Don’t Gamble with Your Software ROI
Amena Ali, Chief Marketing Officer, Arxan 
You are a software vendor. You invest deeply in research and development to find better, faster, more user-friendly ways to empower your users. Your teams develop leading edge, high performance software on aggressive schedules to deliver value and functionality to your customers. And within hours of your latest software release, counterfeit and pirated versions are available for pennies on the dollar across a range of online stores, peer-to-peer networks and gray markets across the world.
Software piracy, and more broadly intellectual property theft, is the single largest threat to software companies today – and to the software ROI these companies get from their investment in developing and bringing to market software applications. Analyst firm IDC estimates that roughly $40 billion of software was pirated in 2006 alone. However, lost revenue is only one aspect of the financial impact of piracy on software vendors. Stephen Siwek of the Institute for Policy Innovation estimates the true cost of copyright industry piracy to the U.S. alone as $58 billion in 2005. 
Software ROI today is a gamble, subject to market forces that threaten fundamental business model assumptions. What can be done to prevent this drain? IP protection or application hardening is a protective layer of security that safeguards your software products against tampering, reverse engineering and piracy. While license management layers enforce business rules and usage policy, application hardening comprehensively protects your software application, and the intellectual
property within it, against professional pirates and hackers. An effective IP protection strategy provides both immediate ROI through cost savings and increased revenue. It also provides long-term ROI by insuring your core business and product lines against reverse engineering, by raising investor confidence, and through improved customer satisfaction and loyalty.
Sidebar 1:Effective IP Protection: To be effective, an IP protection solution must provide long term resistance to BORE (break once run everywhere) exploits, which are the key to widespread piracy of your software. Seven key factors to choosing an IP protection solution which is effective, and which will not unduly impact your software development life cycle, are:
- Dynamic : Protection technology includes both static obfuscation and encryption and dynamic run-time detection of, and reaction to, attacks
- Durable : Diversification, customization and interleaving with your application to eliminate single points of failure and prevent construction of reliable BORE exploit
- Resilient : Protection can be easily reconfigured and rapidly reapplied to quickly respond to potential breaches, and adopt to an evolving threatosphere.
- Development Friendly : Binary-based solutions compatible with debugging and crash analysis tools will not disrupt your coding process or schedule.
- Easy to Use : Your tool should provide both intuitive UIs and scriptable command line options minimize learning and integration overhead.
- Proven : Choose a protection technology which has been stress tested through existing deployments and stringent third party testing
- Low Impact : Negligible performance overhead, zero invasion of end user systems and complete transparency to end user experience are critical to customer satisfaction.
As with any aspect of software development, your end result is only as good as the tools you use. In order to realize a strong return on investment on your IP protection strategy, you must ensure the solution you implement is based on effective tools and technology. |
Software ROI Through Increased Market Share
By delivering superior products at exceptional value, you can confidently stay ahead of your competition. Right? Wrong. Your biggest competitors don’t build their own parallel product line with their own investment. Rather, they sell your exact product, released on the exact day as your titles, for as low as 5 percent of your price, and capture an estimated 33 percent of your market. Meet the software pirate, also known as the black hat or the hacker. Software piracy today is an organized business, backed by highly skilled hackers and entrepreneurs, and powered by the anonymity and speed of the Internet.
Software applications are pirated on a widespread basis. As evidence, the Business Software Alliance (BSA)’s latest global piracy study, conducted by IDC, estimates that for every $2 businesses and consumers spend on PC software in the next four years, $1 of that will be pirated using stolen IP. An estimated 200 billion dollars of revenue will be lost over the next four years.
An effective anti-piracy strategy is critical to manage this proliferating competitive frontier. Microsoft is a prominent example of the benefits software vendors can reap by curbing piracy. In October 2007, Microsoft reported strong gains on sales of PC and server software. They attributed sales increases of almost 5 percent to anti-piracy measures, and shares have hit their highest levels since mid-2001.
>Tip: Make anti-piracy a core, high-priority tactic of your competitive strategy.
ROI Through Decreased Costs
Piracy’s impact to your bottom line extends beyond revenue loss. Counterfeit software, sold by professional pirates on so-called “Cheap OEM Software” sites, is buggy and often carries malware payloads. Customers who unknowingly buy counterfeit software can account for up to 20 percent of your technical support costs. Effective IP protection mitigates this loss. Tamper resistant features make it much harder to hack the software in the first place, and tamper evidence features clearly identify cases where failure has occurred in tampered software.
