Flexera Software Announces 2010 Key Trends in Software Pricing & Licensing Survey Results

"The 2010 survey highlights a continued need for more sophisticated usage and entitlement tracking," said Amy Konary, Director of Software Pricing and Licensing Research at IDC. "The majority of enterprises believe that they are either underutilizing or out of compliance with their vendor software licenses, which equates to a significant opportunity for license optimization. Software vendors have also identified opportunities to better serve their customers and improve efficiencies, with 20% more companies planning on offering usage-based models within the next two years and 46% citing the need to deploy technologies that better track licensing."

Key Findings

• Software Pricing Models: Divergent preferences, converging strategies: While software vendors offer both seat (per machine/server) licenses (65%) and concurrent user (floating/network) (62%) pricing models, enterprises most prefer concurrent user (floating/network (59%) software pricing models and usage-based models (16%). Vendors are responding, with 41% planning on offering usage-based models in the next two years, up from 22% currently.
• Monitoring usage - critically important: Only 40% of software vendors are using tools to monitor customer usage, and just over half of those companies that have or plan to have a usage-based pricing model in the next two years are using tools. One-third of companies that have or plan on implementing usage-based pricing do not track usage at all - not even manually. On the enterprise side, 71% of companies agree that tracking software usage is important, citing software cost reduction and ensuring compliance as their primary reasons.
• Disconnect between confidence and compliance: While 85% of enterprises responded that if audited, they are at least somewhat confident that they are in compliance with all of their software license agreements, when pressed, that confidence is not justified. 53% of enterprises also responded that at least some of their software license spend is associated with applications that are overused and therefore out of compliance; 85% responded that at least some of their software license spend is associated with under-used software, or shelfware.
• Continuing trend to pay only for actual usage: In a continuing trend towards software licensing and enforcement mechanisms focusing on actual usage, 46% of software companies use network licensing as a means of enforcement, up from 28% a year ago.
• Poor usage tracking driving acquisition of licensing management tools: 18% of software vendors believe their customers don't understand their software usage and entitlements, and 21% don't know. Likewise, vendors themselves either don't have technology in place to know what products, product versions or platforms their customers are using (33%), or they don't know (10%). Not surprisingly, 46% of the vendors cite the need to deploy technologies that better track licensing as priority over the coming year.
• Cloud computing driving further market flux: In another sign of significant market change, the majority of software vendors (60%) believe that their licensing will need to change in some way in the next 24 months to adapt to cloud computing, with around 30% expecting that change to be significant. Back-end licensing and entitlement management will need to accommodate cloud computing as well.