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The future of the Internet of Things in 2018

By Julia Gabel
Mon 11 Dec 2017
FYI, this story is more than a year old

While many things will change in 2018, the rapid pace of technological advances will not.

For Internet of Things (IoT) companies these rapid advances in technology continue to make it an exciting and challenging time ahead. 

This rapid change will cause many IoT businesses to feel constantly under the pump trying to keep up with development.

However, many others will thrive, develop greater insight into what customers need and value, all the while testing new monetisation models.

The big monetisation shift

The way businesses think about software monetisation has changed. Previously, discussion around monetisation focused on how to stop revenue leakage and protect intellectual property.

Now it’s all about new, more customer-centric business models and business growth coming from recurring revenue streams.  Aligning price with customer value and monetising more effectively will be a key driver in the industry in 2018.

According to a Gartner report released earlier this year, “technology strategic planners will find next-generation software monetisation is not about protection, limited to IP licensing, but about growth from enabling new models with repeatable revenue streams.”

This fresh approach to taking care of clients and finding new sources of revenue will continue to rise to prominence in 2018.

So, what can we expect to see in a new world of software monetisation

1. Software buyers will demand increased transparency

No one wants to pay for ‘shelfware’ but in the past software buyers were often left in the dark about what they used. 

While many use Software Asset Management (SAM) tools they’re also now looking towards their suppliers and asking for more help, transparency and ease of use. 

Suppliers should show what buyers are allowed to use and what they’re actually using to build trust and strengthen customer relationships.

Suppliers should embrace this data as well, and grow customers that aren’t yet using what they paid for.

2. IoT companies need deeper insight for customer growth

Customers today expect that IoT companies will understand their needs. 

That means the guessing game about how customers use software and services needs to go away.

The good news is that the latest technology provides instant information about customer health, consumption and renewal data; this puts a completely new level of strategic revenue management in play. 

Companies can identify upsell opportunities and uncover when subscription renewals are at risk.

3. Managing SaaS as part of hybrid models the key for growth

As more software suppliers move to SaaS, they’ll bring new offerings to market. The reality is that on-premises applications won't go away immediately and hybrid models will exist for a long time. 

To drive growth, suppliers need to create an environment that easily manages hybrid deployment and monetisation models. 

That will result in true customer insights, offering data around software adoption across a multi-product portfolio.

Companies who prepare an infrastructure that smoothly manages all scenarios will be ahead of the game and ensure that SaaS revenue continues to increase.

4. Let the customer experience rule

Don’t let the deployment model drive your customer's experience. 

Make sure that customers are provided with self-service, ease of use and a seamless software experience for all your products.

Even if you’re using different deployment models, your software products should be managed centrally and connect to the same back office, rather than being operated in silos.

5. OPEX will rise with the subscription economy

The move to OPEX models is imminent. 

Independent software vendors (ISVs) and device manufacturers are moving to recurring revenue models and subscription models are already widely adopted.

Suppliers should proactively increase the number of subscribers and automate subscription and renewal management processes. 

Those that manage the customer journey continuously and start thinking about the renewal when the subscription period starts will be ahead of the game and benefit from high renewal rates, customer satisfaction and business growth.

6. Increased demand for individualised products and monetisation strategies

There’s no one-size-fits-all for products and for monetisation.

Software buyers expect individualised products, and few are willing to pay for a feature set that’s not being used. 

Modular products and features that can be switched on and off meet these expectations. Today, monetisation is also more agile. 

According to Gartner, 80% of ISVs will use multiple licensing models by 2019, and many do so already. A well-known example are SaaS apps priced per user, with additional cost for online data storage. 

These hybrid models are on the rise and software suppliers should get their back office ready for it today.

While some companies may feel overwhelmed with these new trends impending on the horizon, it’s important to remember these can revolutionise your success in the coming year.

Preparing now means customers will feel like you understand their needs, provide the information they want and support a more personal experience and you can transform into an organisation that is nimble with change.

The new technologies and approaches to software monetisation will create a new reality and reap revenue rewards.

Article by Hugh Darvall, director, Australia and New Zealand at Flexera Software

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