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What is a Floating License?
Floating software license means that a limited, predefined 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. This is also known as a standalone license or a named user license, as it only provides access to one specific user. Floating software licensing works a bit differently.
With a floating software license, multiple users (usually 5-25 users) share a predefined number of seats at a table and whoever gets to the table first gets a seat, if one is available.
When an authorised user tries to run an application, they request a license from a central pool of available licenses and these can be accessed concurrently by a predefined number of end-users. This is why floating licensing is sometimes referred to as concurrent licensing.
If a license is available, a license is removed or “checked out” from the license pool and the software is allowed to run and the user will gain access. If no license is available, access to the software application is denied. Only when another user exits the software, or when their allowed license period expires, the license is returned to the license pool and it becomes available to other authorised users.
The Benefits of a Floating License
For the end customer
For the users of a software product that is offered on a floating licensing basis, a huge benefit is that it can help save money and reduce costs, as it helps avoid having and paying for unnecessary software licenses.
For example, a company may have employees who need access to the same software applications, but they don’t work at the same time because they work in different shifts or they’re based on the opposite sides of the planet. With floating licensing, the number of users needing simultaneous access at any given time is lower, and therefore the number of licenses required is also lower.
Floating licensing might also help reduce the amount of time needed to onboard new users, as access could theoretically be given to an unlimited number of employees. New users can instantly start using the software application, without having to wait for old accounts to be deleted or signed out.
For the software provider
The benefit of floating licensing for the software provider is the ability to match customer preferences in terms of how the software is sold and delivered to them.
With floating licensing, a software publisher can implement a business model that is more aligned with customer expectations, as nobody likes the feeling of paying for something they don’t really need.
Although not technically consumption-based licensing, floating licensing enables software businesses to offer their products to customers in a way that is more close to the actual usage of the product.
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.
Why Should You Offer a Floating Software License Model?
Today, end-users expect a consumer-like experience even when they operate within a B2B environment. As a result, software publishers need to be able to offer flexible licensing models that correspond with these changing customer expectations.
There are many license models to choose from, and some companies still use the original model – the perpetual model – but the trend in licensing is definitely moving toward license models that are more customer-centric.
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 most likely increase your bottom line and Openview states that 61% of SaaS companies used some form of usage-based pricing in 2022 – which is what floating software licensing is.
Traditional Floating Licensing With On-premise License Servers
An on-premise license server like FlexNet used to be the only way to enforce a floating software license model. A license server was required at each end-user’s 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 could 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.
This is why an entirely novel approach to implement a floating software license emerged to meet this new environment.
Modern Approach to Floating Licensing
10Duke Enterprise is a cloud-based software licensing solution that supports the modern implementation of floating licenses
It is an identity-based licensing solution that allows software vendors to easily, yet tightly, define access policies for their customers to be able to access software applications.
There are no license keys, no license files and no license servers for a customer to install.
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-based admin tool (10Duke SysAdmin) with edits made easily and in real-time.
For software publishers offering several software applications, 10Duke Enterprise also supports many other license models and different license models can be applied to different software products and application types, as demanded by the specific business case.
Underpinned by the concept of identity-based licensing, 10Duke Enterprise empowers software providers 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, leading to more satisfied customers, less churn, and improved software monetization.
Too much manual admin
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, it’s quite a burden involving lots of manual tasks not only for the ISV, but more importantly for their customer as well.
Simple access for the 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 with 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 by simply clicking a button.
Both the ISV and the customer avoid all the hassles that go along with deploying a traditional floating license system – all enabled by modern, cloud-based software licensing that is underpinned by 10Duke’s identity-based approach to licensing.
Real-time configuration and less manual license admin
Similarly, an identity-based licensing solution is dynamic and operated from the cloud in real-time. Company-wide roll-out across one office or across ten offices takes an equivalent amount of time, as all configuration and setup is done in the cloud.
All the end user has to do is log in to their 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, decreasing the amount of manual license admin work your team needs to do.
Soft limits to create selling opportunities
If you want to offer even more flexibility for the customer, you could implement so-called soft limits or grace periods for your customers. This means that the maximum number of licenses your customer can check out at the same time can be exceeded temporarily or up to a certain number.
And because 10Duke Enterprise collects data on the actual license usage, you will know exactly by how much the customer exceeded the limit. This provides you with a strong selling opportunity, as the customer can see that they undoubtedly need to purchase more licenses from you.
Improved customer experience
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.
Or, ideally, they never need to even think about licensing, as it is invisible to them.
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.
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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.