While it has long been trendy in everyday use to „subscribe“ to software (see Spotify and co.) and Adobe and Microsoft have also been able to count on subscription customers for their products for years, ERP providers and users mostly stick to classic licensing models. Mostly. Some ERP providers have already expanded their licensing model offerings. However, the strategy in terms of customer orientation and customer loyalty differs.
The classic licence model for ERP software
In the classic licensing model, a distinction is made between „Named-“ and „Concurrent users„In the case of the„Named User“must every user have their own licence to use the ERP-systems. With „Concurrent Users“, the customer has a certain number of licences available. This number determines how many users can use the system simultaneously. This number cannot be exceeded. As one can operate with the “Concurrent user„- Model predominantly requires fewer licenses, the prices of individual licenses are largely more expensive. This option is primarily worthwhile for a company if only a few users work in the system simultaneously, but there are many users overall. Furthermore, it is advantageous because individual licenses do not need to be inconveniently overwritten from one user to another or new licenses purchased, as is the case with the „Named User“ model.
In addition to higher customer expenditure, traditional licensing models can also lead to this if a distinction is made between different licences (e.g. full or partial licences). Furthermore, a „classic“ license is largely a disposable model and cannot be exchanged, returned or resold. In the event of an exchange for another ERP product, the licence investment can only be written off. This makes the classic licence models a good means of customer retention. Dynamic companies that change quickly therefore tend to suffer disadvantages if they are tied to these rigid models.
New licence model for ERP systems
The subscription model, which is still new in the ERP sector, offers a good alternative. Here, the customer pays a fixed price for a certain range of functions for a certain period of time. However, separate services such as configuration consulting or training can be purchased separately. This requires a Software subscription not necessarily be a cloud solution. However, this variant offers the greatest advantages for companies in the subscription combination, as they can utilise service offers quickly and easily. This makes the software more reliable and flexible. Customers can adapt, replace or cancel licences as required. Depreciation is eliminated.
Classic vs. new?
The comparison between the classic licence model and a subscription model for ERP solutions is not entirely straightforward. The customer often provides the services for the classic models, such as updates, themselves. This is why the service in the subscription model often appears more expensive. In the long term, however, the flexibility and sustainability of the subscription model is more favourable for most companies. The forecast therefore clearly favours subscription models - even in the ERP sector.
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