The Coming Storm Over Software Renewals

One needs only to look at the security side of the business to see the trouble ahead. While security vendors aren't necessarily pioneers in the SaaS space, they do provide the best example to illustrate the importance of renewals. Without that license renewal, antivirus and unified threat management products can get out of date rather fast.

Customers therefore have a lot riding on renewals, and VARs and their vendors look to that recurring revenue as a business stabilizer.

So why then does most of the conflict in the channel today revolve around renewals? In the most recent but certainly not the only case of this type of conflict, Symantec partners are complaining that Symantec has increased the intensity with which it is pushing the partners' customers to renew. Symantec execs say the goal is to get the renewal for the company and the partner, and in all likelihood, that is true. But the execution of the program has resulted in confusion among customers and anger among Symantec VARs.

At least one partner said that his customers are receiving two to three calls per week to renew their Symantec licenses, when they have in fact already renewed with Symantec through that partner's company. In a case like that, it doesn't matter who gets the margin on the license renewal. Both Symantec and the VAR are forever tarnished in the eyes of the customer.

For their part, vendors say too many customers do not renew their licenses and they aren't willing to walk away from that revenue without a fight. To the untrained ear, that is vendor speak for, "Our partners aren't doing their jobs, so we are stepping in to do it ourselves." And that is never good for the channel.

Symantec is not alone. Several other vendors over the years have decided to focus on boosting license or maintenance renewals for one reason or another. Some have taken to contacting the customers directly while others have created more incentives for partners to more vigorously pursue the renewals themselves. My guess is that in the long run, the companies that create more incentives for the partners to renew their customers end up with more renewals. If it is true that VARs are not going after customer renewals, in all likelihood there must not be enough money in them to make it worthwhile.

What's your renewal policy?