Monetizing Software, Machines, and Materials with New Business Models

… to Monetize Software, Machines
and Materials
Stefan Bamberg | Senior Key Account
& Partner Manager
stefan.bamberg@wibu.com
Joerg Jans | Professional Services
joerg.jans@wibu.com
New Business Models …
16.11.2017 © WIBU-SYSTEMS AG 2017 - Monetizing Software, Machines, and Materials with New Business Models 1

Motivation

Revenue Generation vs. Market Requirements
§ The ISV (Independent Software Vendor) wants to amortize the investment
in software development and make a profit
§ Which added value does software create for the end user? What is he
willing to pay for it?
§ The market demands flexible licensing models, like:
§ Features-On-Demand: Paying only for the necessary functions
§ Subscription: Paying only as long as the service is used
§ Maintenance Contract: Annual fee to enjoy all available updates and upgrades
§ Pay-per-Use: Paying only for what you actually use

Revenue Generation vs. Market Requirements
§ Usage-based license models allow the end user to get a
taste of the offer for a lower upfront cost
§ One-time fee vs consumption fee
§ Business customers are more likely to have access to limited but
recurring budgets (OPEX, Operational Expenditures), rather
than high one-time investments (CAPEX, Capital Expenditures)
§ Pay-per-Use can bring in additional revenues for
consumables
§ Permanent income can exceed income generated
by one-time sales

Scenarios for the
Application of Pay-per-Use

Scenarios for the Application of Pay-per-Use Licensing
§ Use cases for billing with Pay-per-Use (Software)
§ Billing program calls
§ Billing the use of individual functionalities
§ Calculation routines
§ Export/Import of data, printouts
§ Demo versions
§ Billing time-based functionalities
§ Assignment of time periods to usage units
§ Billing the actual usage time (e.g. calculation algorithm)
§ Billing time-based subscription licensing models

§ Use cases for billing with Pay-per-Use (Machines)
§ Billing of each use of a machine or functionality usage
§ The usage counter is safeguarded in a protected container (CmDongle,
CmActLicense, CmCloudLicense)
543210

§ Use cases for billing with Pay-per-Use (Materials)
§ The machine is supplied at a discounted price
§ The end user buys high quality material directly from the manufacturer of the
machine or from "certified" third-party suppliers
§ Coupling the Pay-per-Use counter with the number of sold materials (x pieces of material equals x
units of use)
§ The end user buys the material and receives the associated usage licenses
§ Buying "cheap material" becomes senseless, because it comes with no associated
pay-per-use licenses
§ Concrete examples: tooth inlays (Blocs), printing cartridges, …

§ Protection against product counterfeiting via Pay-per-Use
§ Use case from the textile industry (Project Pro-Protect):
§ Embroidery orders for logos (e.g. on caps) are advertised worldwide
§ Production number (pay-per-use counter) and encrypted logo to embroider are
transferred online/offline to a CmDongle (secure element) in the machine
§ 24/7 worldwide automation possible
§ Only the real production order can be executed, the logo cannot be read. No more
production of extra caps during "night shifts"!
§ Additive Manufacturing
§ Protection and monetization of 3D printing plans

§ Emergency licenses over Pay-per-Use
§ Alongside the purchased licenses, the end user receives emergency licenses
§ Same functionality as the basic licenses (individual emergency license)
§ Full functionality of the software (general emergency license)
§ These can only be used under restricted conditions (x amount of times)
§ While using the emergency licenses, the purchased license can be renewed

Billing Methods
§ Prepaid
§ The end user pays the usage units in advance
§ The usage counter (PIO:Unit Counter) in the license is set in advance by the ISV to
a starting value and later counted down in the software
§ Recharge or increase is possible at any time online or offline via license update
§ Consumption related
§ The usage counter is set to the maximum value in advance (4 billion) and counted
down in the software
§ The difference with the current value indicates the consumed units

Billing Methods
§ Overload licenses via Pay-per-Use
§ The customer buys x licenses for normal operation
§ The customer receives x licenses + Pay-per-Use license for peak load coverage
§ The functionality of the licenses is identical
§ Billing takes place after expiration date
20 +

Technical Implementation
with CodeMeter

Delivery to the End Users
Integration in the Process
Integrate Once – Deliver Many (PC Software)
Integration in the Software
Software Software
CodeMeter
Protection Suite
Integrate Once Deliver Many
ERP/CRM
e-commerce
Software
License Portal
License
Central
License
Central

Delivery to the End Users
Integration in the Process
Integrate Once – Deliver Many (Embedded System Software)
Integration in the Software
Software Software
CodeMeter
Protection Suite
Integrate Once Deliver Many
ERP/CRM
e-commerce
Software
License Portal
License
Central
License
Central

Integate Once – Deliver Many
License
• Basic Module
• Stand alone
• Additional Module
• Stand alone
• 30 days
License
• Basic Module
• 10 Users
• 10 Users
License
• Basic Module
• 7 Users
• 5 Users
License
• Basic Module
• Pay-per-Use
Software Software Software Software

License Entry
§ License Entry = Firm Code | Product Code
§ Firm Code: provided by Wibu-Systems
§ Product Code:
§ Chosen by the ISV
§ For each Option / Module / Feature
§ 4 billion Product Codes (UInt32)
§ Product Item Options: Each license can have
combinable options
§ License models can be changed on-site
Firm Code: 6000010
…
Product Item Options
Product Code: 201.000

