The enterprise software marketplace is undergoing a massive transformation as the pricing and licensing models dictating how software is bought and sold evolve
A new study published by software monetisation expert, Flexera Software states that some software application vendors are poised to
reap windfall profits from the new software pricing and licensing models emerging, fuelled by shifts in customer demand and by rapidly changing technology, while others risk being left behind.
“The report illustrates the fluidity of the software market place and the rapidly changing customer preferences dictating how software is bought and sold,” said Steve Schmidt, Vice President of Corporate Development at Flexera Software. Key findings include:
- Only 43 per cent of software vendors say perpetual software licenses contribute to half or more of their revenues. Historically, the perpetual license was the dominant licensing model used by most software vendors.
- 70 per cent of software vendors will change their pricing and licensing models within the next two years; to generate more revenues, be more competitive and improve customer relations.
- 36 per cent of software vendors say that less than half of their applications are delivered as traditional installed software.
Within the next two years software vendors plan on changing their licensing policies to accommodate new technologies including cloud (49 per cent), SaaS (46 per cent), virtualisation (47 per cent) and mobile platforms (55 per cent).
73 per cent of vendors boast their pricing and licensing policies are effective. Yet despite this confidence, 51 per cent of those surveyed admitted they don’t track customer usage, 45 per cent don’t audit customer usage, 55 per cent don’t have technology in place to track customer usage of their products and 42 per cent say their customers have challenges determining which software products they’re entitled to use.
“To thrive in this environment software vendors must adopt an agile software monetisation strategy and implement automation that flexibly supports multiple software pricing and licensing models. As the data suggests, many vendors are not yet ‘change-ready,’ and therefore are at risk,” Schmidt added.