There’s an ever growing amount of software available to businesses these days and we’re still seeing businesses going down the traditional route of purchasing perpetual licence. However, more and more software is being offered as a subscription licence and it makes more business sense to purchase these types of licences over perpetual licences.
Gartner have said that “By 2020, all new entrants and 80% of historical vendors will offer subscription-based business models”.
We’ve written this blog to try to help you to understand the difference between a perpetual licence and a subscription licence.
What is a perpetual licence?
A perpetual licence is a software licence that you purchase upfront and have the rights to use indefinitely. Historically this was the only way that software licences were purchased. There are additional costs of perpetual licences such as an annual support contract and possibly an installation and configuration fee. Even though perpetual licences can be used forever, they can have a short lifecycle and can become obsolete or need upgrading periodically to ensure that the software continues to work. Another downside to perpetual licences is that they are not scalable. So if you don’t need the licences anymore, say in the event of a member of staff leaving, you have already paid out for a lifetime licence.
When software is bought outright there are some inherent problems. Take one customer of ours who is now running seven different versions of WinZip Courier! That means 7 slightly different user interfaces, training variations, older versions and may well be missing features and inevitably it won’t be as stable or secure as the latest versions. Would you keep using your old Nokia just because it kind of works or replace it with a smart phone? Ok there will be some odd exceptions but there’s good reason to move to subscription licensing.
What is a subscription licence?
A subscription licence gives you a lot more flexibility and support.
It will keep the software current, up to date and it will work better, faster and more efficiently. With a suscription licence you only pay for what you need. Subscription licences are usually based on a monthly or annual renewal so if you don’t need the licence anymore you can cancel it and if you need more licences they are easily activated. If the software has any updates or fixes then they are included in the subscription cost, as is access to support services.T
The Shift From Perpetual Licences To Subscription Licences
Now that businesses have embraced cloud computing it is easier for businesses to move from a perpeptual licence to a subscription licence. They understand the benefits, scalability and cost savings.
According to Microsoft, “the benefits of the subscription model are huge. Subscribers are always up-to-date. They get the latest and most complete applications and can use subscriptions across the multitude of devices” – all with minimal upfront risk and minimum capital investment.
If you would like to talk to us about your software licences we will be more than happy to advise, just get in touch.