager, ISVs define roles for staff members who have access to the account.
• The software vendor can also assign roles to License Managers who can act as resellers and distributors, for instance.

Self-Service Access Management:

• Allowing users to manage their access to resources and services, such as resetting their passwords or requesting access to a new resource.
• We make offline license validation possible through an ISV's use of our SDKs and our offline activation portal for instance.
• We also make available a fully white-labelled user portal, which would allow end users to reset their passwords, to transfer their licenses from one device to another, without needing the software vendor to get involved, for example.

Auditing:

• Keeping track of user access to resources and services, such as when they accessed them and what actions they took.
• LicenseSpring provides an audit log that can who how entitlements for a specific license have been modified over time so that you can keep track of when a certain feature has been switched on and when the expiry date for a license has been extended.

Compliance:

• Ensuring that access to resources and services complies with relevant laws, regulations, and policies. LicenseSpring’s R&D centre is ISO 27001 and ISO 9001 Certified. We also adhere to GDPR Regulations.

Automation of Provisioning and De-Provisioning:

• Automating the process of granting and revoking access to resources and services.
• LicenseSpring makes provisioning and de-provisioning pretty straightforward with our numerous 3rd party integrations as well as through the use of our RESTful management API which allows a vendor to connect our entitlement management solution to pretty much any CRM, ERP, or BI tool.

Revocation:

• The ability to quickly and easily revoke access when necessary, such as when a customer cancels their subscription.

Tips for Selecting the Right Entitlement Management Software for Your Organization

There are a lot of vendors with many different offerings for different types of customers.

A large vendor like Airbus might have completely different needs for an indie game developer looking to support and sell expansion packs to a Windows game built in Unity.

Here’s a list of criteria that might be more or less important for your company, depending on the type of software product you publish, and the sorts of customers you have.

• Reliability & Availability: Above all else, we think the most important factor in using an entitlement management solution is that it is always available, and works. If the system goes down, it means that licensed users simply cannot use or access their licensed software. for this reason alone, you might choose to host the entitlement manager yourself.
• Scalability: The solution should be able to scale to meet the needs of your organization as it grows. For example, it’s one thing if the entitlement management system can validate 10 users once a month, it’s something completely different if you’re running concurrency validations across continents with thousands of user groups, each with a unique set of software entitlements to them.
• Security: The solution should provide robust security features to protect against unauthorized access and protect sensitive data. We perform annual penetration testing, follow security best practices, and have been increasing our emphasis on the security of our service as we grow.
• Cost: Many tools like to charge based on licensed revenue. We’re more of a “utility bill” based on usage and features needed. An easy rule of thumb would be to see how much it would cost you to build or manage your own entitlements solution versus taking one off the shelf. (Hint: Most license managers should be significantly cheaper than building your own, but have the drawback of not being fully made to measure).
• Integrations: Entitlement managers should be able to integrate with other business systems. Frequently, we receive inquiries about the compatibility of LicenseSpring with various platforms like Microsoft Dynamics, SalesForce CRM, or Hubspot. Customers often ask whether entitlements usage data can be seamlessly integrated and sent to these CRMs or other systems for effective management and analytics.
• Usability: The solution should be easy to use and understand for both IT administrators and end-users. We’re often told that we’re very easy to use compared to market incumbents like Revenera or Thales.
• Flexibility: The industry offers notoriously rigid and brittle solutions. In our experience, there isn’t a single market segment large enough to go after, we needed to solve many edge cases before we found enough clients to have a sustainable business. We now count customers in many diverse verticals such as medical device manufacturers, automotive software vendors, AR, and Space and Defense, just to name a few. This was largely possible because we have been working on sufficient edge cases that allowed us to become a general-purpose entitlements management service.
• Vendor reputation: Many companies often decide on an entitlements manager solely based on reputation. We often point to our reviews on Capterra and are often asked for multiple references from larger clients.
• Compliance: Many industries have compliance requirements for their sub-processors, including data privacy, audit logs, data retention policies, disaster recovery policies, and so forth. LicenseSpring’s software engineering team maintains much of this compliance through our ISO 27001 and ISO 9001 periodic recertification.
• Support: ISVs will often implement the entitlements manager themselves, but having the ability to talk to a human, as well as access complete documentation can be very handy.
• Reporting and Analytics: Reports and analytics can be very handy for many different staff and end-user roles, such as sales, product, customer support, compliance, or security teams.

How Can An Entitlement Management System Help With Software Monetization?

An entitlement management system plays a pivotal role in software monetization by enabling software vendors to effectively control access to their products and generate revenue.

Here are several ways an entitlement management system benefits software monetization:

1. License Enforcement: The entitlement management system ensures that only users with valid licenses or subscriptions can access the software's full features and functionalities. This prevents unauthorized usage and protects against software piracy, ensuring that users pay for the value they receive.
2. Flexible Licensing Models: The system allows software vendors to implement various licensing models, such as subscription-based, perpetual, trial, or feature-based licenses. This flexibility enables vendors to cater to different customer preferences and market demands, optimizing revenue streams.
3. License Compliance and Auditing: The system keeps track of license usage and provides detailed usage reports. This helps software vendors enforce license compliance, identify potential misuse, and conduct audits to ensure that customers are using the software within the agreed terms.
4. Monetizing Software Updates and Upgrades: With an entitlement management system, vendors can offer software updates and upgrades as part of a subscription or charge for them separately. This incentivizes customers to maintain active subscriptions, ensuring a recurring revenue stream.
5. Renewals and Upselling Opportunities: The system automates license renewal processes, making it easier for customers to continue using the software. It also presents opportunities for upselling, encouraging customers to upgrade their licenses for enhanced features.
6. Custom Licensing and Packaging: An entitlement management system allows vendors to create custom license packages tailored to specific customer segments or market niches. This customization helps maximize the software's value and appeal to a broader audience.
7. Seamless Integration with E-commerce: Many entitlement management systems integrate with e-commerce platforms, enabling a smooth purchasing and licensing experience for customers. This simplifies the buying process and helps achieve more sales.
8. Protection against License Abuse: The system includes security measures to prevent unauthorized license copying or sharing, safeguarding the software's intellectual property and revenue potential.
9. Data-Driven Decision Making: With comprehensive usage reports and analytics, software vendors can make data-driven decisions regarding pricing strategies, product enhancements, and target markets, optimizing their monetization efforts.
10. Global License Management: An entitlement management system can handle licenses for customers worldwide, accommodating different currencies, languages, and regional regulations, expanding the software's market reach.

What Is the Difference Between Software Licensing and an Entitlement Management Solution?

Software licensing is the legal agreement that defines the terms of software usage, while an entitlement management solution is the technology that enforces those terms by controlling user access and permissions within the licensed software.

The software license sets the rules for customer experience, and the software entitlement management solution ensures that users can only access what they are entitled to based on their licensing agreement.