W H I T E PA P E R

Medical Equipment Providers: Speeding Time to Market and Building Revenue Streams with Embedded Software

Medical Equipment Providers: Speeding Time to Market and Building Revenue Streams wit h Embedded Software

Medical Equipment Providers: Speeding Time to Market and Building Revenue Streams with Embedded Software
Introduction
More than ever, embedded software is playing a central role in intelligent device manufacturers go-to-market strategies. This trend is especially apparent in markets such as telecom, test and measurement, healthcare, and industrial automation where manufacturers are under increasing pressure to innovate, rapidly enter new markets, control costs, maximize incremental revenue from existing customers, and deliver a competitively differentiated customer experience. As embedded software has become more integral to their business, more and more manufacturers are discovering the power of software licensing. With licensing, manufacturers can turn device features and/or capacity on and off as appropriate. This allows them to charge customers for the capabilities they want, while not charging them for capabilities they dont want. Specifically, licensing enables medical equipment providers to more effectively use embedded software as a means of managing and monetizing the features and functionality they provide in their devices. By adopting the right licensing models, medical equipment providers can: Produce different products on the same hardware chassis. This drives down costs by eliminating the need for additional production lines and minimizing the number of SKUs that have to be kept in inventory. Create innovative products on existing hardware chassis. This reduces the cost and time it takes to bring differentiated products to new or existing markets. Up-sell existing customers by simply activating additional device capabilities or capacity. This makes it easier to capitalize on incremental revenue opportunities. Meet evolving customer needs without requiring them to swap out hardware or otherwise disrupt their operations. This makes for a more positive ongoing customer experience.
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These examples highlight why software licensing is such a compelling best practice for intelligent device manufacturers. In fact, in todays highly competitive and fast-moving markets, the skill with which manufacturers structure the licensing of their embedded software and the diligence with which they manage their customers entitlements may well turn out to be what separates market leaders from other players. Today, manufacturers are applying software-based licensing principles to manage a wide range of functions in hardware ranging from medical devices and location intelligence equipment, to devices used in telecommunications, supply chain automation, automobiles, test and measurement, and storage management. This whitepaper outlines key trends and opportunities influencing medical equipment providers today, and how Flexera Software FlexNet Producer Suite for Intelligent Device Manufacturers can help these companies to fundamentally improve their business. In addition, the whitepaper illustrates the power of licensing-based solutions with a customer implementation scenario.

Trends and Opportunities in the Medical Equipment Arena

At a macro level, a convergence of business issues is driving the software-based differentiation of medical equipment all of which can be capitalized upon with embedded software licensing solutions: hanging economics of intelligent device manufacturing: C The global market for medical equipment is large and growing, attracting new entrants and putting timeto-market pressure on all participants. This fact has driven the rise of standards-based hardware and core operating system software, which has in turn allowed medical equipment providers to gain economies of scale. Medical manufacturers are increasingly buying versus building, core subsystems and system software. As a

Flexera Software: FlexNet Producer Suite for Intelligent Device Manufacturers Whitepaper Series

Medical Equipment Providers: Speeding Time to Market and Building Revenue Streams wit h Embedded Software

result, their role is evolving to more of an integrator, and less of a manufacturer. Solution providers seek better ways to differentiate themselves; software is a key means to creating competitive advantage and driving incremental revenue. rowing revenue contribution from software: As a G corollary to the commoditization of hardware, many medical equipment providers are focusing more resources on software development. As such, software enables new revenue sources and provides a way to deliver a superior, differentiated customer experience. oftware-enabled supply chain transformation: With S the underlying hardware becoming more powerful and at the same time commoditized, medical manufacturers can now build fewer base configurations and deliver more functions. Product capabilities, capacity, versions and price points can be created and modified based on functions that can be turned on and off by licensing of the embedded software. This dramatically streamlines the supply chain and manufacturing processes, as well as lowering inventory carrying costs. The challenge for the medical equipment provider is to determine how to limit access to certain functions of software, without changing the configuration or SKU of the product. Achieving this goal also streamlines securing approval from the U.S. Food and Drug Administration (FDA) on equipment modifications. Licensing-based approaches allow medical equipment providers to enter new markets with a full-function device, and then, as FDA approval is gained on software changes, create lower or higher price points with the same device by enabling new software functions. rand and revenue erosion from grey market abuse: B As underlying device configurations become more standardized, grey market theft can be perpetrated more easily. For example, demonstration models of products increasingly find their way into the grey market via channels for selling used equipment. These devices are running improper software and typically do not function correctly, posing a serious threat to the customer experience, and possibly patient safety. In addition, grey market sales jeopardize maintenance revenues, as manufacturers lose track of device ownership and thus the maintenance relationship.

ustomer preferences: In todays ultra-competitive C business environment, healthcare customers are demanding more flexible pricing models, easy access to upgrade features, and a superior customer experience. Embedded software licensing capabilities allow medical manufacturers to meet all of these customer requirements by enabling important capabilities such as field upgrades and a consistent, streamlined customer experience across products.

