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What is a Floating License? – Floating Licensing Guide [2021]

floating software license

What is a Floating License?

Floating software license means that a limited number of software licenses are shared by a larger number of users on a first come, first served basis.

In general, a software license simply defines the terms on which an end-user can legally access an instance of software. Having an active software license can be thought of as having a seat at the table. When you assign a ‘named user license’ to someone, a seat at the table is reserved in that user's name, and that seat is always available until the software license expires. That user can access the software at any time, regardless of the number of other users within their organisation using the product. This is sometimes also referred to as ‘per seat license’, a ‘dedicated’ license or an ‘anchored’ license.

A floating software license works a bit differently. With a floating software license, multiple users (usually 5-25 users) share a defined number of seats at the table and whoever gets to the table first gets a seat, if there is one available. When an authorised user wishes to run an application they request a license from a central pool of available licenses and these can be accessed concurrently by a defined number of end-users.

If a software license is available then a license is removed from the license pool and the software is allowed to run. If no license is available, the software can’t be accessed. When a user exits the software or when the allowed license period expires, the license is returned to the license pool and it’s made available to other authorised users.

High-value software applications in corporate environments such as construction software or engineering software, often use a floating software license model, but its use is now expanding more widely throughout the software industry. Commercial software vendors with medium or high-value applications often license their products by means of a concurrent user restriction, which means that only a fixed number of users can access a product at the same time. Increasingly, they may also use a floating software license model to allow many users to access a limited number of licenses. This will often better fit actual consumption patterns they are seeing within their customers base.


Why Should You Offer a Floating Software License Model?

Today, end-users expect a consumer-like experience even when they operate within a business to business environment. As a result, ISVs need to be able to offer licensing models that correspond with these changing customer expectations.

An ISV can choose to license their software products, using one of several software license models, but the trend in licensing is definitely (and perhaps unsurprisingly) moving toward license models that are more customer-centric. Perpetual licenses, the traditional software monetisation model, continue to be a popular license model used by ISVs.

However, with the growth of SaaS and the change in customer expectations towards paying for what they use, many software vendors are moving to subscription, floating, or use time license models to meet customer demands. As you’ll notice, these popular license models more accurately reflect a customer's usage of a particular software product.

Unsurprisingly, giving your customers what they want will increase your bottom line and IDC Futurescape predicts that by 2019, more than 50% of all industries will price and package their offerings with a flexible or consumption-based pricing model - like a floating software license.


Floating Software Licensing Made Easy - On-premise License Servers Are Not Needed

An on-premise license server like FlexNet or FlexLM used to be the only way to enforce a floating software license model. A license server was required at each end-users location and each computer or device in a network needed to connect to it. License files would usually be tied to the Host ID of the license server by a MAC address or Ethernet address but can be made available to any client computer in the network, with the concurrent user limit enforced by the on-premise license server.

The number of licenses registered and installed on the license server would limit the number of concurrent users. Every time an authorised user made a request to run the software, the device or computer connecting to the license server requested a license key from the stored license file. If a license was available the server ‘checked out’ a license and allowed the software to run.

When the software is running it constantly updates the server to let it know that the license is still being used. The license server, in turn, acknowledges that the license was still valid. If the server does not receive an update from the end client machines (for example if the connection with the server is lost) the software application is terminated and the license returned so that it becomes available to other clients.

This approach to implementing a floating software license does work but it’s a very traditional approach, best suited to the software industry of the 1990s. It’s not suitable for the much more dynamic, online, global software industry of the 21st Century. So an entirely novel approach to implement a floating software license emerged to meet this new environment.


Modern Approach to Floating Licensing

If we look more deeply, there are several key drivers underpinning the move by ISVs towards floating software license models and also towards more modern methods of implementing licensing.

The first of these is that many software customers are operating from several different physical offices spread around the world. If an ISV used a traditional approach to implement a floating software license, this would mean the customer having to deploy and manage several, on-premise license servers, and issue and manage all of the license keys for each of the end-users authorised to draw on the floating license pool, mapping these to the license servers, etc. All in all, quite a burden involving lots of manual tasks both for the ISV and also for their customer.

Instead, ISVs are now able to use identity-based floating software license solutions to allow their end-users to simply log in to an application, using a username and password. License checks are made to see if a license is available or not and the user is able to check-out a license, (if it is available), by simply clicking a button. All enabled from the cloud - both the ISV and the customer avoid all the hassles that go along with deploying a traditional floating license system.

Similarly, with an identity-based licensing solution it is dynamic and operated in real-time. Company-wide roll-out across one office or across ten offices takes an equivalent amount of time as all configuration and set up is done in the cloud. All the end user has to do is log in to their ISV account, access the application and the licenses are granted (or not) transparently and in real-time. When changes are made to license terms, these changes propagate through the system immediately, meaning that there are no license keys to return, revoke or reconcile.

From the end-user perspective, a modern identity-based licensing solution allows them to see in real time what licenses they have access to, what licenses they have consumed and even what license gap or wait may exist before a floating license becomes available. All of these capabilities increase the awareness of the end-user regarding their application usage and therefore increases the likelihood of them being a happy customer. And happy customers are good for the bottom-line of the ISV.


An Identity-based Approach to Floating Licensing

10Duke Entitlements is a cloud-based software licensing solution that supports the modern implementation of floating licenses. The 10Duke Entitlements API is an identity-based licensing solution that allows an ISV to easily, yet tightly, define access policies for their customers to be able to access software applications.

In regard to floating licenses, pools of authorised users can be created across offices regardless of their physical location. The size of both the authorised user pool and the floating license pool can be configured from a simple web-configuration tool with edits made easily. There are no license keys, no license files and no license servers for a customer to install.

For ISVs offering several software applications, 10Duke Entitlements also supports many other license models and different license models can be applied to different software products, as demanded by the specific business case. Underpinned by the concept of identity-based licensing, 10Duke Entitlements empowers ISVs to easily deploy the most appropriate license models for their products and ensure that their customers get software products in a manner that closely aligns to their actual usage of them.

To learn more about 10Duke Entitlements, click here.

To learn more about different types of software licensing models, check our Ultimate Guide to Software Licensing Models. (all supported by 10Duke)
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What is Identity-based Licensing?

Identity-based licensing is a method by 10Duke of controlling access to a digital product based on the authenticated identity of an individual.

A floating software license works a bit differently. With a floating software license, multiple users (usually 5-25 users) share a defined number of seats at the table and whoever gets to the table first gets a seat, if there is one available. When an authorised user wishes to run an application they request a license from a central pool of available licenses and these can be accessed concurrently by a defined number of end-users.

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