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Enterprise Software Vendors Showing Signs of Bending to Clients' Demands for More Flexible Software Licensing Models

February 20, 2013
By David Gitonga, Software Licensing Contributing Writer

Over the years, companies have had to bear with the loss and pain of purchasing software under inflexible licensing models that left them stranded with expensive annual maintenance fees. However, they have not been suffering in silence since there have been active crusades pushing for the introduction of newer models that are either subscription-based or usage-based.

The dissatisfaction from these rigid enterprise-software purchase contracts is however at its twilight hours since vendors are beginning to take heed of their customers’ demands. According to a survey carried out by Flexera Software, a firm interested in increasing application usage and value derived from vendor’s software, the discontentment customers got from their proprietary software price to value ratio has been on the rise.

Under most circumstances, these dissatisfactions stem from the lack of clearly defined guidelines to matching software usage with licensing. Flexera’s research unearthed the fact that IT managers really do not care whether they overpay or underpay for any specific software but are rather vexed by the fact that software vendors do not have to justify the price they quote for their solutions.

The other huge thorn in the flesh arises from the licensing completion old licensing models get from the new licensing plans that SaaS and cloud-based firms give to their customers. Once businesses taste the flexibility of modern software licensing models, there is no way they are going to insist on the rigid old system.

Steve Schmidt, the VP of corporate development for Flexera, points out in the last 18 to 24 months, 42 percent of producers have already amended their licensing and pricing models. An additional 23 percent plan to give user-based licensing models in the coming two years, a value that has improved from last year’s 9 percent.

The fact that some companies are already willing to adopt licensing plans that favor the client is a clear indicator that software vendors are already bowing under the strain. Schmidt says, “We've seen companies implement a subscription-based license model for software that's delivered on-premises. That's done more and more frequently now.”

With the number of licensing models on the rise and as each vendor tries to win the heart of the client, producers will end up offering all the licensing models to consumers without having to resolve to the delivery of software as a service. In Schmidt’s opinion, the fruits of the software licensing “upraising” are already showing up and will continue to grow bigger and juicier as vendors struggle to capture customer attention.

Edited by Rachel Ramsey

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