What is an “on-demand” model?

There are two types of software: Commercial Off-the-Shelf Software such as Microsoft Word and Customized Business Process Software such as a Warehouse Management System.  Both of these types of software have traditionally been sold under an Independent Software Vendor (ISV) model which includes a one-time or term license fee and other associated services such as implementation, support and maintenance.  An on-demand model does not charge license fees, invoices by usage and treats all income producing activities as provisions of a service for a fee.

Is there a software product involved?

Yes.  A software product is included.  The service based model differs from the ISV model only in the method of licensing and the associated invoicing.  Scenic will continue to perform R&D to improve the base product which is used as the starting point for an implementation.  In order to compete well, Scenic must continue to provide a world-class product with exceptional functionality.

Where did this product originate?

Scenic Technologies acquired a robust, Microsoft DotNet-based warehouse management software product from a bankruptcy court.  This product had been developed over 13 years and had a number of customers.

What is the underlying technology?

The most recent version of the software was written in Microsoft Dot Net using Visual Studio using the Visual Basic and C# (C-Sharp) programming languages

Is the Source Code provided?

No, the source code is not provided.

Do we need to enter into an Escrow Agreement?

Yes, Scenic deposits and maintains the source with the escrow agent for an annual fee at the customer’s request.

So how exactly do you license this software?

Scenic has opted to offer its proprietary products under a On-Demand/Use License, which is simply a License that is paid over time, calculated based on the number of transactions executed, commencing when the system is placed in a production environment.

What if we never deploy the system in a production environment?

If the system never gets placed in production, you are not obligated to pay any licensing fees.

What is On-Demand/Use Licensing”?

With On-Demand/Use Licensing, a customer pays a small incremental fee for each use of the system.  Scenic makes its money and improves its revenues as a customer uses the system to increase its own revenue.  This method aligns our goals with the goals of our customers.

How does Scenic determine its Use Fees?

Scenic charges on a single Base-metric of “a fee per line item shipped” and the expected volume of shipments.  The initial pricing goal is to establish a cost per line item shipped which results in a reasonable cost relative to your business volumes for each site that uses the software.

Does the Base-metric have to be Line Items Shipped?

Scenic has determined that this is the likely the best Base-metric to be able to consistently price the product across a varied customer base.  In the instance where this metric is not optimal, Scenic will work with its customers to derive one that is.  If a Scenic customer only uses the Inbound Subsystem, then we use Line Items Received as Base-metric.  If a Scenic customer only uses the Inventory Control Subsystem, then Tasks executed as the Base-metric.

All Vendors say “our success is dependent on your success”

Yes they do!  However, there are many instances in recent history where companies have been wildly successful and yet their customers have not been successful.  The very structure of ISV pricing promotes a short term outlook on the part of a software vendor and its sales staff.  Any business relationship that involves a license fee from the customer to the vendor and compensates a sales person for capturing that fee should have a business performance metric associated with it.

How do you protect your Intellectual Property?

Scenic offers its products with a license key – very similar to the keys used by Microsoft or any other commercial software provider.  In order to deploy our product, you must have a key.

Can you remotely “turn-off” my system?

No.  Scenic has a policy to never hurt its customers’ business under ANY circumstances.  In the event that customers are not in compliance, Scenic will communicate openly and often to bring a customer back into compliance.  However, if a dispute remains open, Scenic will necessarily rely on arbitration and the judicial system to resolve these disputes in a fair manner.

Why is On-Demand/Use Licensing better for my company?

Simply, this model is better for the following reasons:

• Your interests are aligned with Scenic’s

• Your company does not pay for the software unless and until you use it

• We don’t get rewarded for our work until the system provides economic value to your firm

• Your costs are a direct function of the value you receive

Why is this better for me as the decision maker?

Buying and committing to a system as important to your company as a WMS can be a “bet your career move.”  Being able to provide your company with a fee based on business performance is much less risky than spending hundreds of thousands of dollars to purchase a license to a product and spending months to implement it.  While Use Licensing does not necessarily decrease implementation time or costs, it can greatly decrease the license fee risks and reduce the overall project risk by 50% or more.  And, face it, wouldn’t you rather receive a small recognition each day of your worth than a just being congratulated for a one-time event.  Obviously, we would!

What if we get to the point where our Use Costs exceeds your standard license fee over time?

As volume grows, customers become eligible for discounts based on a higher level of committed transactions.  It is also possible to change the Base-metric in isolated cases where “line items” are not the best metric for your company.

Can my company purchase a Perpetual License in the future if we grow to the point where that makes sense?

Yes.  Scenic will allow you to purchase a Perpetual Software License.  One hundred percent of the first year’s Use Licensing may be applied to a Perpetual License.  For the next two years, you may apply 50%.

Why don’t your competitors do this?

Well, we speculate that this type of licensing is oft-discussed by the competition.  Some are offering it as an option.  The ISV Model has its advantages, too, but the change-over to Use License pricing would be expensive because it would involve a hit to earnings over the near term.  Many of the competitors cannot afford that.  Over time, the choice of licensing will become decided by the marketplace.  We do not know at this time if this is the preferred method or not, however, we have determined that there is substantial demand for this type of pricing.

So, tell me, what’s the catch?

Scenic, frankly, believes this is a superior model because it allows us to be a better vendor.  Its relationship with its customers is permanent so long as Scenic does a good job.  Since the company does not rely on ‘elephant killing’ to stay in business, it is nearly impossible to become insolvent.  By having visibility into its future revenues, Scenic can make smarter decisions about how to run its own business.

Is there a “floor” or “ceiling” on the pricing?

No, however, our pricing is driven by your average volume with the unit cost (cost per line item shipped, for example) is dictated by your average volume.

Are there other advantages to my firm

Scenic’s model aligns expenses with revenues and allows its customers to treat the use of WMS as a Cost-of-Goods-Sold (a Direct Expense), rather than an overhead expense which remains fixed no matter how the underlying business performs.

What about Hosting?  Can we host this System?

Hosting is completely independent of On-Demand/Use Licensing.  Scenic can host it, or you can opt to have it hosted at a co-location facility of your choice.  While there is a hosting charge, of course, the Use Licensing and services fees remain the same no matter how you provision the service.

What about Implementation Fees?

Implementation Fees are by definition the same as if you opted for the ISV model.  Scenic provides these services on a T&M basis.

What about Maintenance and Support Fees?

Maintenance and Support Fees are also the same as in the ISV model.  Our pricing is the same for all customers and is available upon request.  Scenic offers three programs; Will-Call, Priority Support (8 X 5) or Premium Support (24 X 7).  Other customized programs are available.  Customers that sign-up for Maintenance receive upgrades to their software on a regular basis at the same Base-metric charge.  Support provides hot-line support for questions and software fixes.

What about upgrades?

As long as you remain current on your Maintenance and Use License Fees, you are eligible for all new versions of the software and any enhancements that are made for any customer.