Software is the foundation of any business today, but managing multiple license agreements with many different renewal dates and fixed contract terms can become a complex and costly process for organisations, says Fred Mitchell, Symantec division manager, Drive Control Corporation.
The model of buying software on a perpetual license has become out-dated, lacking flexibility and scalability, and in its place a new model has emerged – monthly software rentals. Software rentals offer a number of benefits both for service providers and their end user customers, a truly win/win situation for all involved.
Simplified licensing
Buying software with the old perpetual license model can become a complex process for organisations, particularly where multiple software solutions are involved. Every time an additional license is required, it must be purchased for a fixed period, usually one, two or three years.
This leads to many different licensing renewal dates, creating additional administrative tasks and complexity. However, with a monthly software rental agreement, this challenge is easily overcome. Instead of a renewal cycle, organisations simply pay a monthly fee. This is far simpler to manage, as the service provider can deliver multiple software solutions and simply provide the client with a single invoice.
Enhanced scalability and flexibility
The old perpetual license model is not scalable – if an additional license is purchased for an additional employee, and the organisation then scales back on staff numbers, the license must still be paid. This can lead to unnecessary expenses being carried until the license expires.
With a monthly rental model, additional licenses can be added or removed as needed on a monthly basis. This additional scalability and flexibility enables organisations to be more agile in their deployment of software, while better managing costs and reducing extraneous expenses.
Pay-as-you-go
Like many services and solutions today, the monthly software rental model enables a simple, cost-effective ‘pay-as-you-go’ model. Rather than the capital expense (CAPEX) required to purchase software licenses on an annual or bi-annual basis, a monthly fee can become part of an organisation’s operational expenses (OPEX). This enables organisations to optimise their IT budgets while providing users with the latest leading software solutions for enhanced productivity and efficiency.
Enhance revenue streams
Perpetual licensing is complex not only for organisations, but for resellers as well, as this process must be carefully managed in order to ensure annuity income is obtained. With monthly software licensing, however, revenue income is regular and predictable, and far easier to manage. In addition, licensing from many different software providers can be bundled together for customers. This creates excellent cross-selling opportunities that help resellers to enhance their revenue streams.
Sell services, not products
By far the biggest advantage of monthly software licensing for resellers is the ability to move from selling products to providing services. In today’s world resellers who ‘drop boxes’ have become out-dated, and service providers are more competitive as they are able to better meet the needs of their customers.
Resellers can now more easily become service providers, bundling various software solutions together, and delivering these solutions in addition to value-added services such as regular health checks, maintenance and support. This takes the age-old pricing discussion out of the equation, as service providers do not simply offer products, but full service solutions.
Benefits for all involved
The world of software has changed, and users are demanding greater flexibility, scalability and cost effectiveness, which monthly rentals deliver with ease. Resellers need to keep up with this demand if they are to remain competitive. Monthly software rentals enable resellers to solidify their service provider footprint with end users, catering to changing needs and enhancing their own business at the same time.