May 2016
18
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nternet
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of
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hings
Flexible licensing models
in the Internet of Things
By Ansgar Dodt,
Gemalto
Cross-linking of machines
via the internet has grown
tremendously in recent years.
An increasing amount of intelligent
software-based hardware is being
deployed in industrial production.
Engineering companies are therefore
shifting their focus onto software
development rather than hardware
development, with the consequent
need for license management.
The Internet of Things (IoT) is turning
engineering companies into software provid-
ers. Thus, securing intellectual property (IP)
is especially important. License management
plays a major role in this. New licensing solu-
tions not only protect embedded software;
they also entail new business opportunities.
These include flexible licensing models such
as pay-per-use, function and capacity-based
licensing, software keys and subscriptions.
This type of licensing requires constant
changes, in order to meet the user demands.
Therefore, companies need to implement
Licensing Lifecycle Management.
Certain licensing models are more suitable
for the IoT than others. Licensing with phys-
ical keys like Smart Card Chips attached to
control boards, which work just like the well-
known dongles, limits the access employees
have to certain machines or functions. How-
ever, software keys are more appropriate in
the IoT because they are more cost-saving
than chips or dongles. The latter need to be
delivered, repaired, or possibly replaced if an
employee looses the key.
Yet, the software is only as secure as its key.
An example: if the keys are stored in software,
they can be stolen or misplaced. It is for this
reason that companies should put their trust
in special platforms like Hardware Security
Modules (HMS) when it comes to key man-
agement. Keys can simply be stored on and
managed from the hardware, where they are
better secured and can be more easily con-
trolled than from software. With unified key
management and built-in, granular security
controls users can manage the encryption
very accurately.
Function-based licensing is especially inter-
esting for engineering companies that deliver
the same device to customers with different
requirements. This form of feature monetar-
ization enables integrating a software into
the machine on which the functions are then
unlocked. This allows a variety of products
and at the same time doesn’t give the user the
impression of paying for functions he doesn’t
even need or use. Merely the functions that
actually get used are billed. These can be
offered in bundles according to what applica-
tions are in high demand. With this kind of
flexible licensing vendors can easily increase
their revenue.
Another option to choose from is pay-per-
use-licensing. With this model companies can
also bill usage subsequently if it goes over the
originally fixed amount. Usage-based licens-
ing helps equipment manufacturers capture
the actual use of their machine, as the data
containing this information is forwarded to
them. This helps capturing the exact way the
user has utilized the machine – something
that was not possible with traditional mod-
els, as only the access to software and not the
usage could be restricted. An example; the use
of a robot during an operation can be calcu-
lated afterwards, if it was used for more occur-
rences than originally planned. The software
development also profits from utilization data
as usage reporting functions can be activated.
This provides information on which software
functions were well-perceived by the users
and which need to be optimized.
All these licensing models can be combined
with one another. By licensing application
functions separately, an-own license met-
ric can be applied to each function. Thereby
different combinations of licensing terms are
possible for each deployment. Customer A
would like a subscription-based core mod-
ule, as well as a fixed number of licenses for
different add-ons. Customer B on the other
hand orders the same core module but on a
pay-per-use basis. He would like to subscribe
to the add-ons. Numerous combinations are
possible: licenses, simultaneous use, pay-per-
use, time-based licenses. The device sent to
the customer is always the same.
Flexible Licensing requires continuous
Licensing Lifecycle Management (LLM), as
