Contributed by Kay Somers, Dell Global Alliances

Imagine a world where all of your users have real-time access to the software and tools they need. What if you could do this using the same software budget that you have today?

New software licensing models are emerging for both enterprise and desktop users that provide feature-rich, low-maintenance provisioning and management. Changing the way your organization selects software and negotiates with software vendors can optimize software deployments and maximize utility of purchased licenses.

Established and emerging software licensing models
Virtualization, cloud, BYOD and SaaS are changing the way the software industry views licensing and expanding your software purchasing options and opportunities. This is an essential part of your IT strategy since as much as 30 percent of an organization’s software portfolio is evaluated, upgraded or replaced each year.

Popular software licensing models include:

  • User license – based on named users or number of users
  • Server license – per server license that may be based on server “power” (e.g., processor type, number of processors, number of virtual machines, etc.)
  • Subscriptions – “rental” of software for a specified period of time; includes hosted SaaS applications
  • Usage-based – licensing fees are based on actual software use (e.g., time of use, number of logins, number of users, number of concurrent users, etc.)
  • Open source – free software (but not necessarily free support and/or services)

Licensing models are evolving faster for SaaS and cloud-based solutions, but options are also increasing for traditional on premise implementations. For example, both Microsoft and Adobe have rolled out their latest software suites using a subscription model; users subscribe and have access to download and use the software for a specified timeframe. According to Forrester, usage-based licensing will grow from 28 percent to 45 percent for cloud-based software and from 7 percent to 20 percent for on premise software in the next few years. 1

Organizations are not limited to these models, either! Many software providers can deliver hybrid and custom licensing arrangements to meet your unique needs.

Four ways to optimize software license management
As an IT professional, you are challenged to maximize every dollar spent while making many users happy and productive. Software is a critical component of your strategic IT plan. So, how can you use shifting software deliver and licensing models to your advantage?

  • Understand your usage patterns – Optimize your spending by matching software selection, volume and licensing models to your organization’s unique usage patterns. “Shelf-ware” is a sunk cost. By some estimates, organizations spend over $30 billion a year on cloud and on premise software that no one uses! SaaS, subscription and pay per use licensing models can provide the flexibility to fine-tune your software portfolio for maximum return on investment.
  • Get creative – Software providers are becoming a lot more receptive to hybrid and custom licensing solutions. Some organizations have had great success building pay per use models based on industry-specific transactions (pay per project, per design, per login, peak usage, etc.). Some providers will also allow graduated licensing based on user role. Don’t be afraid to negotiate!
  • Expand strategically – In traditional per seat licensing, software was often a precious commodity, an investment in a particular user’s need for the software. Virtualization and subscription-based solutions open a lot of doors and make software more easily accessible. How can your organization change if software is not a limiting resource? Now that you understand your usage models and have explored creative licensing options, think about how more users can leverage the software, data and tools and functions to streamline and simplify operations. What knowledge and integration will be a game-changer for your organization?
  • Stay compliant – Compliance management is the not-so-*** part of your software strategy. Virtualization, SaaS and cloud-based solutions distribute applications multiple devices, platforms and organizations - making it difficult to automate software tracking, usage and license management. However, the penalties for non-compliance can be significant. To mitigate non-compliance, plan your license compliance tracking methodology as you introduce new software into your ecosystem.

Final thoughts
In a 2012 survey, 42 percent of software companies said that their pricing and licensing models had evolved over the past 18-24 months. 2 This trend will continue for the foreseeable future. By evaluating your organization’s software needs, usage patterns and critical success factors, you can drive the dialog with your key software partners and develop robust and manageable licensing solutions.

1Forrsights Software Survey, December 2012

2 2012 Key Trends in Software Pricing and Licensing Survey by IDC and Flexera