The SCG Blog

What’s the Right Engagement Model for Your Business?

February 06, 2017

Author

Jason Swan
Managing Director

   

You have actionable data on where your software is being used illegally and where your customers are not in compliance with their entitlements. You want to recover that lost revenue – fast.

But you’re not all that sure how to do that. Should you use a softer approach, and send an initial letter alerting the customer to the noncompliance? Should you call in the lawyers? Or should you get boots on the ground in the region you’re seeing the noncompliance spike?

The truth is, it could be some combination of all of those things – and more. There is no one-size-fits-all solution when it comes to recovering license revenue lost through software piracy. It’s something of an art form – and the combination of services used is unique to each engagement. Plus, it’s a tremendous amount of work, and if not handled perfectly, it could wind up hurting your relationship with the client – diluting the value of engaging in the exercise altogether. Ensuring that the right combination of engagement methods is used dictates whether the engagement will have been worth it in the long run.

What are My Options?

As a rule, there are four ways to engage a customer in a revenue recovery effort.

Auditing engagements are a more collaborative effort, and provide a chance for a stronger client relationships through the channels opened for knowledge transfer and feedback. These efforts involve a comprehensive evaluation of a customer’s license usage, analysis of license entitlements and recommendations for optimal licensing configurations. Upon the completion of the engagement, a deliverable is provided to the customer serving as a formal knowledge transfer of its unique deployment. The customer and the publisher now have complete visibility into the entitlement.

Sales-based approaches rely on a global team of compliance recovery experts, all of who are experienced in leading recovery strategies and maintain the utmost respect for customer relationships.  Strong language skills in the region in which the recovery effort is conducted are crucial to success.

In a Legal Advisory approach, having the option to leverage law firms can both accelerate and grow the value of the settlement. This approach requires strong partnerships with leading copyright and intellectual property law firms around the world, each of whom have a deep understanding of both culture and regional policy.

Finally, Anti-Piracy Enforcement (aka a surprise audit, or raid) is a necessary option in parts of the world. This method is used conservatively. It requires detailed planning and coordination with government agencies that have a vested interest and responsibility in enforcing copyright and intellectual property policy.

How Can I Determine What’s Best for My Business?

Some combination of all of these services will be necessary to maximize the value of an engagement. There are a few questions a software publisher can ask to start putting the pieces together on what their particular engagement may look like.

Where is the infringing company based?

There are simply some places in the world that do not hold intellectual property (IP) laws in the same esteem as others. Advanced notice in such circumstances could have customers in these locations doing anything to avoid licensing penalties, even dumping hardware. In these cases, a surprise audit is often the only way to uncover issues in licensing compliance and seek remediation. 

How big are you?

Anti-piracy enforcement is not a great option for publishers who don’t have a large customer base yet. A softer approach – an auditing engagement – will frame the recovery as a licensing optimization exercise that will maximize usage and value for the business. Publishers can then involve dedicated compliance and legal resources to develop and enforce remediation methods.

What’s your capacity?

For smaller and mid-size companies, taking even one person away from his job will jeopardize another revenue generating process or smooth operations.

For instance, many midsize companies are tempted to handle audits in house with their sales teams. But for smaller companies, an internal sales-based approach will hurt sales in the long run, and may even nullify the benefits of revenue recovery all together. Ask yourself: does that person have the language skills to tackle compliance in some of the places where it is the most blatant? Will that person put in place a remediation effort that will ensure continued revenue generation – or look only to pad his quarter? With attention focused on “low-hanging fruit,” will organic value add to the pipeline suffer?

Can you handle it alone?

In engaging a customer in a revenue recovery exercise perhaps the most important question to answer is: what’s the maturity of your existing program? Can you even call it a program? Underestimating the value of having the right team in place for revenue recovery will not only result in a host of inefficiencies for the daily operations of your business, but could cost you hundreds of thousands – or even millions – in potential revenue and residual licensing fees that you didn’t maximize your opportunity to recover.

The Bottom Line

Determining what’s right for your business isn’t always a transparent and easy task. Leveraging professional resources – who can ensure that the engagement is tailored to the client, carried out in a timely manner and maximizes revenue recovery – is a solid option for any company for whom this isn’t a core competency.

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