While it has long been a trend in everyday use to "subscribe" to software (see Spotify and co.) and Adobe and Microsoft have also been able to count their products among a subscription clientele for years, ERP providers and users usually stick to the classic licence models. Mostly. There are already some ERP providers who have expanded their licence model offering. However, the strategy differs in terms of customer orientation and customer loyalty.
The classic licence model for ERP software
In the classic licence model, a distinction is made between "Named-" and "Concurrent users". In the case of the "Named User" each user must have their own licence to use the ERP-system. With "concurrent users", the customer has a certain number of licences available. This number determines how many users can use the system at the same time. This number cannot be exceeded. As the"Concurrent userAlthough fewer licences are required for the most part in the "Licensing" model, the prices of the individual licences are generally more expensive. For a company, this variant is particularly worthwhile if only a few users work in the system at the same time, but there are many users in total. It is also advantageous as the individual licences do not have to be laboriously overwritten from one user to another or new licences purchased, as is the case with the "named user" model.
The classic licence models can also lead to higher expenses on the customer side if a distinction is made between different licences, e.g. full or partial licences). In addition, 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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