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We recently interviewed Vickie White Director of Virtual Products at Gemalto, to hear about the shift companies have to make in their go to market when they become more software driven. 

Q: Hi Vickie! Thanks very much for joining us today. Can you introduce us to your current role in Gemalto’s Enterprise and Cybersecurity (E&C) business unit?
Thank you for having me. I am Director of Virtual Products for Gemalto’s E&C business unit. 

Q: Can you tell us a bit about how this role came about?

Gemalto’s acquisition of SafeNet included the “acquisition” of products and processes that were different to Gemalto’s. So the state of mind from a go-to-market perspective was, “This group has done this forever and this group has done that forever” and it takes a lot of effort to reverse that inertia. 

More or less at the time of the acquisition, Gemalto had set a corporate objective to invest in the growth of their software and services offering across all the business units, primarily focused on E&C.  In my terms this means transitioning from more of a hardware company to a software license virtual delivery type company and when contrasting both of those, we’ve seen clear differences. 

A lot of confusion with virtual, and I’m speaking mostly from an operational standpoint, within operations. This became an opportunity to replace legacy practices that were focused around hardware go-to-market with best practices in software go-to-market – predominantly around the areas of software delivery and product licensing.

Q. For many hardware companies the transition to a software license-type business model is foreseen primarily as an operational challenge, why do you think that is? 
From an operational standpoint, when we talk about hardware, a lot of people are involved with supply chain and vendor relationships and everyone knows their job, everyone knows how to deliver hardware.  As we’ve shifted towards delivering virtual products it is not that clear.  

A lot of people are looking at this, and thinking “I don’t even know what I’m delivering”, and because it’s different from one product family to another, a lot of internal stakeholders are confused.  I hear people saying “I don’t even know how I’m supposed to deliver this, how are we going to close this line in our ERP system and how are we going to recognize revenue?”

Introducing new products brings lots of challenges.  Operations systems that were built to support hardware lifecycles cannot apply the same methodology and processes to software and services.  Software design/development teams often “assume simplicity” and don’t engage Operations early enough, making selling and fulfilling with legacy/hardware centric systems unsuitable. 

Customer expectations are very different: in the Hardware world, delivery details and overall customer experience are often an afterthought, whereas in the software world “empowering the user” often leads the go-to-market strategy.

Q. Can you name the 2 pain points that led you to seek out a solution for software monetization?
1. One issue is operational efficiency – or lack of. When we were acquired by Gemalto, there was a lot of confusion around delivery of legacy SafeNet virtual items, and adding legacy Gemalto items was just going to make the situation worse! Then from a back office standpoint, we have a single ERP system and a whole bunch of back office systems.

There’s a lot of back office systems that we’ve inherited and we’ve just not phased out.  So, we have some level of automation or we had gotten to the point where we have some automation between our ERP system and our back office systems but a lot more were fully manual where we have people either in customer service or order fulfillment that are booking an order in our ERP system and then turning around and doing manual steps in a variety of other back office systems.  It’s not efficient, not scalable, and causes a lot of confusion.

2. The other issue was customer experience – both internal and external; Customer service representatives, getting a call, trying to book an order, and really thinking great, I have no idea how I'm going to book this because there are so many different products and ways that we sell our products.  So, our own internal folks have confusion.  

Similarly, a fulfillment staff member trying to fulfill a simple software license order finds himself or herself often quite confused, saying something like “I'm not even sure how I'm supposed to fulfill this.” Lastly and most sadly, we've seen customers frustrated.  You're telling me I'm going to get my software and my license next week.  

Q. On average, before implementing a software monetization solution, how long did order fulfillment take from the time a customer placed an order to the time they received it?

Here's the case study I’m going to take you through.  This is a case study of a product called SMC.  It's a software-only product that's used to manage high-speed encryptors, so the high-speed encryptors themselves are hardware items.  This is a software management console that sits up on top of those and helps administrators to manage those high-speed encryptors.  There's a software component and then a licensing component which enables features and functions.  A quick diagram of how the process worked before.  First, the customer would submit a PO to us, it would be booked in our Oracle ERP system as a sales order, and then that relevant sales order information would go across to the fulfillment team.  

The fulfillment team had two main tasks.  First, they were physically shipping a DVD so we had to keep inventory or we had to burn the DVD or whatever, physically shipping something to the customer and secondly, they went to a separate system called WPS where they would process the order manually.  

They would generate license keys and do a number of other steps manually and that process would then send an email with the license keys in the email so in an attachment of the email to the customer and then once both of those steps were done, someone would manually go back into our Oracle system and close the line item so we could recognize revenue.  

I don't have a precise metric but we said hours or days.  Depending on how busy fulfillment was, it would take a few hours to get that in their backlog to go to the system to do it and then days if you think about the shipping time to the customer so from the time the customer placed the order to the time he or she received it, we’re talking days and the fulfillment mechanism was primarily manual other than the automated email. There was a person pushing the levers behind the scenes.  Revenue recognition, hours or days. 

Licensing security was low because we're sending that license key in the clear in an email. Customer self-service, none. They’re purely a recipient at that point and we really have no visibility or insight into whether they received the goods and whether they're using it or how they're using it.  

Q: Can you share the main business impact benefits the operations team gained by implementing a software monetization solution? 

Implementing a software monetization solution has provided several benefits:
1. Automated fulfillment and scalable back-office processes - When we compare the previous to the present, the fulfillment mechanism is 100% automated including closing the line item in Oracle so the order gets booked in Oracle and not a single person touches it. 
2. Improved customer experience - fulfillment time is minutes vs hours or days, so shorter lead time for customers. We can now actually see if the customer has received the product and we have insight to customer needs that we can use to continue to improve.
3. Revenue recognition - substantially faster and clearer due to the automation (literally minutes).

Q: what will your “next steps” be?
We have plans to expand the success we have seen within E&C to other product lines and maybe even business units within Gemalto. I want to reach increased automation and alignment of backoffice processes across products, continue to improve support for usage based sales/billing models and expanded customer self-service options.

Q: Do you have anything else you would like to add?
Our main focus is on improving the customer experience both internally and externally. We are adopting a “plug and play” approach by building systems and processes that will make NPI for virtual items like software and services fast and efficient. I am excited because this is critical to the future direction of our business!

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