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IDC: Big Changes on the Way for Software Licensing

More than half of enterprise software vendors are likely to change their licensing models in the next year, according to a new study by IT researchers at IDC.

"Software vendors generally agree that traditional licensing models are no longer suitable in today's environment," IDC analyst Amy Mizoras Konary said in a statement. "The software market will move toward licensing models and practices that increase the predictability of vendor revenues, make it easier for customers to manage and comply with software license contracts, and clearly establish the business value of software."

IDC recently completed a survey of 100 software vendors and 100 software customers that is the basis of a new report called "The Future of Software Licensing."

The study found that 75 percent of participating software vendors software revenues come from perpetual, or up-front, licensing methods. Many vendors are considering a move toward subscription licensing, which is what Microsoft has sought to achieve with Licensing 6.0 and especially its Software Assurance component of Licensing 6.0. According to IDC, 43 percent of the software vendors surveyed and 26 percent of the customers surveyed thought the majority of worldwide software revenues would come from subscription-based software offerings by 2010.

IDC puts a positive spin on the change for customers -- contending that customers should see their licensing options open up dramatically as vendors seek to better address customers business needs, make it easier for customers to evaluate how much software they need and align pricing with value.

Meanwhile, the survey included one sobering fact in the category of misery loving company. If you feel overwhelmed by the number of software contracts you manage, you're not alone. IDC's study found that medium and large software customers are managing an average of more than 40 software contracts.

About the Author

Scott Bekker is editor in chief of Redmond Channel Partner magazine.