Subscription – a sum of money given or pledged as a contribution, payment, investment etc.
‘Subscription’ today can be a scary word, a word that instils questions such as ‘Am I going to need this?’, ‘Am I going to see the value in this?’ or ‘Is this the cheapest option?’ Our lives today are changing to a subscription and contract society, be it mobile phones, car rental or satellite and cable providers. With it comes visions of suspect ‘customer service’ pricing models that require a doctorate in accounting and an unease that you are signing away your life.
However subscription and rental services aren’t all bad, a lot of them are very easy and give you a very clear picture of what you will receive and how much you will pay. Companies like Netflix have not grown their shares by +700% in the last 5 years by creating a horrific experience for their customers. With their huge growth they have also changed customers spending pattern from the historical physical video rental to streaming viewing online.
This brings us to the Autodesk Subscription model; with the demise of software upgrades in January, Autodesk has effectively created a Subscription only model. It’s not mandatory for Customers to purchase Subscription however they will be disadvantaged commercially and financially if they don’t.
Autodesk has created 3 different Subscription programmes – each one runs as a standalone model and cannot be combined - Maintenance Subscription, Desktop Subscription and Cloud Service Subscription.
Maintenance Subscription or Subscription as it was called up to 2 years ago, has been in existence since the 2000i release of software. For the last 15 years the features haven’t changed too much. Effectively it’s the add on when purchasing a new perpetual licence to futureproof your investment and to maximise future technologies. Maintenance Subscription allows flexible licencing (home use, previous version and extra territory rights), if you are one of the few that reads the terms and conditions of a licence before clicking the ‘I Accept’ button, you will appreciate this will keep you compliant. As a Maintenance Subscriber you will also receive access to the latest software and technologies, with the market being so competitive and pricing and return of investment being at the front of everyone’s mind, customers need to look at executing smarter and faster to win business. Autodesk has begun to add cloud offerings into their Maintenance Subscription base, allowing customers to store documents, render and visualise. The adoption has been quite slow whilst the market relinquishes its data from its own in house hardware up to the cloud. However users that are using this service have regarded this as a substantial benefit and are now purchasing additional cloud credits as it is now an integral part of how they work. As with all Subscription programmes one of the main benefits is price. As a Maintenance Subscription customer 1, 2, and 3 year contract terms allow you to budget easily and get a level of price protection. As I mentioned earlier with the demise of purchasing upgrades, the Subscription model has become even more important. If you were to purchase a perpetual licence without Subscription or were not to renew your Maintenance Subscription contract, your Autodesk asset will become obsolete. Although you will still be able to use the current release, if at any time you require a newer version then a new full copy will have to be purchased. With Maintenance Subscription costing about 10% of a new product licence it will be more economical to remain on Subscription than worry about the consequences tomorrow. This is why millions of assets are now on Maintenance Subscription and +90% customers purchase subscription and renew their licences.
Rental, pay as you go or to give it the correct Autodesk terminology ‘Desktop Subscription’, Autodesk’s Subscription model has many aliases. This model is fairly new to Autodesk having been around for only 2 years but nonetheless, Autodesk has made it very clear it is looking to rapidly grow this market. This is the same with all the large software companies such as Microsoft, Adobe, Salesforce and IBM all of which are making a transition (some faster than others) to a SaaS, Software as a Service, cloud based model. Effectively it is a rental program, you have the option to purchase a copy of Autodesk software over a quarterly, 1,2 or 3 year period with the opportunity to renew when the existing contract expires. With Desktop Subscription, you get the same full version as a perpetual licence but instead of owning (technically you never own the software – you just acquire a licence to use it), the asset you are borrowing is for a set period. Additionally if you subscribe you will receive the latest software releases and access to Autodesk’s cloud services similar to Maintenance Subscription.
Will it replace the existing perpetual licences? Probably, one day, watching how the other software companies have begun to evolve their business, some have succeeded, some are in transition and others have had a few bumps on the way. Autodesk has announced that by the 1st February 2016 all products outside of their Suite portfolio will move to Desktop Subscription. (http://www.autodesk.com/products/perpetuallicenses)
So who will buy it? Desktop Subscription is aimed at 2 different audiences, those who wish to use the software on a short term basis or those who wish to use the software at the cheapest price. Using the software on a short term basis covers 2 different factors, purchasing additional software technology or additional software seats. Both of these allow you to plan for projects, an increase in workload or allow you to use the Autodesk software without the upfront investment you would have to make with a perpetual licence.
It’s worth noting that you are paying a premium price for the smaller contract terms. Based on today’s pricing, Desktop Subscription is cost efficient up to 3 years. If you are going to use the software past this date, then a perpetual licence with Maintenance Subscription is the most economical route. To counter balance this argument with the pay as you go option from Autodesk you can charge this against the operating expense and not against the capital expenditure which will please your financial controller.
Cloud Service Subscription
Cloud Service Subscription is very different from the Maintenance and Desktop Subscription. Where the latter two are licencing platforms for the catalogue of software packages, Cloud Service Subscription is the name for a range of particular products. These include PLM 360, Infraworks 360 & Sim 360 (notice a trend here, the 360 refers to Autodesk’s Cloud). The products referred to as Cloud Services are Cloud based products only. They use the strengths of the Cloud for collaboration and hardware centric tasks. However as the name suggests they are still based on a Subscription model, so you can purchase them on 1, 2 or 3 year term and then further renew them on the expiry date.
Technology is rapidly changing and with it our purchasing and usage behaviour. Our purchasing model has been one of buying perpetual licences and receiving media but this is changing. Autodesk is easing us into the transition with a number of Subscription models ensuring we have an option to meet our business needs. Not boarding this train has its risks not least of all getting left behind. Maximising your current assets and making the right future purchases for your business is getting more complex as we transition, if you need assistance then call our team today and let us help you.