20 Aug 2014

The rental market: Why your business should move to Software-as-a-Service

The traditional software market has undergone a major upheaval in recent times. There’s been a move away from perpetual licensing towards the subscription model, along with new delivery platforms such as online software-as-a-service. The new approach to software lets businesses turn an upfront capital expense into a more manageable ongoing operational expense.

Renting software rather than buying it lets customers ramp up or scale down as required without the restrictions of a long-term contract. While some software vendors are switching completely to the subscription model, Autodesk offers the choice of paying upfront for a perpetual licence or on a term basis for a pay-as-you-go access to some software, called Desktop Subscription.

A high percentage of Autodesk customers purchasing under the perpetual licensing model also opt for Maintenance Subscription, which entitles them to new versions, technical support, flexible licensing rights and cloud services. Software users can further extend their workflows from the desktop into the cloud through a broad selection of cloud services available through Autodesk’s Cloud Service Subscription, says John Biviano, Director, APAC Media & Entertainment Sales.

“At Autodesk we’re not moving 100 percent to the rental model, we’re giving customers choice,” Biviano says. “But if you think about the types of companies that are using our software – from a multi-disciplined engineering company through to a visual effects company – these customers work on a project basis.

“The pay-as-you-go model obviously makes it easier to add and remove licences, so if your project is ramping up and you need to throw more designers at it, you can rent those licences rather than buying perpetual seats. You can start to align your licence usage to your real business requirements so people aren’t sitting on licences which aren’t being used.”

With lower upfront costs, software subscription gives users greater confidence to launch a new business or a new project whilst reducing risk.

While the move to subscription-based services helps smooth out cash flow for end customers, it naturally presents challenges for software vendors and channel partners founded on the perpetual licensing model. Biviano sees the shift as an opportunity for channel partners to play the role of trusted advisor and strengthen their relationship with customers.

“In the short term, the channel will have to manage itself through those changes in terms of cash flow. With the move away from perpetual licensing, channel partners need to consider other ways to continue to add value to their customers – perhaps through services or through training,” Biviano says.

“That’s the advantage that reseller partners bring to any vendor; it’s not just about the software, it’s also about the services, the consulting, the training and the add-ons. I think the channel is in a good position to handle the change if it uses this as an opportunity to broaden its engagement with customers.”

Fast facts

  • Subscription software allows customers to smooth out cash flows, reducing risk when launching new businesses and projects.
  • Autodesk is retaining perpetual licensing and Maintenance Subscription, while adding pay-as-you-go access to some software through Desktop Subscription, and access to cloud services through Cloud Service Subscription.
  • Subscription software changes cash flow for vendors and channel partners, but also creates opportunities for channel partners to broaden their engagement with customers.

First seen in the Buzz magazine at: http://www.brennanit.com.au/thebuzzmagazine/rental-market#sthash.w08ilb39.dpuf