Enterprise IT infrastructure is evolving towards the inclusion of third-party resources, an increase in cloud managed services, true SaaS and co-location environments. As the market transitions away from high-end, high-value perpetual software licenses, new licensing models are emerging to reach lower end prospects.
One of the new kids on the licensing block is an aggregate use time license, which better reflects the multi-faceted reality of 21st-century business environments. In this article we aim to explain what the aggregate use time license is, what its benefits are and why there is now a demand for it.
Update: Article updated 12.6.2020
As technology continues to evolve, traditional software licensing solutions are under pressure as they lack the flexibility to fully satisfy the changing business needs of today’s modern business environments. The landscape is changing at a macro level and software licensing solutions that rely on traditional models and outdated product keys are creating a bottleneck for transformation.
The majority of software licensing models operate through an elapsed time model. This means that the amount of time that has passed during an ongoing event is measured with a finite end. For example, in the case of subscription models a software license may be issued on a monthly or yearly basis and once that amount of time has elapsed, access to the licensed application ends. With perpetual licensing, the user has a non-expiring right to use a given application and its the support contract that is based on an elapsed time model, which is usually renewed annually.
An aggregate use time license, on the other hand, involves the accumulated time taken to accomplish a task and refers to the total hours consumed by one sector or group of workers. Providing an aggregate use time licence is very appealing for enterprise customers as it allows them to better control spending on complex projects.
For dynamic projects where the progression of each element has third-party dependencies, delays can often force organisations into a state of software over licensing – software that’s being paid for but not used.
With an aggregate use time licence the software may still sit redundant while work streams are coordinated, however, the key difference is that software is not consuming budget. Some lower-end prospects won’t be using your product continuously, and extending the lease period may be too expensive with some prospects only willing to pay for the amount of your product they actually use – regardless of how long they possess your product.
With an aggregate use time licence, an organisation can purchase a total number of licensed hours and this time allocation can be consumed by any number of users. The pool of named-users can be amended and updated as a project progresses, ensuring that entitlements are always an accurate reflection of those who actually need access to a piece software. When the time is used up, access to the licensed application for all users will end.
License flexibility is the major driver behind today’s modern software licensing solutions due to virtualized infrastructures and distributed environments (incl. the Cloud), which call for flexible and non‐hardware based license models. The goal and challenge is to balance customer needs and vendor requirements, which means using flexible and non-key-based licensing solutions that better fit into these new environments.
License servers were an important development in the transformation of software licensing, but they are also too restrictive for running commercial software licenses in multiple cloud environments.
If users can find an application that suits their needs and does not require a cumbersome perpetual or fixed-term license, they will use it. Software vendors can get a sound competitive edge without reducing revenue by exploiting more flexible licensing models such as an aggregated use time licence.
However, traditional software licensing solutions run into problems as licenses are usually bound to hardware or a company, and do not offer enough flexibility to deal with interchangeable resources. To enhance customer satisfaction and value, software vendors need to adapt to changes in surrounding technology and offer a wider array of licensing options, including an aggregated use time licence if that’s what the client requires.
Businesses nowadays are discretely diversified, outsourced and globalised. Managing software licensing for your customers and their employees and partners is a complicated task. To find out more about how 10Duke solutions and services can help your business, please contact us.
To learn more about different types of software licensing models, check our Guide to Software Licensing Models. (all supported by 10Duke)
Providing an aggregate use time licence is very appealing for enterprise customers as it allows them to better control spending on complex projects.