The Dynamic Landscape of Software Licensing

From the early days of boxed corporate applications and operating systems, software has proven to be a requirement for successful day-to-day operations within any organization. Since that time, how software is purchased and consumed has changed, and continues to do so as offerings adapt to new technologies. Software ownership is no longer a cut-and-dried metric of static seat counts but has transformed into a complicated mesh of different delivery options and license models, making management of enterprise software a more complicated task.

Traditional software packages initially were purchased directly through entities such as retail outlets, or in many cases value-added resellers that would bundle software licenses as a part of a turn-key solution. Even with these, the different licensing models were already starting to expand beyond simple seat or user licenses, leveraging license manager servers that would make licenses available to the users or devices that needed them.

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 for an application, but by processes and applications themselves, 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 models are variations of more recent developments in licensing purchasing, ownership, and use. And while there are distinct advantages and disadvantages inherent to a particular design, they each have their place and purpose appropriate for their related application.

One proprietary model, 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 maintaining 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, where usage days are tracked and a token consumed for each of the utilized applications, providing 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.

Lastly, many shared license models can involve various configurations multiple license servers. This provides licenses that can be site-based (LAN), or cover an entire region, country, or even global (WAN), with costs generally increasing the wider the license server reach. To help determine whether or not a node-locked, LAN, or WAN-based model should be implemented, application usage requirements have to be taken into consideration, as in when a license could suffice for different users in multiple locals and timezones. More comprehensive tools can help in this respect by allowing organizations to simulate different license agreements, giving them the information needed to consider the number of licenses required, or even rebalancing a mix of license models altogether, to help determine what is most beneficial to them given their usage pattern.

Each of these examples of changing license model types illustrate the importance of why effective management of software requires information beyond just knowing what is owned. Innovative methods for optimizing software assets is needed to help guarantee the business will continue to have the tools and services they need – while ensuring that resources are used efficiently. Having access to license usage metrics can show not only what resource has consumed the license, but also when related applications are used or unused across the organization during different times, exposing potential license overlap or shortfall.

A strong dedicated tool is necessary to collect these metrics and help manage these complex licensing systems through innovative reporting options, providing a unified holistic view across the entire enterprise. Such information can enable decision-makers to make informed choices as the organization strives to optimize resource productivity.

By Tyler Schlief

Tyler Schlief is a Technical Consultant with Open iT with over 15 years of experience as a Technical Account Professional in Enterprise Software Implementation, Pre- and Post-Sales Consultation and Technical Support.