Ravi Trivedi, Senior Product Manager, FlexNet Licensing, Revenera, on the advantages of elastic licensing – an approach that can optimize the needs of customers and suppliers alike.
Software customers want to access the software they need when they need it. Licensing different software packages with different terms for different users can create an entitlement management headache that frustrates customers – especially when the need for access varies from what they initially planned or purchased.
Software suppliers want to avoid those frustrations. Streamlining the process of provisioning and managing licenses benefits all parties, making software consumption easy and profitable.
Elastic licensing provides an approach that can optimize the needs of customers and suppliers alike. The movement to subscription/term and consumption monetization models is growing, as shown in the Revenera Monetization Monitor: Software Monetization Models and Strategies 2023 report. Software companies on the cutting edge of software monetization are paying attention to these market trends, embracing elastic licensing to meet evolving needs in software distribution and to make licensing seamless for customers.
What is elastic licensing?
Elastic licensing is a software monetization model that provides licensing-as-a-service (LaaS), combining subscription-based access to a set number of entitlements alongside the ability to expand capacity when needed, ensuring supply always meets demand.
Sometimes called universal credit, token-based, pay-as-you-go, pay-per-use or project-based licensing, elastic licensing is a flexible way for customers to utilize various software products that a supplier offers – dialing up and down access to different applications as needs dictate.
By delivering on-demand access to products in a software supplier’s portfolio, elastic licensing minimizes the complexity of use rights and entitlement management. This enables customers to scale up or down the licenses needed easily, as determined by organizational or project needs, and meet the demands of high-volume usage.
On-demand access to licenses prevents scenarios of delayed or limited access to a product, wasted spend on overprovisioned licenses, or the friction caused by the administrative complexities related to planning for all of the anticipated needs over a particular licensing term.
What are the advantages of elastic licensing?
Elastic licensing allows for software usage needs to be met throughout a demand curve, making software available whenever a user needs it. For example, if a customer has a set number of leased licenses (such as perpetual or subscription) and additional users need to access the software (based on demand spikes during a particular time of year or for a specific project), limitations are common, including:
- An individual user must wait until a license becomes available in order to use that software. Alternately, that person may arrange for a colleague to give up that license for a particular timeframe
- Additional licenses may be purchased to meet the immediate or increased demand. If, however, access to a product is needed for only a limited time (i.e., a few weeks while an engineer is completing a particular phase of a project), then purchasing additional license(s) to a product proves to be wasteful once the project is complete and the demand falls away, leaving unused resources.
Elastic access prevents the friction and waste common with more traditional software licensing models that may be rigid in nature.
By optimizing a customer’s software assets and license position for the software its users need, elastic licensing supports efficiency, aligning business resources with business needs.
Elastic licensing eliminates the need to give up or shift licenses – or even to forgo progress due to not having sufficient access to the required software.
Who benefits from elastic licensing?
Elastic licensing provides customers the flexibility to access software that previously may have been out of reach. Any software user who needs temporary or variable access to software benefits from elastic licensing.
Elastic licensing can eliminate customer pain points by delivering:
- Asset optimization, whereby customers only pay for what they use.
- Portfolio flexibility, enabling use of the products customers need in the quantities they need, without complicated planning for time- and capital-intensive software purchasing evaluations and processes.
- Entry and peak capacity access, ensuring that occasional users aren’t locked out due to a fixed number of licenses.
- Visibility into usage with clear reporting. For example, Ansys Elastic Licensing, rolled out for a majority of the company’s simulation software products, delivers backend reporting, which is critical for any customers using pay-per-use models. It also provides detailed product usage reporting to identify what customers have purchased, with simple real-time graphics that detail usage and authentication metrics, such as project and session IDs, monthly usage statement, and user permissions.
- Cost allocation with the ability to charge back to business units.
- Entry access – ensuring that occasional users aren’t locked out due to a fixed number of licenses.
The software supplier also benefits. By making software easier to try, purchase, use and manage, elastic licensing can help improve customer engagement and loyalty—and ultimately the long-term revenue stream for the supplier. Providing users with visibility into consumption can help shorten sales cycles by illustrating how price and value are aligned.
Proactive planning for a comprehensive approach to software monetization takes a long view on the various models that users will embrace.
Any software supplier looking to offer elastic licensing needs a strategy with all departments aligned to meet customers’ needs.
A smooth process evaluates factors such as customers’ needs and preferences, competitors’ offerings, back-office processes and entitlement management – and the ability to support hybrid software deployments and monetization approaches.
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