Software Licensing and Subscription

Options proliferate internally and in the cloud, but challenges abound!

Published/updated: August 2011

By Tony Lock


Few organisations know what software they are using
The vast majority of organisations have only partial knowledge of the software that is deployed in their organisations. A significant proportion have no monitoring tools in place capable of auditing what software is deployed, and even fewer have accurate information on what is actively in use. The result is significant operational risk and overspend.

The proliferation of licensing mechanisms is aggravating the problem
User, server, processor, site, enterprise and a number of other commercial licensing schemes are in common use, with organisations large and small often managing a complex mix of arrangements. We then have open source licences which may or may not be used under subscription/support contracts. Pretty much every license type known to man or vendor is used to some extent.

Use of Software as a Service (SaaS) is rising, but beware contract inflexibility
While utility SaaS offerings such as hosted email are used the most, there is evidence of SaaS starting to be adopted for both core and departmental application needs. While this delivery option is still in the early stages of market acceptance, it looks set to take its place in the mainstream. Many, however, report that SaaS is not always as flexible as providers would have us believe.

Many licences and subscriptions are based on the ‘ratchet’ principle of commitment
On site or in the cloud, most commercial software arrangements appear to scale only one way – up. Reducing commitment is too often costly, difficult or even impossible. This artificial restriction on flexibility is perceived to exist purely to the benefit of suppliers, and potentially stands in the way of dynamic cloud based models being used to deal with fluctuating demands.


Based on the results of this study, it is clear that many organisations need to get better at managing their software assets and subscription arrangements, while suppliers must stop dragging their feet on providing the flexibility needed to support the promise of cloud computing. In the meantime, contract due diligence is as important as evaluating functional fit, security, manageability, cost and other aspects of solutions and services when making software or SaaS related decisions.

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