As a product manager I talk to many software producers about trends and their challenges in adopting those trends. Many of these conversations center on the subscription licensing trend and the switch from perpetual to recurring revenue models. It’s been a hot topic for some time now, yet there are common questions I get all the time – so I’ll provide those questions as well as answers based on my experience.
First, the whys of subscription licensing are becoming clearer as producers are adding subscription licensing to their portfolio at a rapid pace. Data from IDC supports this in their 2016 Software Licensing and Pricing Predictions citing that software subscription revenue will continue its rapid growth trajectory to reach$130 billion in 2016, a 21% increase over 2015.
Customers (referred to as enterprises in rest of this article) are being forced to move away from CapEx (capital expenditure) models to control cash outlay and have greater flexibility as mentioned in ShoreTel’s “Why Are More CFOs Shifting IT Investment From CapEx To OpEx?”