A strategic analysis of an IT company for software licensing solutions

XYZ is a newly acquired software company of Company JL, which develops recreation management products for Parks and Recreation centres across North America. Company XYZ uses a perpetual licensing model where a lump sum is charged up front for the use of the software. Company JL uses a transactional licensing model where the licensing fee is charged per transaction via the Internet. Company XYZ can provide its customers with hosting solutions that provide end users with online registration services. Based on our analysis of XYZ's internal competencies and external environment, the transactional licensing model is recommended as the most suitable software licensing strategy for meeting the company's goal of increasing revenue by 20%, aligning itself to customer values, and increasing transaction volume by 40%. This study further recommends that a gradual transition to a full transactional model is a key to ensuring success for both Company XYZ and its customers.