Over the last few years software licensing has shifted from predominately perpetual device-based licensing to user-based subscription licensing. Subscription licensing has also introduced us to the world of ‘token’- or ‘credit’ based licensing, a model that was previously used for networked software rather than standalone software.
The ‘token’ or ‘credit’ based licensing model works in a unique way whereby you have an agreement that allows you to use any piece of software from the manufacturer you want for the duration of the agreement. This sounds great, but it’s not as easy as it sounds. The vendor will define how many ‘tokens’ or ‘credit’s each application is worth. So, for example;
As part of your agreement you may have 100 credits per day for 30 users (it’s a small company!). A user can ‘check out’ or use any application they want, but it’ll cost a certain amount of credits. All the user has to do is open the application, and this gives them the rights for 24 hours (or a customised time set by the SAM/IT Manager). Even if the user closes the application the user has still taken the credits required to use the application. The credits don’t go back into the ‘pool’ until the cycle period is over.
A license server usually manages this, however with the new subscription based models it is also managed via Cloud solutions. It provides an organisation the opportunity to use as many different applications as they want without specifying what they will use at the start of the agreement.
You have to consider subscription based licensing from both the vendor and end user point of view. There are a number of pros and cons for both (mainly pro’s for the vendors!) that make you question where vendors see software licensing progressing to in the future.
Subscription based licensing looks like it is here to stay for the time being. The subscription model works great for personal and home use. An end user can purchase a really expensive bit of software for just a month or so at a fraction of the cost it would have cost them previously to buy a perpetual license.
For business use however it’s a bit more complicated. A number of processes need to incorporate the new management method required for subscription licenses, with account creations, different deployment and update options (especially for those cloud-based services). The subscription and cloud-based models are certainly providing a big push towards SaaS (Software as a Service) rather than the on-premise perpetual software we are used to.
It makes obvious sense from the vendor’s perspective. They will be able to generate more money, combat piracy (slightly!) and generally have greater control over their customers. A number of large vendors have been almost forcing customers to move to their subscription-based model, offering them ‘take it or leave it’ deals. A number of organisations have decided against moving to a subscription model and have actually moved to alternative vendors who provide perpetual licensing.
Subscription based licensing appears to be the future of software licensing. In fact it could only be a matter of time before all software is subscription based, thus slightly changing the license management environment. What will this do for SAM and Licensing professionals? Well it certainly won’t put us out of jobs like some analysts are saying; it will just highlight our importance as we will now have to manage the complexities of subscription licenses.