Software-Licensing Market Taking New Shape

Broadline distributors have also added vendors or revamped their online sites to help simplify the licensing process and streamline vendor communications for solution providers.

On the consolidation front, corporate software reseller Softchoice, Toronto, last week bought the federal government sales arm of Beyond.com for $3.1 million. Meanwhile, broadline distributor Synnex Information Technologies, Fremont, Calif., finalized the integration of License Online, which serves about 44,000 integrators, solution providers and consultants, or solution "influencers."

\

ONLINE LICENSING POOL SHRINKS

\

Consolidation in the online software licensing space continued last week as toronto-based Softchoice, headed by President David MacDonald, completed its purchase of Beyond.com's Government Systems Group.

"Volume licensing has become one of our largest growth areas," said Dave MacDonald, president of Softchoice, adding that licensing grew 62 percent from last year and now makes up 85 percent of Softchoice's business. "At the end of the day, the whole industry revolves around software, so software sales, services and integration is going to grow."

The purchase of the Beyond.com division gives Softchoice GSA certification and access to 500 federal government customers, including the Department of Defense, the Internal Revenue Service and the Department of Energy. The deal also gives Softchoice Beyond.com's Atlas License Management Technology, an automated software license distribution management system.

id
unit-1659132512259
type
Sponsored post

"We didn't have GSA access with Microsoft, and this helps us to leapfrog the bureaucratic process. It allowed us to integrate quickly," MacDonald said. "It was a big opportunity because the federal government is the fastest-growing IT environment in the country."

Synnex is also banking on big opportunities with License Online, a Microsoft license aggregator. The distributor was particularly interested in tapping into the emerging class of influencers, which accounted for the majority of License Online's 44,000 customers, said Mimi Anderson, vice president of software marketing at Synnex.

The influencers are mainly consultants that don't carry inventory but recommend products and solution sets to their customers. That growing segment of the channel is enticing to Microsoft and other vendors because of its strong presence in the SMB market,a sweet spot that hasn't suffered the same widespread spending constraints as the enterprise market. Vendors compensate influencers with an agent fee.

"There are hundreds of thousands of influencers in the IT industry, and at least 80 percent of them suggest software solutions to the end customer," Anderson said. "The majority of those customers represent the ever-elusive SMB."

License Online's electronic software-licensing tool was another key element of the purchase. The quoting, billing, ordering and tracking tool eases many of the complexities solution providers face with manual licensing, Anderson said.

Software distributor Merisel Monday plans to increase its online-licensing capabilities with the launch of its revamped SELline configuration and procurement tool. The company spent the past six months redesigning the five-year-old tool to improve graphics, navigation, functionality and speed.

"Our customers were asking for it, so we decided to create a superior product," said Traci Barnett, Merisel's vice president of sales and marketing. "It was truly functional, but the look and feel was very archaic."

Ingram Micro and Tech Data have also recently added new vendors and improved functionality to their respective Click2License and LION licensing tools.

Solution providers said they welcome any tools that can simplify ordering processes, especially for something as time-consuming as software licensing.

"Online licensing has saved us 70 percent in time, and that translates into direct cost savings," said Roland Pinto, CEO of Globabilities, a solution provider in Omaha, Neb. "We're making more cash on software deals because it saves us time in ordering, administrating, managing and tracking the orders."