Shift from perpetual to subscription in software licensing opening up new opportunities

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Cloud computing purveyor DataOne Asia said the visible shift from perpetual licensing to subscription licensing in the software market is creating a growth opportunities for local firms, especially small and medium enterprises.

DataOne Asia president and CEO yril Rocke
DataOne Asia president and CEO yril Rocke

?In the past, perpetual licensing was really the only option when it came to buying enterprise software,? said Cyril Rocke, president and CEO of DataOne Asia, during the ISV Cloud Seminar, an event that gathered software and application providers to talk about leveraging software licensing for business growth.

?It was simple: vendors licensed their software and customers had to pay an upfront fee to use it.?

He continued: ?When cloud computing started to gain traction in the IT industry, subscription licensing started becoming popular?giving end users the option to pay for these services on a per subscription basis.?

Based on worldwide trends, subscription revenue is forecast to increase at a faster rate compared to revenue from perpetual licenses, at 7.5 percent and 4 percent respectively from 2011 to 2016.

?Cloud computing turns capital expenditure into operational expenditure with its pay-as-you-use model,? said Rocke. ?Because the upfront cost is lower, subscription licenses are very appealing to clients. It also lets customers pay for services with operational budgets rather than capital ones.?

With affordable upfront costs, Rocke said subscription licensing offers a flexible option for companies with tightly allocated budgets. It also gives more room to match revenues and expenses, which can be advantageous for firms that sell products and services on a subscription basis, he added.

As cloud computing reshapes the demands of the IT industry, Rocke said more service providers are anchoring their products based on the subscription model.

Aggregate subscription licenser Newlease, in fact, offers third-party software, line-of-business applications, and business transaction services through their Services Provider License Agreement (SPLA). DataOne, a partner of Newlease, provides these software and enterprise technologies for businesses.

?There are a lot of changes happening right now not only in the nature of IT solutions, but in the way clients consume services as well. Enterprises need to consider these trends to ensure that they keep up with the changing demands of the market,? said Rocke.

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