Featured Article from Software Licensing

Market Trends Changing Software Licensing Landscape

May 12, 2016

There is a number of different software licensing models currently offered by software vendors, including a number of emergent models that were not around in the licensing world even just a decade ago. No matter what, all software and applications have a license attached to them, and it’s up to developers to go where the money is.

Software vendors will continue to introduce new licensing metrics to end users, as the name of the game is to generate as much revenue as possible and to ensure the lack of software piracy.

The landscape has changed simply because of how computing has changed; software licensing trends have shifted away from the popular device and user based model to a subscription-based model. In the 1990’s and the 2000’s the predominant method of software licensing was user and device based licensing for desktops, and less complex licenses for servers.

Josh Colton, Manager of Licensing Programs at Tableau Software shared his expert insight on the shift from perpetual-to-subscription based model that is so prevalent today.

For developers, change is good, even if tricky. The the long term benefits are great; particularly higher growth and higher company valuations. For end users, it’s also beneficial. Companies operating dozens or hundreds of workstations are considering subscription licensing or SaaS (News - Alert), as a replacement to purchasing on-premise media. The solution offers convenient scalability and the ability to outsource the work of integrating software into the business.

Many software vendors are gradually adopting the “SaaS”, Software as a Service business model, abandoning the traditional on-promise license model, and offering monthly or annual payments plans to their clients. This model is very similar to leasing, since the user pays a regular fee in order to use the product, but he does not “own” the software, he is just entitled to use it for a specific time period. When the payment plan is terminated, the user cannot actually access the software.

SaaS is by now an important element within the software market industry and many vendors are focusing their strategy on this delivery model. Software companies tend to like the subscription-based model simply because it allows them to have a better financial roadmap, making income much easier to predict, and in the end, it’s all about software monetization.

Hear more from Josh Colton via Flexera Software. 

Edited by Maurice Nagle
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