Many software vendors today rely purely on metering solutions, such as license management, to prevent piracy. When (not if!) “Break Once Run Everywhere” (BORE) exploits occur, teams incur expensive reengineering and upgrade overhead to close out the vulnerability, only to get hacked again within hours of their next release. IP protection solutions eliminate BORE vulnerabilities and decimate the cost of renewing and restructuring protection as your needs and threat vectors evolve. Not only are development costs reduced, but you now have resources freed up to enhance your product and delight your customers.
> Tip: Product management can take a leadership role in protecting software IP by sharing these initiatives with development, quality assurance and customer support teams – they all benefit from IP protection.
ROI Through Improved Customer Satisfaction
There is a plethora of versions, editions and variations of your software on the gray and black markets. Many potential customers download such software for trial usage or pilot projects. When they are dissatisfied with the experience, they are disillusioned with your software quality. By preventing piracy of your software, you promote trust and confidence in both existing and potential customers. Additionally, the unchecked availability of pirated, nearly-free software is very disturbing to paying customers. They are forced to compete with a higher cost than their competitors, your prospects, who use pirated software to lower costs. Your customers lose market share and they are invariably tempted to follow suit. And don’t overlook the opportunity cost that you incur by not supplying to other prospects.
Application hardening provides broad protection for your application, which extends beyond anti-piracy to anti-malware as well. Effective protection not only protects the application against hacking, but also protects your application’s end user against malware, trojans, counterfeits and other potential threats. It is unrealistic to find and mitigate every Internet security vulnerability that may exist in your complex software. Fortunately, the same anti-tamper measures which protect your IP against application hackers can also protect your application from being hijacked by Internet hackers. By reducing the time your developers need to spend on fixing internet security bugs, application hardening provides ROI by freeing up resources for competitive feature development. At the same time, by promoting the security features of your software, you can build customer trust and loyalty in your product.
>Tip:You can and should promote application hardening as a valuable feature for your customers.
Protection of Business Models
Software theft can not only impact the revenues, costs and customer satisfaction for given product lines, but can have even broader business consequences. For instance, Skype – a hugely popular VoIP provider - was acquired by eBay for $2.6 billion in 2005. Following reverse engineering, hackers were able to create counterfeit clients that plugged into Skype’s protocol and connected to Skype’s users. These counterfeit clients worked outside of the Skype community, were independently branded, and resulted in destabilizing the entire Skype P2P network. The result? In October 2007, eBay took a $900 million devaluation on Skype.
Such numbers speak for themselves. In today’s threatosphere of rampant and sophisticated reverse engineering, software companies simply cannot afford to ship products – or safeguard their business models – without a strong application hardening layer for IP protection.
>Tip: Consider anti-piracy as a form of insurance for your business that mitigates a huge risk.
Getting Started
As with any software feature, you should begin your process of implementing application hardening by understanding your risks and requirements.
Sidebar 2:Understanding Piracy: For many software vendors, characterizing and combating piracy is challenging, uncharted territory. To get you started, Arxan offers complementary Crack Situation Investigation (CSI) services to software vendors. CSI analysis will tell you on which software and peer to peer sites your software titles are available, and will also help you estimate ongoing losses from piracy. To request your free CSI report, please write to info@arxan.com. |
As your first step, investigate the extent to which your software is being hacked and freely distributed online today. Next, at a technical level, understand where your software and license management layers are vulnerable. At the same time, from a management perspective, determine broader risks to your business and pricing model from piracy and counterfeiting.
Armed with this information, you will be able to create requirements for your application hardening initiatives. Implementing an effective intellectual property protection strategy will immediately ensure that your core software ROI, and your business model, stays intact.
Ms. Ali has over 16 years management experience in software and telecommunications companies ranging in size from $25 million to $30 billion. She has developed and implemented marketing strategy, execution and corporate communications through an IPO, a secondary offering, 3 acquisitions of private companies, and 4 mergers of public companies. Ms. Ali comes to Arxan from Softek Storage Solutions, a leader in data migration and replication software, where she was SVP, Marketing.