Turning to Flexera Software for Answers

As medical equipment solution providers address these trends, they increasingly recognize that they face similar issues as software companies. Todays intelligent device manufacturers are looking to Flexera Software to help them: Reach new markets by creatively packaging and pricing embedded software Build revenues by better monetizing capability and capacity Cut manufacturing costs by using software to differentiate capabilities on devices, and thus reduce the number of unique SKUs Accurately track customer entitlements and usage Track channel partner activity, and maximize service and maintenance revenues Prevent unauthorized use of capabilities without cutting off legitimate customers Reduce the operational costs associated with shipping software upgrades Cut customer support costs by offering customers and channel partners self-service and keeping them current on the latest version Make better development and marketing decisions based on device usage data

FlexNet Producer Suite Addresses Intelligent Device Manufacturers Unique Needs

FlexNet Producer Suite for Intelligent Device Manufacturers is the most comprehensive end-to-end solution for electronic licensing and entitlement management available today. Medical equipment providers can benefit from Flexera Softwares support for the largest number of embedded software license models; FlexNet Producer Suite provides a single operations view to easily integrate products across multiple software licensing schemes. Flexera Software supports dozens of platforms the widest range in the industry enabling medical device manufacturers to use it across both large- and small-footprint devices.

Flexera Software: FlexNet Producer Suite for Intelligent Device Manufacturers Whitepaper Series

Medical Equipment Providers: Speeding Time to Market and Building Revenue Streams wit h Embedded Software

FlexNet Producer Suite for Intelligent Device Manufacturers leverages Flexera Softwares 25 years of industry experience, helping to maximize revenue, cut costs, and eliminate manual processes. It has numerous features that have been optimized for medical devices, including: Small footprint, embedded client: offers a licensing toolkit that is highly modular, supports several license models, and has a very small footprint (under 50K). This allows costs to be kept low by using licensing of the embedded software to configure capabilities and capacity on a device while producing a minimum number of device types (SKUs). High configurability: allows key elements such as security and binding to be configured or replaced as needed. This provides additional flexibility to fine-tune the solution to meet exact requirements or take advantage of existing device capabilities, while keeping the footprint small. Hands-free activation and silent trials: provides hands-free activation and silent trials that dont require registration. This transparent in-product activation improves the customer experience and increases upgrades/up-selling by enabling easy trials for new capabilities. Licensing and entitlement management from end to end: provides a single view for you, your customers, and your channel partners to view and manage software embedded on devices and enables you to electronically turn on and off functionality.

in development, and anticipated gaining FDA approval within a year. The company wanted to capitalize on the current market opportunity for the low-cost 2D machine, and maximize future revenues when the 3D machine became generally available. FlexNet Operations and FlexNet Publisher, part of the FlexNet Producer Suite, allowed the medical equipment provider to achieve both these objectives with secure and flexible licensing. Todays hospitals use a network-based picture archiving and communications system (PACS) to store and transport medical images. The medical equipment provider took advantage of this operating model to deploy FlexNet Operations on its end to manage configured entitlements, license fulfillments, returns and transfers. The FlexNet Publisher toolkit was used to build a management console that binds entitlements to configurations. The management console communicates with FlexNet Operations over an Internet connection. Networks that connect into a hospitals PACS typically have gateway access to the Internet, to send images to other institutions an ideal environment for the medical equipment providers new licensing strategy. Flexera Software reduces future manufacturing and inventory costs by half Prior to adopting the Flexera Software licensing and entitlement management solution, the medical equipment provider intended to use traditional manufacturing methods to mass-produce a fixed number of the 2D and 3D ultrasound systems. With the FlexNet Producer Suite, they manufacture a single piece of equipment for both Model 2D and Model 3D (Model 2D is the low-end system and Model 3D is the high-end system.) Model 2D contains all of the components and software necessary to deliver Model 3D capabilities; when the company receives FDA approval, Model 3D will be created by invoking different configuration parameters, enabling the 3D graphics capability. FlexNet Producer Suite allows us to achieve major new efficiencies in manufacturing and inventory, says the vice president of operations at the medical equipment provider. We anticipate that it will help us to cut associated manufacturing and inventory carrying costs in half. Field upgradeability increases revenues Before deploying FlexNet Producer Suite, the medical equipment providers equipment could only be upgraded by a certified technician on-site. This expensive approach entailed significant lag time in deploying new capabilities. Now, with FlexNet Producer Suite, upgrades to the 3D system will easily be executed on-site by the hospitals IT organization.

