Software Licensing: It's All About Flexibility And Security

IDC recently released their annual top 10 software licensing and pricing predictions for 2016 and I think they are right on target based upon feedback from organizations who are using our CodeMeter secure licensing platform. I believe a few of the predictions will have an immediate impact on software developers:

• Software subscription revenues will continue its rapid growth trajectory
• Software license complexity will indirectly cost organizations an average of 25% of their software license budgets in 2016
• At least three software vendors will announce in 2016 the intent to end all perpetual licensing

There are many more details outlined in the report, but the bottom line for me was that the licensing environment is rapidly evolving and software publishers, now more than ever, need to have the flexibility to roll out new licensing models to meet their customer’s needs as well as achieving their own software monetization goals. Let’s take a brief look at some of the license models that are currently in play, ranging from single user/network licenses to modern consumption and user-based models:

• Single user license: the license is stored on a local PC or dongle plugged into the local PC.
• Single user license in a virtual machine: the license is bound to a virtual machine and when the virtual machine is copied, the license becomes invalid.
• Network license: the license is stored on a license server in the network.
• Feature-on-Demand license: individual licenses are used to activate specific product features and modules.
• Perpetual license: the license never expires.
• Demo/Trial license: the user can only access specified features for a limited time.
• Rental, Leasing, Subscription License: the developer specifies how long the licensee is valid.
• Pay-per-Use license: billing is based on the number of units used.
• License with software assurance: a perpetual license with a maintenance agreement that includes automatic updates.
• License with downgrade-right: the license provides the right to optionally use older versions of the program.
• License with upgrade-right: the license covers the right to optionally use a newer version of a program.
• Grace period license: software can used for a limited time without activation.
• Volume licensing: the customer is sent a large number of licenses to cover the required number of seats.

This is just a short list of licensing options (read an expanded list of licensing options here) which could possibly double in size by next year. Whether you are using your own, home grown licensing solution or you’ve outsourced to licensing professionals, it is imperative that you have the flexibility to adjust your model as the market dictates.

Finally, let’s go back to the IDC report. One surprising note was that there was no mention of license security. No doubt, secure software licensing is at the forefront of the discussion, particularly in the rapidly growing IoT sector. We’ve covered IoT security in this blog frequently and will continue to post more thoughts in the coming months as the market emerges.