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Leaders and Laggards in the Internet Infrastructure Sector
A new report by Tier1 Research (T1R) shows that the content Internet infrastructure market will continue to grow rapidly through 2008. T1R analysts estimate that the total for 2007 Internet infrastructure revenue will reach $17,990.75m, which represents 26% growth over the 2006 total of $14,216.39m. Based on current trends in consumer behavior, T1R expects the market for Internet infrastructure to grow another 24% in 2008.
The managed hosting sector remains the largest sector within Internet infrastructure and has experienced tremendous growth in the last 12 months – in excess of 30% – and will continue to show similar growth rates moving forward.
Several trends account for that strong growth, including increased managed hosting adoption by SMBs and mid-tier enterprises and hosting for software-as-a-service (SaaS) providers. Moving forward into 2009 and 2010, an array of new utility storage and hosting services will continue to fuel strong growth.
These findings are contained in a report released today by New York-based T1R, an independent research firm that analyzes the financial and industry implications of developments affecting public and private companies within the hosting, IT, communications and Internet sectors. The report is the second in a series designed to provide timely analysis and perspective on key technology trends and marketplace developments in the Internet infrastructure marketplace. It includes sector-specific examinations of shared hosting, dedicated hosting, managed hosting, Internet content delivery, colocation and interconnection.
The report covers more than 40 key public and private companies in the Internet infrastructure sector, including 1&1, Akamai, AT&T, BitGravity, CDNetworks, CI Host, ChinaCache, Endurance International, GoDaddy.com, GS Neotech, Hostway, Intergenia, Internap, Layered Tech, Level3, Limelight Networks, Melbourne IT, Mirror Image, NaviSite, Network Solutions, NTT America, OpSource, Peak 10, Peer1, The Planet, Rackspace, Register.com, Savvis, ServerCentral, ServePath, SoftLayer, SunGard, Terremark, United Internet, ViaWest, Verio (NTT), Verizon, WebSite Pros and Yahoo.
Contact www.t1r.com
Coghead Brings Its Web Application Development Platform to Amazon Web Services Coghead will move its do-it-yourself web application development platform to the Amazon Elastic Compute Cloud (Amazon EC2) and the Amazon Simple Storage Service (Amazon S3). By using Amazon Web Services to host the Coghead system, Coghead will be able to scale rapidly to meet growing user demand then adjust capacity instantly to address peak loads. Along with its move to Amazon Web Services, Coghead is introducing Coghead 2.0 with new functionality that will make it easier for any developer to build applications that leverage Amazon EC2 and Amazon S3.
Coghead’s use of Amazon Web Services supports the continued expansion of the Coghead web application service. With the release of the next version of the platform, Coghead 2.0 is leveraging the same highly reliable, scaleable and cost-effective technology infrastructure
that Amazon has spent 12 years and over $2 billion building for its own web-scale operations.
“Amazon Web Services was designed to provide a highly reliable, cost-efficient infrastructure that can scale as a company’s needs change,” said Steve Rabuchin, Director of Developer Relations for Amazon Web Services. “With Amazon S3 and Amazon EC2, Coghead customers can be confident that their applications will be supported by the same technology infrastructure that Amazon.com uses.”
“Our passion is to provide a massively scalable, highly reliable and secure application platform that a broad class of developers can use to efficiently build and deliver web applications that solve specific business problems,” said Coghead CEO, Paul McNamara. “With Amazon Web Services, we can take advantage of their unmatched expertise in building high reliability, web-scale applications, and provide the infrastructure we need to rapidly scale the Coghead service to meet the demands of our ever-expanding roster of developers.”
Currently, more than 25,000 do-it-yourselfers have registered to use Coghead’s online application platform to create business applications and entrepreneurial opportunities. An intuitive, drag-and-drop interface makes it easy and fast to build sophisticated, robust business applications – from managing sales pipelines to tracking supplies for restaurants – without any coding. The web-based services are developed and delivered using Coghead’s all-in-one platform, resulting in a radical reduction in the time and expense normally required to develop and deliver business applications that scale on-demand.
