By Randy Littleson:
As we enter 2010, one trend in software license management that I believe will continue to grow in the next few years is the rise of usage-based models for software licensing. This is a trend being driven by enterprises and governments, but one that software vendors will need to track carefully in order to meet the expectations of their customers.
For years end-customers have licensed software based on projected needs, but have had no ability to actually reconcile those licenses (or software entitlements) with actual usage. The growing adoption of SaaS and subscription licensing models combined with the budgetary pressures brought on by the economic downturn have elevated the importance of usage-based models.
Our recently completed research study “2009 Software Pricing and Licensing Trends” sheds light on these trends:
- 61% of enterprise IT managers believe that tracking software usage is important or very important to reduce costs, minimize shelfware, and ensure software compliance
- Enterprises are increasingly using automated tools for license compliance tracking (62%, up from 58% in 2008), but 35% still manually track or do not track compliance
- Currently, only 15% of software vendors surveyed offer a usage-based model, but by 2011, 36% expect to do so, making it one of the top three fastest growing licensing options
- While 58% of software vendors report monitoring customer software usage— 18% growth over 2008—the majority of these have only rudimentary tools to track usage with 28% using home grown tools and just 6% using robust third-party tools
- 34% of software vendors have no system in place or tools to determine what product/versions their customers are using
In the following video, I talk more about how as enterprises and governments seek to “buy what they need and use what they have”, the pressures on software vendors to implement usage-based software pricing models will continue to grow.
Do you think the availability of more usage-based software licensing models would benefit your organization? How do you think it will impact software license management in the next year or 18 months?
Randy Littleson is Senior Vice President, Marketing, at Flexera Software and will occasionally provide insights as a guest author for the Enterprise License Optimization blog.
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