Case Study: Flexera Software Helps a Medical Equipment Provider Speed Time to Market and Build Revenue Streams

A Tier 2 medical equipment provider of low-cost ultrasound systems recently looked to Flexera Software for an electronic licensing solution to speed its time to market with a new low-cost two dimensional (2D) system, and establish a builtin upgrade revenue stream for the systems forthcoming 3D capabilities. FlexNet Producer Suite helped the medical equipment provider to: Lower future manufacturing and inventory carrying charges by 50 percent Enable field upgradeability of the 2D product More effectively enable dealer demonstration devices FlexNet Producer Suite speeds time to market As a Tier 2 provider, the medical equipment provider wanted to seize market share from more established players by coming to market first with a compact, quiet, low-cost portable 2D ultrasound station. It also had a 3D machine

Flexera Software: FlexNet Producer Suite for Intelligent Device Manufacturers Whitepaper Series

Medical Equipment Providers: Speeding Time to Market and Building Revenue Streams wit h Embedded Software

When the 3D system receives FDA approval, a hospital IT administrator will use an Internet gateway to establish a secure connection and access the equipment providers FlexNet Operations system. A new entitlement will then be downloaded to the ultrasound system in effect, upgrading the license. When the ultrasound system is re-booted and re-initialized, it will recognize the new 3D configuration parameters, and the upgrade will be complete. Field upgradeability is a major benefit to customers, dealers and our company, says the vice president of operations. By eliminating the time and expense of on-site service, we can quickly upgrade our systems to deliver maximum value. This also translates into increased revenue as the more systems are upgraded from Model 2D to Model 3D. Enhancing dealer relationships with high-performance floor models The medical equipment provider is additionally leveraging Flexera Software technologies to deliver demonstration models to dealers that are specifically configured to meet their needs. Before adopting FlexNet Producer Suite, we had two problems: first, we had demonstration models, which are provided to medical equipment dealers at a discount, being sold on the grey market. Second, if we sent demo systems that were not viable for resale, they were not properly showcasing our equipments capabilities, he says. Using FlexNet Producer Suite, Model 2D and Model 3D demonstration systems can be configured specifically for demonstration purposes, which typically entails disabling data-saving features. Without data-save capabilities, any potential resale value or unauthorized use vanishes, because the ultrasound images the user takes cannot be saved, the vice president of operations says, adding, its yet another complex problem that was easily solved with FlexNet Producer Suite. As this medical equipment provider leverages Flexera Software licensing and entitlement management solutions to improve numerous aspects of its business, the power of FlexNet Producer Suite is clear: beyond traditional software and computer hardware applications, Flexera Software enables medical equipment providers to increase profit margins while reducing manufacturing and operations costs.

and entitlement management solution for intelligent device manufacturersunlocking revenue of embedded software and reducing operational costs while streamlining manufacturing processes. FlexNet Producer Suite also delivers unified entitlement management in both on-demand and on-premise options. As competition intensifies in todays global market, maximizing customer satisfaction, increasing revenues and reducing costs remain top business imperatives. FlexNet Producer Suite for Intelligent Device Manufacturers allows medical equipment providers to: Penetrate new markets through cost-effective, softwaredriven product differentiation Improve customer satisfaction by offering self-service and a consistent experience for downloading, using and upgrading products Reduce the number of SKUs that must be manufactured, carried and supported Enable electronic upgrades Fully monetize maintenance programs with better tracking of channel and end-customer entitlements Allow new up-sell capabilities to be sampled and activated in the field

About Flexera Software

Flexera Software is the leading provider of strategic solutions for Application Usage Management; solutions delivering continuous compliance, optimized usage and maximized value to application producers and their customers. Flexera Software is trusted by more than 80,000 customers that depend on our comprehensive solutionsfrom installation and licensing, entitlement and compliance management to application readiness and enterprise license optimization - to strategically manage application usage and achieve breakthrough results realized only through the systems-level approach we provide. Flexera Software is a privately-held company and an investment of private equity firm Thoma Bravo, LLC. For more information, please go to: www.flexerasoftware.com

For more information, please go to:

www.flexerasoftware.com/medical

Summary

where you can learn more about the valuable opportunities Flexera Software offers.

Medical equipment providers are increasingly shifting to a technology and business model that emphasizes value delivery through software. Flexera Softwares FlexNet Producer Suite is the industry-leading licensing

Flexera Software: FlexNet Producer Suite for Intelligent Device Manufacturers Whitepaper Series

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