Contact www.coghead.com
SaaS Offering from Atos Origin and Axway Serves Growing Worldwide Market for B2B Integration Outsourcing Services Axway and Atos Origin have signed a global alliance to jointly offer business-to-business (B2B) integration outsourcing services. With the new service, customers no longer need to invest in hardware, software and licenses; instead, they only pay for real usage. This results in cost reduction, increased efficiency and guaranteed global real-time monitoring of business-critical activity.
The service is designed to manage all aspects of business document exchanges between a company and its clients, suppliers and partners, such as purchase orders, delivery notes and invoices. The scope of this service goes from connecting multiple information systems to executing and monitoring B2B business processes. The service quickly consolidates and expands the customers’ current B2B IT environments. The offering combines Axway’s Synchrony platform, the excellence with which Atos Origin has structured its global operations and the international network of Atos Origin and Axway experts who know the business needs of the market. Together, they offer a tangible advantage to manage projects quickly and successfully.
Axway and Atos Origin commit to a cost reduction as evaluated in the business case that they will establish after a two-to-three-day audit with the customer. The project will lead to a customized Service Level Agreement for these highly standardized services, to reflect the customer’s business needs. Atos Origin offers the services from one of its global data enters, based in Eindhoven, Netherlands, using Axway’s software and expertise. While customers in various geographies are served from this centre, an international network of experts respond to specific regional needs in order to offer the customer personalized service.
"We made a strategic decision to go to this market through partnership. We were not looking for an exclusive agreement but a global one. The global alliance with Atos Origin extends our service portfolio and consolidates our leading position in the B2B integration market," said Christophe Fabre, CEO of Axway. "Bringing together the expertise and experience of Axway and Atos Origin is a real win for companies looking for a B2B Integration as a Service (IaaS) solution, at low risk and quick ROI. With our combined strengths ─ assets, resources, knowledge and investments ─ we can implement a service quickly and efficiently for our customers."
“Partnering with Axway is a natural progression of our successful long-term relationship and strengthens our existing ortfolio in the growing B2B integration outsourcing services market,” concluded Iain Boag, Senior Vice President Global Alliances at Atos Origin. “Axway’s expertise in the B2B market and its proven Synchrony framework, combined with our primary outsourcing positioning in Europe, creates a winning team to offer customers a SaaS solution that delivers results fast and generates cost savings. Our ambition is clear ─ we want to become a market leader.”
The joint offering features:
- Trading partner community management, protocol and communication management, brokering and transformation of electronic transactions.
- Service Level Agreement per customer and personalization of proposal based on specific needs of the customer.
- End-to-end visibility, traceability and business activity monitoring.
- Ability to only pay for what is used (no upfront software license and infrastructure upgrade fees), reduced production sks, and significantly lower total-cost-of-ownership.
- Implementation speed and high availability. The first customer transaction flow can go into production in less than a month from project launch, and the offering remains highly flexible due to Atos Origin and Axway’s shared customer-intimacy approach.
- The B2B transaction-based cost is proportional to actual business activity – regardless of the size of the transaction. Traceability, operational excellence and business activity monitoring processes guarantee 99.9% availability and allow customers to follow future business through a six-month rolling forecast.
Contact www.axway.com/ondemand
ReachForce Secures $5 Million in Series B Funding ReachForce Inc., a worldwide provider of OnDemand software and data services for targeted lead generation, has received its Series B financing led by Greenhill SAVP (GSAVP). Existing investor G-51 Capital also participated in the Series B round. ReachForce, launched in October 2005, will use the $5 million Series B capital to accelerate new customer acquisition and product technology initiatives. As a result of this financing, Steve Brotman, Managing Director of Greenhill SAVP, will join the ReachForce Board of Directors.
According to the Direct Marketing Association (DMA), lead generation expenditures are expected to reach almost $88B in 2008 and 54% of B2B marketers report that reaching the right decision makers is their
biggest challenge, as cited in a recent Forrester Research report, “B2B Marketing Needs a Makeover – NOW.” GSAVP’s investment in ReachForce illustrates the fund’s continuing emphasis on backing innovative lead generation companies within the technology-enabled services sector. “ReachForce is fundamentally changing the way B2B marketers do business,” said Steve Brotman, Managing Director of Greenhill SAVP. “We are excited to help the ReachForce team continue its success of transforming and advancing the lead generation data industry.”
