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Navigating the Software Licensing Conundrum

Software licensing Navigating the Software Licensing Conundrum While software is crucial to the survival of most solution providers, there’s a great deal of room for improvement in how software licenses are managed. State of Software Licensing Almost three out of four (73%) producers claim their pricing and licensing policies are effective. Yet 51% of those […]

Written By: Michael Vizard

Aug 12, 2016

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Software licensing

Navigating the Software Licensing Conundrum

While software is crucial to the survival of most solution providers, there’s a great deal of room for improvement in how software licenses are managed.

State of Software Licensing

Almost three out of four (73%) producers claim their pricing and licensing policies are effective. Yet 51% of those surveyed admit they don’t track customer use, and 45% don’t audit customer use. Another 55% admit they don’t have technology in place to track customer use, and 42% concede their customers have challenges determining which software products they’re entitled to use.

Importance of Software Licensing

A full 81% of enterprises said managing software licenses is important, with 74% citing the need to reduce software costs and 71% pointing to the need to comply with software licensing terms.

Software Licensing Models in Flux

More than half of providers (56%) have changed their licensing and pricing models in the last six months. A total of 70% say they plan to make changes in the next two years. The top three reasons for change are to generate more revenue, respond to competitive dynamics and improve relations with customers.

Sources of Licensing Revenue

Just over two-fifths (43%) report that perpetual licenses contribute half or more of their revenue. Many providers are moving toward consumption-based models (42%) and subscription/term licenses (30%).

Reliance on Software Installed On-Premise

More than a third (36%) say less than half their applications are delivered as traditional installed software.

Preferred Licensing Models

Device-based (19%) and site-based models (17%) were cited most often, followed by named-user and token-based models, tied at 13% each. A full 78% of software providers say they don’t use tokens. Another 63% don’t use a named-user model, while 52% say they don’t support a site model and 43% don’t support a device model.

Drivers of Software Licensing Changes

The rise of mobile computing (55%) was cited as a primary driver, followed by cloud computing (49%); virtualization (47%) and software-as-a-service (46%) technology.

Method of Licensing Enforcement Today

Network licensing is most commonly used, at 36%, followed by serial numbers and node locks (tied at 29% each). Internet licensing was cited by 27%.

Method of Licensing Enforcements Customers Prefer

A full 81% of enterprises cited network licensing as their preferred method of software licensing, followed by product activation (69%) and trust-based licensing (44%). Less preferred are dongles (82%), serial numbers (62%) and automated monitoring (50%).

Method of Licensing Enforcement Tomorrow

The biggest shift will be to Internet licensing, according to 36%, followed by network licensing (27%) and automated monitoring (16%).

Michael Vizard

Michael Vizard is a seasoned IT journalist, with nearly 30 years of experience writing and editing about enterprise IT issues. He is a writer for publications including Programmableweb, IT Business Edge, CIOinsight, Channel Insider and UBM Tech. He formerly was editorial director for Ziff-Davis Enterprise, where he launched the company’s custom content division, and has also served as editor in chief for CRN and InfoWorld. He also has held editorial positions at PC Week, Computerworld and Digital Review.

Navigating the Software Licensing Conundrum

Michael Vizard

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