Software licensing: How do you eat yours?

Software licensing is known to be one of the most complex aspects of enterprise IT infrastructure management. New technologies such as cloud, mobility and virtualisation continue to change the way that products and services are licensed and,...

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Software licensing is known to be one of the most complex aspects of enterprise IT infrastructure management. New technologies such as cloud, mobility and virtualisation continue to change the way that products and services are licensed and, coupled with the often labyrinthine licensing agreements that software houses insist upon, managing this complexity can be an immensely difficult task.

Licensing is affected by a number of factors and in a dynamic business and IT environment, the goalposts continue to shift.

In addition to the new technologies that impact on software licensing, changes to established pricing and licensing models are beginning to hit home. A number of large software houses have recently introduced new pricing models, including Microsoft and Adobe. While on the surface these initiatives claim to offer greater flexibility for end-users, the reality for some businesses may be the opposite. Software investments may not be delivering promised value and, with new models bringing new complexity, identifying these areas of poor ROI, risk and opportunity becomes even more taxing.

All you can eat vs. one-off meals

Traditionally, businesses have had few options when it comes to licensing, with many finding themselves ‘locked-in’ to fixed-term agreements which left little room for manoeuvre. Perpetual licensing has been something of a mainstay in enterprise licensing, which can often seem like an easy answer to on-going usage, but can in fact mean businesses end up paying too much and end up with too many licenses. The growth of cloud has changed this somewhat, with its ‘on-demand’ nature allowing for procurement of products and services in a new way. Though cloud is not without its difficulties; many businesses, for example, similarly end up paying for cloud services they don’t need or use because of a lack of visibility into what they are signing up for.

It is interesting then, to look more closely at Adobe’s recent Creative Cloud launch, which promises a greater degree of flexibility, and moves its most popular and widely used products to a cloud delivery model only. Creative Cloud allows for monthly purchasing of licenses for its Creative Suite (at $50-$70), but with the caveat that unless you sign up for a one-year commitment, it will actually cost more on a month-by-month basis ($80). The difference may seem small, but over a year across a large software environment, this could be a significant extra cost.

Greater choice, greater value?

Creative Cloud has implications for the wider software market and has parallels in other industries, with similar moves also being made by internet service providers and cellular companies towards usage-based pricing and subscriptions. Creative Cloud may or may not herald a shift in software licensing, but as Adobe is such a large software player, it does suggest that others may follow its lead. What this means for businesses is that increased choice offers an opportunity to ensure value in investments, but also simultaneously increases the potential complexity and number of factors that affect purchasing decisions.

While the ‘death of perpetual licensing’, as some commentators have put it, is not imminent; it’s clear that licensing models are going through a period of change that businesses cannot afford to ignore. For some businesses, these one-off payments and monthly-renewable subscriptions may represent the best value proposition if, for example, you only need to use a particular product for a short period of time. For others, however, it may end up costing them a lot more. For all businesses, understanding how these licensing models affect their budgets is crucial. The devil, as ever, is in the detail.

How to get what it says on the tin

The only sure-fire way for businesses to make sure they have the level of detail needed for effective and successful decision making is through having visibility into their entire IT infrastructure and software estate. The most efficient way to do this is by making use of Business Intelligence (BI) that delivers a holistic and realistic picture of all software usage. This becomes especially important for businesses with multi-site operations and those with mobile and home workers, a growing demographic where the deep-dive visibility needed can often be hard to maintain. For example, ensuring that you know exactly what software is installed on an employee’s mobile device for business use can help avoid any nasty surprises in the form of non-compliance fines.

Businesses can use BI to assess what licensing model suits them best from the often bewildering array of choice on offer to them. This means that businesses of all shapes and sizes can be confident that whatever model they choose, from perpetual to subscription only, that it is the right choice for them and reflects their software usage accurately. In the final analysis, whether subscription only licensing is the future or not, it doesn’t change the bottom line for businesses - the complexity surrounding software licensing is only going to deepen as vendors continue to adjust licensing models in line with IT trends.

Vendors themselves won’t be seeking to make their offerings any less complicated, and as technology continues to innovate and the way that licenses are bought and paid for is transformed; businesses must ensure value, no matter what.

Posted by Martin Prendergast, CEO and Co-founder, Concorde Solutions and Board Member, Cloud Industry Forum

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