Software subscription model gathers momentum

According to IDC, consumer pressure will soon change the way in which vendors price their software.
Written by Jo Best, Contributor
Good news for tech buyers - it looks like pressure from consumers is having an effect on vendors and the way in which they price their software

According to the latest report from analyst house IDC, The Future of Software Licensing, it's all change in the licensing world, with consumers pushing sellers to prove how much their software is really worth to businesses.

Of the licence buyers surveyed, 70 per cent say that they strongly believe it's up to the vendors to put more emphasis on demonstrating the business value of software - and 72 per cent of vendors agreed. The end result, IDC believes, is that more than half of vendors will be making changes to their pricing models in the next year.

One of the major changes that buyers can expect to see is a change from 'up front' payments to a subscription model, where users pay over time rather than all in one go. It's a model that's more popular with vendors than spenders - 43 per cent of sellers and 23 per cent of buyers thought that most software would be sold as subscription by 2010.

It seems that the buyers have little faith in tech sellers making the licensing environment better for them, though - 70 per cent thought that managing their licensing would get more not less complex in the future. And with those customers handling an average of more than 40 software contracts, it's a headache that most customers could do without.

It's just such discontent and drive for simplicity that will bring major changes in the licensing environment, according to Amy Mizoras Konary, IDC's programme manager for software pricing, licensing and delivery.

"Software vendors generally agree that traditional licensing models are no longer suitable in today's environment. The software market will move toward licensing models and practices that increase the predictability of vendor revenues, make it easier for customers to manage and comply with software-licence contracts and clearly establish the business value of software," she said in a statement.

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