Software monetization market leader SafeNet, Inc. and SIIAtoday released additional results of a joint survey of more than 600 software developers and 200 enterprise software end users, revealing current trends, adoption rates, and drivers of cloud-based software delivery.

Key Findings:

• Three-quarters of software publishers plan to be in the cloud by the end of 2013; Hybrid models expected to dominate through 2017
• More than half of software publishers expect operating costs to decline once in the cloud ; 25 percent still cite cost and complexity as biggest barrier to entry
• 35 percent of enterprise end users cite inflexible licensing as #1 software consumption headache; Close to half of software publishers expect to improve end-user experience with cloud

Cloud Adoption Trends

Today, 65 percent of software publishers report offering all or a portion of their portfolios as a cloud service, and, on average, cloud services comprise 24 percent of a typical company’s software portfolio. Though approximately one-third of software publishers have yet to offer cloud-based services, 75 percent of the respondents have plans to offer at least some of their product portfolios as a service in the next year. Of those with mixed portfolios (i.e., both cloud and non-cloud offerings), the percentage of cloud offerings is expected to remain steady at 25 percent. During the next five years, the survey indicates that the cloud will continue to grow as a percentage of overall portfolios for publishers, even though the number of publishers with no cloud presence will remain steady at 25 percent.

Michelle Nerlinger, Vice President at SafeNet, explains it this way:

Cloud-based software delivery is attractive to software publishers and end users alike, most often because of the promise of increased transparency, more flexible business models, and perceived operational simplicity. The ability to reap these benefits is strongly dependent on a software publisher’s ability to effectively track, control, and manage their applications in an automated and operationally effective manner. This means that the implementation of effective licensing and entitlement management techniques will be key to achieving software monetization success in the cloud. For transitioning or hybrid software publishers, a platform capable of managing on-premise and cloud applications in tandem will be absolutely critical.

Understanding Publisher and End-User Adoption Drivers

The most common driver for software publishers to offer cloud-based services is to reduce the operational costs associated with product delivery, activation, and support (cited by 62 percent of respondents). Additional motives include improving customer experience by “reducing end-user headaches” (46 percent); the ability to access new and niche markets (48 percent); improved usage tracking (33 percent); and faster time to market (32 percent).

Sixty-one percent of software publishers that have already adopted a cloud-based software delivery approach confirm the validity of these expectations by reporting a positive financial impact, due to reduced operations costs or increased revenue. Reinforcing that, only six percent of respondents reported a negative financial impact or security threat once introducing cloud-based software delivery.

Software publishers are not alone in their desire for the flexibility and transparency promised by cloud-based software delivery. Thirty-five percent of enterprise end-users reported inflexible licenses that don’t meet organizational needs as the number one headache related to software consumption. In addition, 14 percent of enterprise end users cited cloud-based services as their top software licensing model preference, and 16 percent specifically identified a metered billing method as their preferred pricing model.

Obstacles to Adoption

More than half (55 percent) of software developers do not see their organizations as “cloud-ready,” with security concerns about data in the cloud (36 percent), and the perceived cost and complexity of the transition from on-premise (25 percent) being cited as the biggest obstacles to true cloud readiness. On average, respondents said it would take 16 months to make all or a portion of their product portfolio cloud-ready; however, 26 percent of respondents believed that they could never move their offerings to the cloud.

Additional Resources:

• To learn more about the full survey, download a copy of the SafeNet and SIIA State of Software Monetization Executive Summary at www.safenet-inc.com/softwaremonetizationmatters.
• Video Case Study: Supplementing Your Core Business With a Services-based Product Offering
• Join the LicensingLive! Software Monetization Community
• Learn more about Software Monetization in the Cloud
• Follow SafeNet on Twitter, Facebook, YouTube, and LinkedIn
• Follow SIIA on Twitter, Facebook, YouTube, and LinkedIn

Rhianna Collier is VP for the Software Division at SIIA. Follow the Software team on Twitter at @SIIASoftware.

Today SIIA released “Vision from the Top” — its third annual report on the future of the software and services industry. The publication, unveiled at the SIIA All About the Cloud conference in San Francisco, features insight from 41 CEOs, who discuss opportunities and challenges facing the future of software and services industry. To offer a better understanding of the state of the industry, SIIA also conducted a survey of software and cloud executives and announced the results along with the report.

The survey, which included responses from 37 top executives at software and cloud companies, found that there are expectations for moderate-to-strong technology industry growth in the year ahead.  Fifty-seven percent of executives said they expect moderate growth, while 35 percent expect strong growth.  When asked to identify whether leading social media platforms are “over-hyped” or “under-hyped” in terms of their usefulness for business, 86 percent said Pinterest is overhyped.  LinkedIn and Twitter, however, are more useful, according to the executives, 59 percent of whom said that LinkedIn is under-hyped, while 57 percent said Twitter is under-hyped.   Full survey details are available upon request.

Vision from the Top features insight from 41 executives, including: Jim Whitehurst, President and CEO of Red Hat; Rick Nucci, General Manager of Dell Boomi; Matt Ellis CEO of Cloudability; and Larry Cates, President and CEO of Bancroft Technology Group.  Each executive answered questions related to where they see business opportunities, public policy concerns, the evolution of business models, international opportunities and more.

Our goal for this book is to provide insights into some of the challenges brought on by these new technology trends and how successful companies are addressing these challenges to continue on a path of solid growth. We also look at how these trends are not only affecting business today, but also what they will mean for the future of our industry.  To do this, we took the pulse of SIIA member executives driving innovative technology businesses.

From the insights contained in the 41 entries in the book, I identified four key takeaways:

• Social media continues to redefine and enhance sales and marketing strategies. Social media is now a significant part of the B2C and B2B sales and marketing strategy. In fact, a survey of our CEOs showed that the majority felt social media platforms, LinkedIn and Twitter, were under hyped in business.
• Mobile will continue to change the way we do business. Today’s always-connected workforce expects to be able to carry out all aspects of their business regardless of location. We see more and more companies supporting increased mobile device usage with business applications.
• Companies are using data analytics to gain market share. Just as we see the impact of mobile and social on business, analyzing the data provided by trends like these is increasingly important.  Businesses are finally making sense of this explosion of data.
• It is all about efficiency. To keep pace in an increasingly competitive world, businesses need to run as efficient as possible. Mobile allows employees to have access to business processes, customers and prospects, anytime, anywhere. Social allows businesses to track competition, customer and prospect behavior, and increase business collaboration. Data analytics allow companies and organizations to make better business decisions.

The CEO insights can be read here.

Rhianna Collier is VP for the Software Division at SIIA. Follow the Software team on Twitter at @SIIASoftware.