© WIBU-SYSTEMS AG 2017 - Monetizing Software, Machines, and Materials with New Business Models 18
Text
License Quantity
Activation Time
Expiration Time
License Transfer
Linger Time
User Data
Protected Data /
Extended Protected Data
Customer Own License
Information
Named User License Hidden Data
Secret Data
Usage Period
Unit Counter
Feature Map
Maintenance Period
Minimum Runtime Version
16.11.2017
Module Items

Integration of Pay-per-Use Licenses
§ Using Pay-per-Use via AxProtector
§ Automatic usage via AxProtector
§ No program intervention necessary
§ Each program call decrements the value
§ Definition of the warning message
§ Usage in source code via WUPI in combination with AxProtector (license list)
if (Wupi.AllocateLicense(0))
{
if (!Wupi.DecreaseUnitCounter(0, 1))
{
// Error Message
}
Wupi.FreeLicense(0);
}

§ Demo

§ Integration via CodeMeter Core API (1)
§ Access license and check if PIO "UnitCounter" exists
CmAccess2 cmacc2 = new CmAccess2();
cmacc2.FirmCode = firmCode;
cmacc2.ProductCode = productCode;
HCMSysEntry hcmse = cmApi.CmAccess2(CmAccessOption.Local, cmacc2);
if (hcmse != null)
{
int unitCounter = -1;
CmBoxEntry2 boxEntry = (CmBoxEntry2)cmApi.CmGetInfo(hcmse,
CmGetInfoOption.EntryInfo2);
if (((boxEntry.SetPios) & CmBoxEntry2.PioUnitCounter) ==
CmBoxEntry2.PioUnitCounter)
{
unitCounter = Convert.ToInt32(boxEntry.UnitCounter);
DecreaseUnitCounter(hcmse, 1);
}
cmApi.CmRelease(hcmse);
}

§ Integration via CodeMeter Core API (2)
§ Decrement PIO "UnitCounter" with cryptographic operation
private bool DecreaseUnitCounter(HCMSysEntry hcmse, int amount)
{
// random encryption code
Random rand = new Random();
// set encryption parameters
CmCrypt cmcrypt;
cmcrypt = new CmCrypt();
cmcrypt.BaseCrypt.Ctrl = CmBaseCrypt.Option.Aes | CmBaseCrypt.Option.CalcCrc;
cmcrypt.BaseCrypt.EncryptionCode = (uint)rand.Next();
cmcrypt.BaseCrypt.EncryptionCodeOptions =
(int)CmBaseCrypt.EncCodeOption.UnitCounterCheck |
(uint)(amount & (int)CmBaseCrypt.EncCodeOption.UnitCounterDeltaMask);
CmCryptOption flCtrl = CmCryptOption.DirectEncryption;
// create a dummy sequence to encrypt
byte[] abBuffer = new byte[16];
return cmApi.CmCrypt(hcmse, flCtrl, cmcrypt, abBuffer);
}

Distribution and Update of
Pay-per-Use Licenses

The Solution
Page 24
§ License Lifecycle Management
§ Create
§ Deliver
§ Manage
§ Ticket System
§ Uniform solution for
§ On-premise scenarios
§ Cloud-based scenarios
§ SOAP Interface
16.11.2017 © WIBU-SYSTEMS AG 2017 - Monetizing Software, Machines, and Materials with New Business Models

End UserISV
CodeMeter License Central – Activate & Update
16.11.2017 25
Ticket + Digital Fingerprint
4
License
5
Ticket
2
Order
1
e-commerce
ERP/CRM Software
License Portal
Ticket:
ABCDE-FGHIJ-KLMNO-PQRST-UVWXY
3
© WIBU-SYSTEMS AG 2017 - Monetizing Software, Machines, and Materials with New Business Models

Update of Pay-per-Use Licenses
§ Automatic collection of new usage units via CodeMeter License Central
§ Save the initial ticket (activation code) in the application
§ Update the licenses in the same ticket via CodeMeter License Central
§ Cyclical demand for new usage units via Gateway
License
Central
Gateway
Application

Creation, Distribution, and Updates of Pay-per-Use Licenses
§ Demo

Risks and Opportunities of
Pay-per-Use Licensing

Risks and Opportunities
§ Risks
§ In contrast to revenues generated from traditional license models, the pay-per-use
approach requires more time to amortize the costs
§ Opportunities
§ With the pay-per-use approach, high-quality products generate higher revenue over
the product lifecycle
§ Wider customer base thanks to low entry threshold
§ Higher flexibility (emergency and overload licenses, …)
§ Billing of consumables

Summary
§ Pay-per-Use Licensing with CodeMeter
§ Can be easily implemented with the existing functionality of CodeMeter
§ Can be used in the same way for software, machines, materials and IP protection
§ Supports prepaid and consumption billing
§ Recharging/increasing usage units can be done offline or online via the standard
CodeMeter License Central mechanism.
§ Possible integration into existing back office systems (SAP, ...) and online shops

Germany: +49-721-931720
USA: +1-425-7756900
China: +86-21-55661790
http://www.wibu.com
info@wibu.com
Thank you for your attention

Monetizing Software, Machines, and Materials with New Business Models

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