Perpetual, Rental or Cloud Licensing Model: What are the Differences?

SS025 Cloud licensing

The best example of software business disruption is related to licensing models changes. From the beginning of commercial software, it was never a client’s property. The client didn’t pay for a product, but he purchased a license for the rights to use it according to providers rules, specified in licensing agreement.

Cloud licensing disruption

The changes in this licensing system occurred when the Cloud subscription was introduced. The migration of applications to Cloud was done in several ways; basically there are four main migration models:

  • Total and immediate migration of all applications in the Cloud – a risky model, which can be hit by the customer’s lack of adaptability;
  • Gradual migration – Cloud version offered as alternative to the classic on-premise software;
  • Rental mode – this is only a permanent licensing diversification. Rental is not Cloud;
  • Cautious migration – with new products or special versions for Cloud, without giving up the traditional perpetual products.

Which is the best licensing model for me?

Let’s say I am an engineer looking for a CAD or a simulation software. Apparently there are not such big differences between a software I buy „for life” and the same product I pay a small amount for every 3 or 12 months. It is the same product. The differences are only for the processing style. Each version has its specific advantages from the logistics perspective.

As specialist in mechanical engineering, I have the possibility to choose the version which best fit my current needs. Let’s say I have some experience in CAD design and from time to time I run mechanical structural analysis based on FEA models. I just opened my own business and I already have a project for a client who needs a mechanical equipment optimization. In this moment, a 3 month rental subscription for my familiar CAD software is OK for me to finish this project. After that I will think of the best alternative: to upgrade to 12 or 24 months subscription or to buy a permanent license without maintenance package. Perpetual license is too big, but I can recover the investment after a few years, if I will find other projects.

I hear that another provider is offering CAD software in the Cloud. The initial investment can be a better solution, because I will pay for 1 year Cloud subscription, and benefit for the automatic maintenance and update of the product without additional costs.

Permanent or Rental: Which is the best fit for me?

I had an old CAD license but no budget to pay for maintenance services. So no upgrade possibility for me. But I see in my LinkedIn group that I can purchase the same software in rental mode for minimum 3 months. This is OK, in 3 months I will finish my project and afterwards see what license I purchase. I hope I will have enough money for a new permanent licence. In the worst case, I will renew my rental subscription for 12 months.

I don’t know in this moment which is my best alternative. The rental is clearly better for investment flexibility. And I don’t need to supplementary pay for upgrade or maintenance services, the solution provider is offering me the newest version of the product. And I have permanent online support. Even if I stop my rental agreement, I still have a period to recover my data. To this can add the possibility of working remotely from any computer. No restrictions related to supplementary license needed for a secondary machine. I only sign up and I start to work.

Rental or Cloud licensing: What is the difference?

In a first instance, a rental system is offering the same advantages as the Cloud. Financially it is the same to pay for 1 year rental or Cloud licensing. Both are less expensive than a permanent license for the same CAD or CAE software. But where is the difference?

If I rent, I will need to download the application on the laptop each time I renew. This needs a strong Internet access. For slow connection I need a lot of time for renewal and I’m not sure I will find my data in the system. Actually one of my friends had some problems with the download. He lost the Internet connection and didn’t finish his work on time. Quite some problems were caused to his business.

If I’m using a Cloud licensing I don’t need to take care of renewals and downloads. A simple Wi-Fi connection is enough to open the software from my preferred browser and to open my last projects. I can of course back-up most important files one time per week on a mobile memory hard, but the SaaS provider also takes care of the back-ups.

But what worries me most is I do not know if I will be able to use rented CAD outside Europe. I will soon leave for a 3-month specialization in the United States and I need to work. I asked the company where I purchased rental software but they didn’t have a clear answer. Their support team told me I need a special approval to use software outside my residence region, I have to submit some forms and to expect the final approval. I don’t have time for all of these…

And then a friend tells me that I don’t have such problems with Cloud solutions. In Cloud there are not problems with the access location and working permission. I  only need a Web connection and a browser. No supplementary requests. No formalities. No wasting time. I open the application and start working. Moreover, Cloud subscription offers the possibility to work on the same projects from different devices, without location, portability or operation system restrictions. I can work with the same design in Windows or Linux-based laptops, MacOS tablet or Android smartphone.

Sounds great, doesn’t it? All of these advantages are real and this is why the whole industry is shifting to Cloud. Some CAD or CAE solutions even offer access to open libraries. You only need to choose your CAD model, a simulation project which you can copy into your own workspace and change the setup according to your own specifications. Furthermore, being in the US  for example, you can still share your CAD drawing with your colleagues and work on them together. And it doesn’t matter if they are located in Australia or another part of the world, the collaboration efficiency will be the same.

Communication and collaboration are easy with Cloud solutions and one of the best perks. The whole team can work on the same project making improvements, all files are in the same place, and no time is wasted to share big files by e-mail or insecure public transfer. Just open the last version saved in Cloud.

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