Evolution of Subscription-Based and PPU Licensing Models

Evolution of Subscription-Based and PPU Licensing Models

As companies became more connected via the growing internet, distributed licensing grew beyond the walls of the enterprise. And with the advent of XaaS offerings, the software that used to be installed on a device was now simply available to be used anywhere, by anyone or anything, at any time. Licenses were no longer being consumed only by a user of the application, but also by processes and other applications. With subscription and pay-per-use pricing more becoming the norm, and with new proprietary models being added by vendors every year, licensing continues to evolve today.

Some of the newest licensing models are variations of more recent developments in license purchasing, ownership, and use. And while there are distinct advantages and disadvantages inherent to a particular model, each has its place and purpose appropriate for its related applications.

One of these proprietary models born from a typical pay-per-use pricing plan allows users to quickly scale their licensing profile through supplemental purchases based on pre-arranged terms, depending on their current or perceived future needs. While not truly pay-per-use, it still allows users to adapt to rapidly changing needs on short notice. Thus, it maintains resource productivity with minimal risk to over-estimation of initial license requirement.

Another proprietary model is known as elastic licensing. Similar to the above, customers purchase a base level of licenses, but expansion is based on precise license usages recorded, and then billed after the fact. This flexibility occurs automatically, allowing for project completion without the need to arrange for additional licensing. Although the per-license cost of expansion is greater than the initial base level, there is no downtime due to unavailable licenses, allowing for uninterrupted productivity.

Still another model is a pay-per-use option based on tokens. With this model, usage days are tracked and a token is consumed for each of the utilized applications. This provides approved users the ability to use the application without license denials, resulting in unfettered productivity. Customers would be able to purchase a pool of tokens for use in a given year, but the tokens have a one-year lifespan, after which they will expire and become unusable. Therefore, balancing the amount of licenses purchased in the initial pool would need to be carefully considered to avoid over-spend related to possible unused tokens or higher-cost additional tokens due to a token pool shortfall.

Subscription-based and pay-per-use licensing models will continue to evolve as business demands for vital software applications continue to increase. As these models continue to diversify, tracking and managing different software applications will become more and more complicated and difficult without the right tool.

Open iT LicenseAnalyzer2020 can accurately meter the usage of different software applications regardless of licensing method. With LicenseAnalyzer2020, different applications from different vendors can be tracked in real-time on a single dashboard. Accurate historical usage reports can be generated and usage data can be exported to various BI tools, such as MS Excel, Spotfire, or Tableau, for easier reporting.

Learn more about LicenseAnalyzer2020 and other Open iT solutions. Let us guide you through your software license management and optimization journey.