The topic of software licensing is one of the most debated in the context of industry transition to the cloud. PLM is not immunized to this discussion, and I can see it happen in many forms in blogs, twitter and other social media forms. I definitely cannot bring all quotes to this post. One discussion that caught my attention recently in Ralph Grabowski’s WorldCAD Access blog. Ralph is quoting Griffin Securities analyst Jay Vleeschhouwer report from the Autodesk annual analyst meeting in New York:
For Autodesk, switching to the cloud is bigger than the ’90s switch to Windows. Navigate to this link and have read.
Don’t miss comments – they are probably as important as the article itself. In addition to traditional discussion about “security” and “cloud” danger, I found few interesting notes on the topic related to the potential danger of usage metering and other “new forms” of licensing. Here is my favorite passage:
Autodesk showed a slide indicating a progression from today’s mix of perpetual and maintenance revenues (for blended desktop and cloud workflows) to a future of per-user subscriptions and usage metering.
Cloud and Software Licensing Shakeout
This statement above made me think about the real transformation which will happen with licensing model in the cloud era. Traditional software licensing and (especially) enterprise licensing models are not suitable into cloud environment. Until now, the vast majority of enterprise software vendors use to license Servers, CPUs and Databases. With the introduction of cloud environment, most of the metrics became obsolete. How you can license server when you, actually, not really interested to know how many physical servers and/or virtual machines are running to support your environment.
Will “usage” become an ultimate licensing model?
Pay as you go. This is one of the famous and well-known slogans of SaaS (Software as a Service world). The wide adoption of this model in consumer web, raised the question if such a model will work well for the enterprise. Here are few pros and cons I can see.
Pros:
– simple model focused on “resource consumption”
– create a feeling or “fear pricing”
Cons:
– in some situations can be unpredictable
– can create a feeling of “license hostage” for customers.
What is a potential alternative to “usage” in cloud licensing? In my view, I can see 3 additional alternatives: capacity (size of the data storage), timeshare and end user (named users) licenses. All these models are implying “usage” in different forms. To pick up the right one (or combination) will be an important step for vendors.
What is my conclusion? One of the most important questions every cloud vendor needs to ask these days is how to create “a predictable licensing model”. Customers are afraid about a potential license hostage. To prevent it, vendors need to focus on transparency of cost calculations and potential alternatives. Just my thoughts…
Best, Oleg
