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Business Method for creating and selling new usage based charge metrics for traditional non-SaaS software

IP.com Disclosure Number: IPCOM000238300D
Publication Date: 2014-Aug-15
Document File: 2 page(s) / 39K

Publishing Venue

The IP.com Prior Art Database

Abstract

Disclosed is a business method that creates new charge metrics for selling traditional software licenses based on usage metrics. The core idea is to constrain the usage-based metric (e.g., Instance-Hour) with a repetitive period during which a customer can either use or lose the purchased quantity.

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Business Method for creating and selling new usage based charge metrics for traditional non-SaaS software

Cloud services are enabling new business models such as pay per use, which enables organizations to reduce software costs by paying for usage. However, this requires organizations to buy Software as a Service (SaaS), through which the vendor can monitor and bill for the usage. On a public or vendor managed private cloud, for example, customers can pay for software based on Instance-Hours, thereby only paying for the number of hours for which the software instance is used.

Traditional software license vendors selling software licenses want to deliver the value of reduced software cost from these usage based metrics, without requiring customers to buy software as a service or enforcing monitoring of usage data (vendor-managed). These vendors have limited choices to charge for software, primarily because of constraints such as Revenue Recognition. Some of these choices include:


Charge for software based on the number of software instances (e.g., number of virtual servers, number of installations, single installation format, etc.)

Require customers to report monthly usage and then charge customer based on the usage reports
Sell fixed term licenses on a monthly basis, which increases the transaction costs

The solution is a business method that creates new charge metrics for selling traditional software licenses (non-SaaS or vendor-managed) based on usage metrics such as (Instance-Hour or User-Hour) without deferring transacted revenue. The core idea is to constrain the usage-based metric (e.g., Instance-Hour) with a repetitive period durin...