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Innovative Software Licensing Models.        Do They Exist?

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Looking for innovative and dynamic pricing models for enterprise software?  If the answer is yes, you’ll need to look beyond your software publisher for licensing options tailored to your business environment.  Legacy vendors remain locked by the restrictions of the perpetual, on-premise world.  New age subscription or SaaS vendors may offer new delivery options but don’t provide a bespoke solution that addresses your specific budget, balance sheet or income statement drivers.  Businesses today want more flexible options for purchasing software to better meet their budget demands.

What do business leaders tell us they want?  Flexible software packaging and accessibility across multiple devices are extremely important to 83% of enterprise software users.1  Moreover, they want more options to meet their budget requirements, including better pricing structures, extended deployment schedules, and license and maintenance costs that align with their project rollouts and deliverables.

Industry expert R “Ray" Wang, Principal Analyst & Founder at Constellation Research explains, “Enterprises are rapidly redefining how they want to license and pay for business software.  Moreover, technology is shifting so rapidly it is rendering old pricing and licensing models obsolete.  Smart software producers are being proactive, viewing this dramatic shift as an opportunity to offer more flexible monetization models, capture market share and new revenue streams.  Producers that fail to act risk being left behind.”2

This means that an industry once dominated by perpetual software licenses now offers a range of software solutions to match your business plan and budget.  In fact, according to a recent Morgan Stanley Research report, 70% of CIOs expect their SaaS spend to increase this year, up from 57% last year.3

Here are some of the best and most innovative software licensing options available today:

Lock in volume discounts now, for your needs today and in the future

A flexible vendor will aggregate your company’s current and future needs, and create an enterprise software acquisition plan that gives you volume discount rates on your combined software licenses right away.

Software subscriptions help you save on up-front costs

If your software solution is subscription-based, the cost of up-front licensing fees can be matched to your deployment schedule which will free up cash flow and reduce the impact on your bottom line.

Plan your deployment schedule to save on licensing and maintenance fees

Some software acquisition models allow for a more agile deployment cycle and faster time-to-value.  You’ll defer expenses when you customize your deployment schedule to align maintenance and licensing fees to your available budget, and pay maintenance fees only when the license is deployed. Not a bad idea, considering that the yearly price for on-premise software maintenance and support ranges from 18% to 29% of the license fee.4

Roll out software as needed to reduce operating expenses

Software roll-out dates can be adjusted to your deployment schedule or to changes you foresee in usage, such as the number of users.  Deferring payment until the software is deployed and used can have a significant impact on your operating expenditures (OpEx).

Help the finance department meet their OpEx vs. CapEx requirements

If it’s important to keep your software expenses below the EBITDA earnings line, you could opt for a plan that lets you convert cloud subscription OpEx to CapEx, moving OpEx to interest and amortization expenses. According to a Forrester brief, you will see a 30% reduction in first year OpEx with SaaS and cloud licenses.5

With all these innovative, flexible options, you can now have a plan created to tailor deployment schedules, pricing options and costs to match your budget and business plan. A good partner can help you navigate your options to acquire and better manage software assets with multiple vendors.

Take advantage of Central Technology Services’ innovative licensing models that optimize accounting for software licences with volume discounts based on your future software needs, while avoiding the costs of unused capacity.  Our suite of software license solutions can help you better manage your business, balance sheet and EBITDA drivers to leverage the industry’s evolving range of subscription, cloud and perpetual license options.

Central Technology Services is the software industry’s leading financial services partner, specializing in assisting Fortune 1000 companies and their vendors to manage the financial, operational and budgetary issues associated with acquiring enterprise software and related technology assets.

Sources:

  1. Gemalto, Software Vendors Are Losing Revenue Due to Rigid Licensing and Delivery Options, November 2015.
  2. Marketwired, Flexera Software Study, July 2016.
  3. Morgan Stanley Research, IT Budget Growth Poised for Acceleration in 2017, June 2017
  4. Gartner, Reduce Your Software Maintenance and Support Costs by Up to 50%, May 2017.
  5. Forrester, Brief, Don’t Let CapEx Based Budgets Dampen Your Cloud Plans, October 2016.

 

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