ReachForce delivers data services and software as a service (SaaS) solutions that enable B2B companies to target lead generation at the right buyers within target companies. ReachForce OnDemand software provides real-time analytics of CRM data by highlighting winning market segment ‘sweet spots’ and automatically recommending the right businesses to target. Additionally, ReachForce Data Services deliver role-based contact information within these target companies enabling marketers to drive their lead generation efforts to the right buyers in the right companies.
“Finding the right financial partner in the tech-enabled services sector was essential for ReachForce,” said Suaad Sait, CEO of ReachForce. “With the backing of Greenhill SAVP coupled with G-51 Capital, we will be able to continue to build a company to revolutionize targeted B2B lead generation and extend our market leadership.”
Contact www.reachforce.com
Oracle Software as a Service Platform Leveraged by Agistix
Agistix, Inc., the leading provider of Logistics Management Automation (LMA) software, now leverages the Oracle SaaS Platform, specifically Oracle Database and Oracle Enterprise Manager, for all of Agistix’ on-demand solutions. Agistix adopted the Oracle SaaS Platform for its reliability and scalability.
"As a SaaS leader, quality, speed of delivery and reliability are the lifeblood of the Agistix business," said David Fox, president and CEO of Agistix. "By using Oracle, we can focus on serving our users and growing network of partners without worrying about database and application performance and scalability within our on-demand LMA platform."
Agistix LMA provides companies with end-to-end visibility into all their shipments in order to control logistics costs. It offers a practical solution spanning both tactical and strategic logistics operations by delivering:
1. A means to bridge the gap between transportation plans and real logistics operations with on-demand software that implements and enforces global logistics controls.
2. A global, carrier-neutral and mode-agnostic platform that incorporates a rules-based workflow engine for driving and tracking day-to-day shipment processing operations.
3. Centralized repository of real-time information.
Delivered as an on-demand application, Agistix customers and their partners do not need significant IT resources for installation and ongoing maintenance of proprietary and costly solutions. In addition, as new customers and carriers adopt the software, all participants benefit from the expanding resource network.
The Oracle SaaS Platform, consisting of Oracle Database, Oracle Fusion Middleware and Oracle Enterprise Manager, allows ISVs to build, deploy and manage SaaS applications on a complete, secure and pre-integrated platform.
Contact http://www.oracle.com/goto/saas
Contact www.agistix.com
IRM and Trackmax Solutions Form Strategic Partnership IRM Corporation and Trackmax Solutions, information technology leaders in the food and beverage industry, have formed a strategic partnership. The partnership brings together the leading software systems of both organizations to create new “best of breed” solutions that optimize the value of purchase and sales transactions, delivering unique sales and profit analysis capabilities for both the foodservice manufacturer and distributor communities.
Led by its flagship Discovery System, currently used by nearly 200 Food & Beverage manufacturers and distributors, IRM is an innovator in Business Intelligence (BI), forecasting, promotion management and analytics. Trackmax Solutions is the leading transaction-based tracking, forecasting, analytics and profit optimization software developer with 150 Foodservice distributors currently using its Earned Income Contract and Rebate Management software system.
The integration between Discovery System and Trackmax Solutions’ Earned Income Profit Optimizer delivers foodservice distributors unmatched capabilities in analysis and reporting.
Contact www.irmcorporation.com
Contact www.trackmax.com
Capterra Grows to Largest Business Software Database with 10,000 Software Companies
Capterra, an online destination for business software buyers, has reached two major milestones: 10,000 software vendors in its database and 1,000 software vendors signed up for its lead generation programs.
Capterra reached these milestones without the benefit of a dedicated sales force. The value of the company’s website is so apparent to vendors that many simply ask to subscribe to featured listings. More than 2 million people used Capterra in 2007 to find software for their businesses, nonprofits, educational institutions and government entities.
Any software vendor can register to be part of Capterra’s directory for free. The 1,000 paid subscribers receive more visibility, premium placement, longer product descriptions, targeted web traffic and sales leads.
"Capterra has been part of Autotask Corporation's marketing strategy for more than two years. We have been consistently pleased by the results of our campaign and the quality of buyers who visit our website as a result of being listed with Capterra," said Bob Vogel, Chief Marketing Officer of Autotask Corporation, a provider of web-based IT services management software.
Contact www.capterra.com
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