Getting to grips with software licensing

IT managers are regaining the initiative as virtualisation and SAAS put traditional licensing models under pressure.

Tags: Frost & Sullivan (www.frost.com)Gartner IncorporationSAPSafeNet Incorporated
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Getting to grips with software licensing
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By  Keri Allan Published  June 21, 2012

IT managers are regaining the initiative as virtualisation and SAAS put traditional licensing models under pressure.

In the current market where budget pressures are commonplace, IT managers are faced with a number of tough decisions, including ensuring the company’s licensing model reflects their growing IT needs whilst keeping costs low. Traditional software licensing and maintenance models have come under scrutiny in recent years, but the majority of organisations in the region continue to use them, as James Fenton, SCEE/MEA software rights management sales manager at SafeNet explains.

“Annual renewable license models with a maintenance element are still a popular offering across the Middle East for many independent software vendors. This especially applies to the traditional on-premise vendor who relies on customers to make an annual subscription towards point releases and major version upgrades. The perpetual license is also common, typically linked to the number of users,” he says.

But are these traditional models providing fair value to customers? UBA CEO Hazem Bawab believes that international software vendors may not support the Middle East customer base with the best value due to factors including lack of localisation of software and local support. Still, nowadays organisations have a wider choice than ever of licensing models to choose from, with alternatives such as pay-per-use models on the cloud.

In the end, the value comes down to whether the IT managers have chosen the most suitable model for their company as each model has its pros and cons and success is dependent on the fit with the company.

Vendors are listening to their customers, however, and solutions are evolving as they improve on current models as well as new technologies hitting the market.

“Vendors today have certainly evolved from the traditional fixed use models that did not help in vendor/client interaction and client usage to remix models and technology partnerships,” says Haritha Ramachandran, program manager, information and communication technologies practice, South Asia and Middle East, Frost & Sullivan.

“The remix model allows the clients and vendors to evaluate the usage and access. Constant monitoring of usage and access allows the vendor to provide streamlined services to the customer and for the customer to curtail unnecessary costs.
“The vendor can monitor the client’s usage constantly to ensure that the client’s needs are met entirely. Today, licensing models have evolved to the extent that they are pay as you go or pay per use, allowing the customers complete discretion in terms of access and usage.”

“The trends you see in the market come about purely because of requirements,” continues Asheesh Raina, principal research analyst, Gartner. “Delivery models such as cloud and software as a service (SaaS) were all things required by the market and they all do provide fair value, but which one depends on case to case. That’s why companies need to evaluate their requirements.”

In the last 24 months we have been witnessing traditional licensing models being challenged by SaaS pay-as-you-use and metered type offerings, which are easily facilitated by vendors pushing applications into the cloud. Interest in these models are high thanks to them tying price to usage.

“SaaS delivery models are threatening the status quo in the software industry because they’re more flexible, scalable and cost-effective, and certainly provide overall better value for money,” says Ansgar Dodt, SafeNet’s SRM VP of sales, EMEA.

Bawab believes that the mobile application movement has also had an effect on the licensing landscape in the Middle East.

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