Featured Article from Software Licensing

Software licensing and pricing is intrinsically tied to trends in cloud, mobility, the IoT and big data. The evolution of cloud computing and services has clearly impacted the way software licensing is determined and enforced, and subscription and outcomes-based pricing models are becoming extremely popular as well.

IDC (News - Alert) recently published some predictions for software licensing and pricing for the coming year on LinkedIn, and it’s clear that a number of technology disruptors are set to change the way licensing is handled throughout the IT sector. The company forecasts massive growth for the subscription-pricing model, which is set to reach $130 billion in revenues next year. That represents a 21 percent increase over this year, driven by the push toward SaaS (News - Alert), IoT and demands from buyers for less complex pricing models that may be paid for out of operating budgets.

Complexities associated with software licensing are expected to indirectly cost organizations 25 percent of their total software license budgets, on average, next year. That’s a pretty significant number, representing both noncompliance fees and charges as well as the cost to meet licensing requirements and avoid litigation and issues. Fortunately, solutions are available to help companies ensure compliance and avoid these costs. Flexera Software offers a variety of products and services geared toward helping enterprises ensure compliance with complex software licensing mandates while optimizing their spending.

That ties into another important IDC prediction, that nearly 50 percent of organizations will have processes and tools in place to meter usage of their major on-premises software by 2018. Software optimization solutions, like Flexera’s, will be key to this accountability and will play a major role in combatting software licensing complexities.

Other key findings from IDC include the prediction that at least three software providers will announce their intent to end all perpetual licensing next year. The research firm finds that many software companies are struggling to focus as they offering both perpetual licensing and subscription-based models simultaneously, which will lead to this trend. The company also predicts that 40 percent of U.S. organizations will purchase public cloud services through enterprise software agreements by the end of next year. These types of “volume” purchase programs offer cost savings, flexibility and a number of additional benefits that make them attractive to many organizations.

IDC also predicts that outcomes-based software pricing models will become an option for approximately 20 percent of applications by 2017. This is one of the more interesting findings, and tied to the rise of big data analytics and a shifting focus on customer experience, value and business outcomes. Those factors will increasingly drive solution development and will ultimately impact software pricing and licensing via metrics and measurable business processes.