Software Licensing Featured Articles

The Software Licensing Landscape is Changing: Flexibility is Key

By Michelle Amodio, TMCnet Contributor

Software licensing is not at all what it used to be. On-premise licensing models are either being combined with hosted models, or being replaced entirely by subscription-based models. The reason for this is developers are needing to keep up with user demand, and of course create a steady stream of revenue.

According to the SD Times, the subscription model means software developers are going back to the drawing board in terms of building and selling software.

SaaS (News - Alert) subscription models show better promise overall; customers want SaaS and the majority of new applications are SaaS-based, therefore the growth of the SaaS market is much greater than the licensed software market.

The benefits of SaaS are plentiful: the customer always has the most up-to-date version of the software, it’s easily configured, and it’s often mobile-friendly, giving employees more options when working on the go.

SaaS is different because there is no longer a tangible product, rather a hosted version of the product. There is no separate maintenance service provided because it is generally included as part of the hosted platform service package, along with the hosting and technical support.

This shift is why software developers must be flexible; to not change with the landscape would simply mean becoming obsolete.

That’s not to say licensing isn’t going away. There are plenty of software businesses that earn most of their revenues and profits from traditional perpetual licenses. Microsoft, IBM, Oracle, and SAP (News - Alert), while all have SaaS products, still employ traditional software licensing models.

The key here is being flexible.

“You have to think about how to support a subscription model, the move to a cloud offering, [and] a hybrid offering where I’m selling on premise and in the cloud,” said Shlomo Weiss, SVP at Gemalto (News - Alert), according to the SD Times. “How do I support my customers that are deploying software in a virtual environment? The pure software companies are going through a business transformation.”

Even with SaaS, software licensing is needed. Developers must be able to effectively package, provision, control, track, and manage a dynamic service catalog, not only ensure fair compensation but to provide a positive customer experience.