Innovation is not always better than legacy
Software licensing models have always been subject to change. The introduction of the SaaS model is the most recent and probably the most rigorous example. This type of subscription has many advantages but is not necessarily the best option for all companies in all situations. Therefore, always be informed and choose wisely between legacy and innovation.
When software licenses first emerged in the 1980s, they were a huge game changer for the IT industry. Software was no longer a standard part of the hardware: from that moment on, a user was entitled to use the software only under predetermined conditions. Since then, software companies, thanks to intellectual property, had the opportunity to earn real money with their products. This was possible through licenses in which agreements with and conditions for the user were included. In the years that followed, various new licensing models originated and, like the software itself, they became increasingly complex.
The oldest and still most common legacy license type is the ‘proprietary’ license, which gives you the right to use the software if you accept the conditions included in the contract. Often these licenses are ‘perpetual’, i.e. everlasting: you only have to pay for the license once to have the right to use the software at all times. In addition, software vendors often offer extra services such as maintenance or support. For a fixed amount on top of the licensing costs you ensure you’ll get all the software upgrades, updates, patches and bug fixes.
Each license has its own ‘metric’ system. With a ‘license metric system’ the software publisher defines how the use of the software will be precisely measured. One of the most common metrics is the ‘concurrent user’ one: the user can install the software on multiple devices, as long as the number of devices that use the software at the same time don’t exceed the number of licenses purchased. The ‘named user’ metric or the ‘device’ metric are easier to count: you need a license for every user or device. More recent metric systems look at more complex matters, such as the computer power needed to run the software.
Introduction of SaaS
Hence licensing models changed over the years, but the basis remained mostly the same. There was mostly one large investment at the time of purchasing of the licenses, until cloud computing made its entry, already around ten years ago.
Thanks to the Software as a Service (SaaS) model, the way in which software is sold, used and licensed has changed rigorously. The software no longer has to run on premises and maintenance and support are usually included in the price. But the biggest change is perhaps the way it is charged. Software is no longer a one-off investment, but a monthly expenditure – just like a telephone subscription.
Pros and cons
The big question: is this innovative subscription form better than the existing legacy models? It depends. On the one hand, the benefits are evident. Scalability makes it easier to grow quickly, while the capacity can also easily be scaled up temporarily. You are always assured you have the latest version of the software and employees have access to the software anytime, anywhere, as long as they have internet connection. Moreover, the supplier often bundles multiple functionalities and products, which gives you more value for money.
SaaS, on the other hand, brings a whole new dynamic with it. Everlasting use of the software for a one-time fee no longer exists, software is now much more a utility. If you don’t pay, you don’t have access to the software either. Payment issues can therefore immediately impact an organization, especially if the entire business operations are dependent on the software (which is increasingly the case). Also, think carefully about the deals that vendors offer to make you switch to their cloud services. Getting more than what you pay for in the short term is nice, but not always in your advantage, as it increases the chance of a vendor lock-in.
So you can find benefits in both new and old licensing models. Therefore, there is no black or white answer to the question whether innovative licenses are better than legacy licenses. Of course SaaS offers all kinds of great new possibilities, but that doesn’t mean that a SaaS model is always the best. With SaaS, a new flavor has been added, in addition to the existing ones.
Simply embracing each innovation blindly is not advisable – certainly not with something that has such impact on your organization. Visualize first whether it will benefit your company. Maybe you can still use that on premises database for years to come or you should switch to a flexible cloud version sooner rather than later. Nevertheless, take this decision well informed, with a calculator at hand!
This article is also published in Dutch on Computable.nl.
Mark co-founded B-lay in 2008 and is the company’s managing director since then. Additionally, to his managerial role, Mark is using the extensive software compliance knowledge he gathered since 1997 to help organizations worldwide get insight into the risks associated with using and managing their software licenses, as well as preventing compliance issues and save costs. This is also strongly visible in the Zyncc product line of B-lay. Prior to founding B-lay, he was responsible for all compliance activities in Europe, Middle East and Africa at Oracle. This included building the foundation for what now is the global Oracle License Management Services (LMS) team and onboarding the many acquisitions Oracle made over the years into the compliance program of Oracle.
Mark holds a bachelor’s degree in Company Economics and IT from Hogeschool Enschede in the Netherlands.