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 their subscription customers 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 licensing 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 largely a disposable model and cannot be exchanged, returned or resold. In the case 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 are therefore more likely to suffer disadvantages if they bind themselves to these rigid models.
New licensing model for ERP systems
A good alternative is the subscription model, which is still new in the ERP sector. Here, the customer pays a fixed price for a certain range of functions for a certain period of time. Separate services, such as configuration advice or training, can be purchased separately. In this case, a Software subscription not necessarily be a cloud solution. However, this variant in the subscription combination offers the greatest advantages for companies, as they can make use of service offers quickly and easily. This makes the software more reliable and flexible. Depending on their needs, customers can adapt, exchange or cancel licences. Depreciation is no longer necessary.
Classic vs. new?
The comparison between the classic licence model and a subscription model for ERP solutions is not entirely simple. The services in the classic models, such as updates, are often provided by the customer. Therefore, the service in the subscription model often appears more expensive. In the long run, however, flexibility and sustainability are more beneficial for most companies in the subscription model. The forecast therefore clearly tends towards subscription models - also in the ERP sector.
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