It's not often that we get briefed twice the same day under non-disclosure by different vendors about the same topic. Both are well-established incumbents in big data analytics who are biting the bullet on subscription pricing, and will be making announcements next week. And both are designing their subscription offerings to move freely between on-premise and their emerging cloud offerings.
We're tempted to raise the old metaphor about the definition of insanity being doing the same thing over and over and still expecting the same results. There's little question that enterprise software players are embracing subscriptions after having dipped their toes in the water with cloud-based Platform- (PaaS) and Software-as-a-Service (SaaS) offerings. But there's ample reason why the insanity's happening: a decade or more of subscription pricing from Amazon and Salesforce have gotten enterprises used to it.
What's interesting is how enterprises have travelled full circle with the idea that, before the advent of modern day, multitenant cloud, was typically associated with usage-based pricing. When open systems upended the mainframe back in the 90s, there was plenty debate about rethinking entrenched MIPS-based pricing models. Among the alternatives considered were counting the number of seats, processor units, or, heaven forbid, metering. Each of these alternatives in some way, shape, or form, became the basis of enterprise software pricing today - but it didn't happen without consternation.
"I'd like to go to my users and say pay for what you use," an IT enterprise applications director for a large enterprise told me for an IT journal article we wrote roughly 20 years ago. The same piece offered laments from others reticent about disrupting the status quo. "Dealing with numbers of users, nodes, and machines is an unnecessary level of management," responded one IT director. Another dreaded the possibility of getting dinged for exceeding concurrent user allotments for generating end-of-period reporting in much the same way that smartphone users today react after blowing their monthly data caps.
Cloud may have gotten enterprises accustomed to paying subscriptions, but it's not the only reason this form of licensing is growing popular. Budgeting has become a strong driver, as subscriptions can be used for shifting expenses from capital to operating budgets, which are often easier to get approved. And there's the psychological relief of eliminating that steep upfront cost.
But are subscriptions such a better deal overt perpetual licenses? It depends.
