Perpetual vs. Subscription Software Licensing: Three Scenarios Where Perpetual Wins

Is the perpetual versus subscription licensing debate really as clear-cut as software OEMs claim?  

Broadcom’s decision to discontinue VMware perpetual licenses and associated support was controversial, but the concerns it provoked regarding perpetual versus subscription licensing were nothing new to wary business software buyers.  

At the end of the day, the move was just another instance of software’s top players aggressively positioning subscription-based licensing and so-called “portfolio simplifications” as the industry’s new normal. 

It’s not only VMware customers feeling the squeeze. IBM, HCL, and numerous other business software companies have been ratcheting up the pressure to switch for some time. But despite the industry’s aggressive shift to subscription licensing, there are still numerous scenarios that make a strong case for retaining perpetual licensed software – even if the primary vendor won’t support it anymore.  

Before you permanently trade in your perpetual licenses and lose them forever, make sure your company doesn’t fit into one of these three scenarios. 

Scenario 1: Your Use Case is Stable with Little Need for Change 

If you were not getting pressure from the OEM to switch to subscription licensing, would you envision your current software performing in place indefinitely? Are your processes stable and mature enough that they don’t benefit from incorporating every new update that comes down the pipeline? If so, there’s a good chance moving to subscription licensing will add needless cost and complexity to your estate.  

Here’s an example. A company has utilized the same commercial software package for years. Team members are trained in the software’s functionalities and familiar with its quirks. Processes are smooth, reports are accurate, and introducing new features has high potential to disrupt time-tested workflows. In this common situation, it’s hard to believe OEMs when they promise subscription-licensed software will cost less and perform better, because the current product is already affordable and extremely reliable.  

Then why do companies make the choice to move when the account manager comes knocking? Often, it’s because they think they must.  

When your current software subscription and support (S&S) is expiring and the new agreement’s only support options are locked behind a subscription license, surrendering your perpetual licenses might seem like the only choice, even if other options are available through a third-party partnership with independent software maintenance vendors. 

Scenario 2: You Prefer Long-Term Cost Certainty 

Software costs never stay stagnant. Even perpetually licensed software has variations like routine annual S&S fee increases. But by trading perpetual licenses in for subscriptions, companies add more uncertainty to the equation.  

The further entrenched an organization is in a software vendor’s ecosystem, the more freedom the OEM has to increase fees at the start of the next term.  

It’s an especially painful reality for companies that made a steep initial investment in perpetually licensed software and now feel pressure to get rid of it.  

Looking back to the VMware acquisition, for instance, customers have reported price increases as high as 300% to 500%. And despite the introductory cost savings the large vendors bring up when they talk about the advantages of subscription versus perpetual licensing, it’s rare for software costs to go down over the long term.  

With subscription licensing: 

• Your company will likely end up paying more for the same basic functionality you already bought when you purchased the perpetual licenses.   

• The fees your company will end up paying will escalate every agreement as all software costs do.  

Scenario 3: Your Company’s Roadmap Needs Flexibility 

Most major software vendors have a long (and to customers, disconcerting) history of executing pivots that throw user plans and operations into disarray. Avoiding this kind of disruption requires companies to have control over when, how, and how long they use the software they purchase.  

Subscription licenses don’t typically offer that level of control. Customers might not have the ability to roll to different versions of the product they’re using; if a new, forced update breaks communications between business-critical systems, the lack of under-the-hood control means you will be stuck waiting for the OEM to provide a fix.  

By contrast, keeping your perpetual licenses provides more control over the software. That tends to make routine tasks like maintenance and more complex processes like deep configuration changes easier to manage. The longer the software has been a part of the estate and the more embedded it is, the more appealing perpetual licenses become in terms of convenience and control.  

For some companies, being entrenched in a vendor’s ecosystem for access to the latest features and updates is an agreeable trade-off. But for many others, the freedom to make the right decisions and protection from disruptive OEM pivots is even more important. If your organization is in the second camp, consider how much control you will give up before making a switch.  

Look Before You Leap 

No matter how the software vendors market it, there is more to the subscription versus perpetual software licensing debate than introductory savings and the convenience of supposed simplified product offerings. Considering the endless number of use cases and product configurations users bring to the table, many companies would prefer to keep their perpetual licenses if pressures like an upcoming loss of support didn’t force their hands.  

Keep control of your perpetual licenses. Get our guide.