Consumers prefer to pay for what they use; from the electric meter on their house to the gas pump. Software, however, has never followed this model. You buy what you think you’ll need, which could be off by a lot either way depending on business growth or any number of factors. Then there’s multiple usage metrics, license models and schedules. It’s no wonder enterprises have a staff of software asset managers to keep it all organized.
Yet change is on the horizon. “Every software vendor I talk to is experimenting with a consumption [or usage-based] licensing model in one way or another right now,” says Mathieu Baissac, VP of product management at Flexera Software, a provider of licensing, compliance management and installation solutions for software producers and enterprises. “I haven’t seen a licensing model adopted so fast in the 20 years that I’ve been doing this.”
Backing up his viewpoint is IDC research that predicts usage-based software pricing models will be an option for 80% of applications by just 2017.*
Any why not? Enterprises, which have more choices in software than ever before, are demanding easier and more flexible licensing from producers. “Enterprises are saying ‘give me more flexibility and I’ll give you something in return, which is to provide my usage data and pay for my fair share,’” says Baissac.