Ahhh… the good ol’ days when you actually had to “buy” software programs like Microsoft Excel, Microsoft Word and others–sold separately of course–and external storage devices for your family photos and videos. You drove to your closest big box store and handed over your hard-earned cash for the latest and greatest software and storage, drove home and began taking advantage of your purchase. But wait… a few months later a new version is available with better bells and whistles and you are stuck with what you bought. Unless of course, you are willing to start the entire “buy” process all over again. So, the good ol’ days were not really that good.
When is the last time you actually “bought” software or an external storage device? Now we subscribe to software in “the cloud” like Microsoft Office 365 where we get access to the complete bundle which is always updated with the latest capabilities. We subscribe to anti-virus software which is installed locally on our laptops, subscribe to cloud storage for our family pictures, videos and files, and so on. The days of buying license software and even storage devices for our personal use is now being written about in history textbooks.
The same paradigm shift is also occurring in the business world driven mainly by the proliferation of cloud-based and SaaS offers. There is a rapidly growing demand for “subscription” and a move away from perpetual license and maintenance purchases. But “subscribing” to software or services is not limited just to cloud offerings. Regardless of the how one deploys technology whether on-premises, on your own private cloud, public cloud, hybrid deployment of on-premises and cloud (or multi-cloud), outsource the management to a third party or taking advantage of a SaaS offering in a multi-tenet scenario are all scenarios where you should look to take advantage of a subscription offering from your solution provider.
Buy vs. Subscribe
We are hearing from customers that their drive to move away from the traditional “buy” model of license and maintenance to subscription is driven by:
|– Need to pay for all the capabilities up front||+ Subscribe to the capabilities I need today and add or remove capabilities later if needed|
|– Need to buy for “peak” usage of the solution||+ Subscribe to the usage I need today and add or remove later if needed|
|– My capital budgets (capex) are under constant pressure||+ Move to a predictable operational budget (opex)|
|– Time to value is too long as I may not need 50% of the capabilities or licenses that I need today||+ Time to value is shorter as I am subscribing to what is needed when it is needed.|
|– Difficult to monetize and chargeback as capabilities and licenses may not be utilized||+ Easier to monetize and chargeback as we know our consumption of the solution|
Updates without maintenance
A key point to make about subscription offerings. It is not just a financial/pricing model. When looking at moving to a subscription offer, it’s a good idea to keep in mind that subscription is a business model. Yes, price is a part of it. For a single price, you obtain rights to use the offer but remember with the subscription you get updates without having to pay maintenance.
Subscription typically comes with broader and flexible packaging so you have access to the capabilities and usage levels you need, when you need them and where you need them. A subscription provides you the choice and control.
Benefits of a subscription offering
Subscription is becoming the primary purchasing model for enterprises just like it has for our personal use that I highlighted above. When considering a move to subscription keep these value and benefit points in mind:
- Get access to the core products and services you need, when and where you need them
- Lower your upfront costs
- Lower your incremental costs
- Flexibility of usage without large commitment – scale up, scale down
- Access to broader set of capabilities
- Freemium capabilities are typically available
Did you know?
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