Subscription licensing is a hot topic within the SAM (software asset management) world at the moment, with a number of organisations dipping their toes into the unknown waters of non-perpetual licensing. But what should you expect to happen once your subscription agreement comes to an end and you don’t want to renew? Or, if you do want to renew, how should you manage the renewal phase?
A form of subscription licensing has always been around, but nowadays the majority of major vendors have moved to the subscription model. This is usually a user based license metric that runs for a period of three to five years. During this period you have constant support from the vendor, and have rights to all of the latest software that they release. This is great for innovators who want the latest software when it first comes out, but not so great for smaller organisations that may not have the hardware resources to run newer software. If that is the case, then we suggest you stick with your perpetual licenses.
Subscription licensing is a good way for vendors to make extra revenue and ensure that users have a license for all of their installs. It’s also a way for the vendor to highlight their importance to your organisation, a way of saying ‘you really need us, so you need to enter into a subscription agreement so you can keep working effectively’. A number of organisations have been bullied into entering into a subscription agreement, simply because they have no choice or alternative software.
This model is basically a rental service. The organisation does not own any licenses during or after the subscription agreement. You are simply ‘borrowing’ the software for the agreed period. At the end of the agreed period you must either ‘give back’ the software or enter into another agreement period.
You want to renew your subscription
Great news for the vendor! Treat the renewal as you would any software agreement. Make sure you have reliable data so that you can make demands from the vendor and have significant and trustworthy data to back up your demands. This will be a good time to reduce your yearly subscription fees or add any applications into the agreement that you may need in the future or have a requirement for now.
We cannot stress the importance of good data enough when negotiating a new agreement with a vendor. Having good data really puts you one step ahead and enables you the platform to negotiate a better deal with the vendor. Here are our top tips for renewing subscription agreements:
- Have reliable data so you know exactly what users are using and need
- Understand why your users are using certain applications. There may be the opportunity to downgrade users to a cheaper license
- Review previous agreement. Did you get the most out of the added services and licenses? If not, make different demands this time round
- Ask the business if they have any future plans or projects that will involve the procurement of software licenses. If you purchase them now you will get a better deal
- For global enterprises, consider local restrictions. You may have offices that are not permitted to use certain applications
- Also for global organisations, it may be cheaper to purchase the licenses out of another country. For example, buying a global subscription agreement from America may end up being cheaper than the UK.
- This is your only chance to ‘True Down’. Use your data to assess whether your organisation really needs to purchase as many licenses as you did previously.
If you do decide to purchase your subscription licenses out of another country, be aware that other offices outside of the originating country may not have access to addition services or features. This may not impact your usage or needs, but it is still something to consider.
So, you don’t want to renew?
If you have decided that you no long want to renew your subscription agreement for any reason, then you need to plan for the end of the agreement period.
- Do you have existing perpetual licenses to fall back on?
- Do you have alternative software lined up?
- Do you have a plan in place for removing the subscription software?
- Have you spoken to affected users about any changes in software?
- Are you sure? Leaving an agreement will mean any future attempts at entering an agreement with the vendor may result in higher prices!
There needs to be a long consideration period for what the organisation will do post agreement. The software will need to be removed, alternatives installed and some form of communication needs to go out to end-users. It’s a big task to do all of those things, but organisations know the agreements expiry date from the beginning of the agreement so there are no excuses for being caught short.
What to expect post agreement from the vendor
If you have renewed your subscription license then you should expect to receive the same support and new releases that you have been receiving throughout your old agreement.
If you have chosen not to renew your subscription license, then its safe to say the vendor will not be happy. They have lost your custom and a revenue stream. So what are they going to do? Try and claw back some of the money they have lost is the answer! This happens not just with ending a subscription agreement, but any agreement.
It is highly likely that if you do not renew your subscription agreement that you will be receiving an audit letter in the weeks or months after exiting a subscription agreement. With subscription licensing there are a number of ways in which the vendor can see what your installation base is, so they may already know if you are non-compliant. However, there are instances when the vendor doesn’t have access to such information so will audit you on the chance that you haven’t removed all of their software.
What your organisation needs to do at the end of a subscription agreement
Firstly, if it’s a product like Microsoft Office 365, or Adobe Creative Cloud the organisation may have previous versions or editions that it purchased years ago as a perpetual license. They are still entitled to use these licenses and install this software, as long as the organisation didn’t ‘forfeit’ these licenses when entering your subscription agreement (this is rare, but it has been known to happen with some organisations). This is a nice comfort blanket to fall back on.
If the organisation has decided not to renew a subscription agreement then they may either:
- No longer require the vendors software
- Not use any of the new features within the latest releases
- Only have a handful of users that use the latest features, therefore buy individual licenses and go back to existing perpetual licenses
- Want to use an alternative as you don’t want a subscription license
As part of the planning process post subscription agreement the organisation should already be aware of users needs and what old perpetual licenses they will need to revert back to moving forward. To make the transition as smooth as possible from subscription to existing perpetual licenses the organisation need to ensure that they have a plan in place for uninstalling the subscription software and installing the older perpetual software.
To ensure that the vendor has no grounds to audit the organisation, the organisation needs to ensure that all instances of the subscription software are removed by the agreement expiry date. For large organisations this can be quite the challenge, but you know well in advance when your agreement ends so there is plenty of time to plan for the change. Ensure that all evidence of the software is removed from machines, as the vendors will audit an organisation over the smallest detail, such as register files still being installed on machines.
Furthermore, with the majority of subscription licensing being user based the organisation must ensure that they communicate with users to advise them that they can no longer use the software. Some agreements allow users to install the software on home devices, so users will end up not being able to use the software on any home devices they have installed it on. The vendor will automatically cut off access as they manage users via accounts (such as Adobe ID), so they can simply highlight the user accounts that haven’t been renewed and stop access.
If the organisation is moving to a completely different application and vendor then a project or process needs to be created to ensure that ‘downtime’ to users is minimal and that any technical issues are addressed before the end of the subscription date using ITAM data.
Subscription licenses still need to be managed throughout there lifecycle, just like perpetual licenses. We’ve read a number of articles stating that subscription licensing could mean the end for software asset management, but this is further from the truth. Subscription licenses are still complex, and need management from SAM professionals. It simply adds another dimension to the SAM professional’s role and our industry as a whole.
What do you think about subscription licensing? Are you a fan, or would you rather have the option to buy a perpetual license and upgrade when you see fit? Let us know and get in touch!