How does a software company know the value of its product as it is being used? TechSmith Corporation, the maker of Camtasia and Snagit video editing and screen capture software, faced this problem. The company wanted to understand what its end users found valuable in its products “to effectively to increase trial conversions, upgrades, site license renewals, and cross-sales—but lacked the customer data to do so.” So, it turned to Revulytics.
VP of Product and Strategy Vic DeMarines and his team members at Revulytics have seen the challenges software companies face. Despite the growth of SaaS, most software vendors have desktop or distributed server products that are not going away anytime soon. In addition, these same companies are under pressure to develop new cloud based applications as well as new SaaS license models to retain and grow their user base. As he phrased it:
“In former times you licensed a product, activated it and then got that version for an agreed-upon time period. You developed updates to that release that you hoped would create more value. With the emergence of SaaS and cloud-hosted applications, end users are expecting seamless updates to functionality that impact their experience as well as feature-based licensing.”
These expectations will require software vendors – regardless of their application deployment model – to have more direct insight into the needs of their end users.
“Take TechSmith, for example. Their end users not only do screen captures and build videos with their desktop applications, but use collaborative web applications where they receive content from their constituents. More and more, software vendors will be adopting this hybrid application environment and will require product usage intelligence that spans the complete user journey”
So, how can a company understand their customer’s interaction between their desktop applications and their cloud? How can a firm build a real relationship with their end users and also protect intellectual property? Vic DeMarines stressed that companies like TechSmith accomplish these goals with software usage analytics: the ability to understand how software is being used to drive insights for product development and customer satisfaction.
Growth Starts with Usage Analytics
Regardless of how an organization deploys its software products, it cannot ignore usage analytics. Firms need to gain users, grow licenses and revenue, and develop a feature roadmap to evolve the product. But companies “whose bread and butter are software,” as DeMarines said, “have specific business intelligence needs.” In addition to collecting usage data and converting this to ROI, companies that manufacture desktop or server-based-applications need to transition to the cloud:
“They need to figure out this journey through usage analytics while competing with cloud startups that potentially can replace the old software business. This means you need to have a better relationship with your end user, engage them, and understand what they value in the product. To do that requires usage analytics.”
Software usage analytics integrates technology into the backend of a product, through a software development kit. DeMarines explained how this works:
“The software company configures what features it wants to focus on within the application. Once this is done, data comes into a dashboard that enables the software company to visualize the trends and understand user engagement. More detailed analysis can be done within the dashboard to understand the path of a user through that application.”
Vic DeMarines’s approach to analytics comes from years of experience, first with selling software protection and compliance solutions and then evolving Revulytics into a software usage analytics company. Early on, Revulytics focused on answering “key questions around compliance and piracy.” When large software vendors adopted Revulytics usage analytics, DeMarines learned, from their stories, how they gained additional license revenue and value. This in turn, spurred Revulytics to also provide its customers with additional usage intelligence tools so they could get deeper insight into their customers and prospects. He remarked:
“Software companies that have been in business for 20 to 30 years have enormous amounts of features deployed in their software applications. As they are propelled into the cloud, it’s critical that they understand what features differentiate their applications and where to focus their resources.”
This tack is necessary to make more money and gain more paying customers, in addition to reaching more efficiency throughout the software development lifecycle. For companies offering software trials and converting these prospects into paying customers, usage analytics can give more insights. In fact, in-application messaging, combined with user intelligence, “offers a direct feedback channel to improve product roadmaps, user experiences, and marketing as a software company navigates which of its products will migrate over to the cloud,” he said. For many software companies, compliance intelligence is a priority step in their usage analytics programs.
Compliance Intelligence Means Revenue
DeMarines noted that all software companies with packaged applications have also struggled with the piracy problem. Usage analytics not only helps drive product strategy through better end user insight, but helps grow license revenue by monetizing adoption of pirated versions of their applications.”
Usage analytics can help vendors learn the extent that organizations or individuals are adopting pirated versions whether intentionally or not,” DeMarines said. “From our own customers we know that pirated software may be the result of one aggressive engineer bringing it into the shop or any one of several less illicit reasons where it can then be installed on many machines.”
In this form usage analytics can provide software compliance intelligence to measure the extent of pirated software use and drive engagement with organizations to convert them to licensed customers. The software vendor configures the usage analytics to detect when the software is used without a valid license. Then a report is sent describing machine information with the purpose of identifying the organizations with the pirated software.
“These reports help companies understand how much an organization was misusing the software and how many machines were involved,” said DeMarines. “From these analytics, companies can create leads to make compliance cases. Our customers often select this strategy over more draconian digital rights management (DRM) methods to minimize the negative impact to the user experience.”
In the past, vendors focused more on preventing their software from being pirated, and not the subsequent adoption of the pirated versions of their software. This led to companies adding greater complexity with software DRM solutions that delayed but did not stop the piracy. The real focus, DeMarines contends, should be on identifying and converting users of unlicensed software.
“The true pirates are people who like to play around with technology and discover new ways to remove license enforcement methods. They don’t focus on usage analytics reporting, unless it blocks their efforts to disable license enforcement. Therefore, reporting tends to be ignored which gives software companies the ability track the unexpected and interesting places where pirated software is being used.”
The reported compliance data provides the means to recoup the losses from illegally distributed software. To facilitate this a lot of customers convert compliance analytics data into revenue using a compliance program. From there, customers tap services, provided by firms like Revulytics, to help recover revenue and go after the infringers. DeMarines concluded:
“Taking raw data that is coming in about software misuse and identifying the responsible organization is not much different from market analytic tools tracking website traffic to identify what organization is accessing the website. We just have other additional technology and information that helps us do that job.”
Usage Intelligence Means Better Development
Usage intelligence draws from the same technologies as compliance intelligence, but applies it differently. “Usage intelligence peels the onion of software. It looks at what features customers consume and how they interact with them,” he said. Developers and product managers find valuable understanding from this approach. They can balance users’ subjective opinions and feedback on the latest release with quantitative metrics and analysis.
Instead of targeting misuse, companies configure the software development kit integrated into their applications to collect information about priority features, he noted. “From this, firms can understand how their software enables their customers to do their jobs and gain understanding of different use cases and pathways through the application.” This way promises more efficiency than watching a smaller subset of users interacting with the software in a usability lab.
Usage Analytics Will Drive Future Use Cases
Ultimately the old model, logging in and getting subscription information and the latest news about a product will change. “You will see visualizations of how they interact with the software’s features,” said DeMarines. “You may even get some gamification, such as ‘you are in the top 10 in this software’s functions x, y and z.’” From there targeted in-app messaging based on usage data can entice users go to the software company’s website to get expanded functionality or a customized feature.
This could lead to lots of different use cases to bring value to the company, such as combining all the usage analytics into business services, like those expanded by Salesforce or a customer success program. “Software companies will have to propel relationships with their clients and the only way to do that is through usage analytics,” he remarked as the interview ended.
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