As we are all keenly aware, the world in which we live and conduct business is changing at a rapid pace. At Engineering Design Systems, Inc. (EDSI) we are committed to simplifying the myriad of terms, acronyms, and sales strategies to provide our clients with straight answers and guidance. We can assist in preparing your organization for present and future changes, while ensuring that you accomplish your objectives with design software in the most cost effective manner.
This document is intended to be an executive overview of how the software industry as a whole is evolving, how Autodesk is positioning its offerings and changes your organization should be considering and evaluating, as you plan and prepare for the future.
History of software licensing:
For the last 30 years, software licensing has been dominated by perpetual licenses. Organizations purchase licenses to use with no definition or restriction on the term of the license. Most companies consider these licenses assets. Software companies like Autodesk have provided optional maintenance plans to provide upgrades, updates, and technical support to these permanent licenses for an annual fee. This has provided companies with current technologies, and protected the investment they have made in their software assets.
Future of software licensing:
With changes in technology pertaining to electronic delivery, cloud access, and greater connectivity, software companies are beginning to modify their licensing polices and strategies to adapt to the marketplace. In short, licensing is evolving to become more cloud and term based. In these licensing scenarios customers purchase the right to use software applications for a specific term. This term can be anything from a monthly to a multi-year commitment. At the end of the purchased term, the agreement must be continued for the software to continuing functioning. Organizations treat this type of licensing as an operational expense.
How Autodesk is responding to these market changes:
Autodesk has announced that effective July 31st, 2016 new perpetual licenses will no longer be available for purchase. Beginning August 1st, 2016 clients will need to enter into agreements to purchase licenses for a specific term to have access to Autodesk design applications.
Autodesk is very cognizant of the investment its clients have made in perpetual licenses of design software over the years, and has announced its intention to ensure current client’s investments are protected, as it responds to market conditions.
Clients with current perpetual licenses under maintenance – Autodesk has communicated in writing to these clients they will be able to use and continue to maintain these licenses for as long as they desire. These clients are grandfathered into the previous licensing model and are in a favorable cost position for the future. We strongly recommend clients in this position continue to renew their maintenance to protect their investment, and ensure they maintain this favorable position.
Clients needing new licenses between today and July 31st, 2016 - Clients needing additional licenses of Autodesk software have the option (for most applications) to purchase either perpetual or term based licenses prior to July 31st.
Software purchases after July 31st, 2016 - Clients needing access to additional licenses of Autodesk design applications after August 1st will not purchase these licenses, but will enter into a selected term based agreement to pay for utilization for the selected term.
How these changes will affect your organization:
It is important to note that both perpetual and term-based licensing have their pros and cons. While organizations still have both options available, we strongly recommend evaluating your current and future software needs.
The following is a general overview of licensing models. Please note that at times promotions and customer incentives can change the overall cost of either solution.
Overview of Perpetual Licensing:
Software as an asset
- Higher upfront cost than term based
- Lower annual cost than term based
- Significantly lower overall cost in 5 year cost analysis
- License does not expire
- Less flexibility to address varying demand for software
Overview of Term Based Licensing:
Software as an expense
- Lower up front cost than perpetual
- Higher annual cost than perpetual
- Higher overall cost in 5 year cost analysis
- License ceases to work when agreement expires and is not renewed
- Greater flexibility in addressing changes in demand for software
- Evaluate your organizations current and future utilization of Autodesk software.
- Continue with software maintenance for current perpetual licenses in use.
- Address needs for future perpetual licensing prior to July 31st.
- Understand how to maximize the benefits and minimize the cost of term-based licensing moving forward.
At EDSI we are committed to your success. We believe this is an important time for your organization to understand and make good decisions regarding the pending changes on the horizon.
If you would find it beneficial to talk on the phone or meet to discuss in more detail, please do not hesitate to contact us. We want to make sure all of our clients have the information they need to make good decisions while preparing for the future.
Engineering Design Systems, Inc.
Posted on Thu, April 7, 2016
by David Garrison