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2010 Software Licensing and Pricing Survey Results and 2011 Predictions by Amy Konary, Director, Software Pricing and Licensing, IDC Presented at SoftSummit 2010
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Copyright 2007 IDC. Reproduction is forbidden unless authorized. All rights reserved.
2010 Software Licensing and Pricing Survey Results and 2011 Predictions
Amy Konary
Director, Software Pricing and Licensing
IDC
Oct-10© 2008 IDC 2
Resources
Lead Vocals
Backup
• Summer 2010 WW survey of 77 Enterprises. Primarily North
American (NA) firms
• Summer 2010 WW survey of 156 Software Publishers. Split
70/30 software firms/high tech manufacturers
• Winter and Spring 2010 surveys of 1500 NA Enterprises
• IDC Enterprise Panel, Quarterly, ~250 NA Enterprises
• My iPod, iTunes, eLyrics and Google Images
Oct-10© 2008 IDC 3
Agenda
Oct-10© 2008 IDC 4
There’s Traffic in the Sky
“There’s traffic in the sky,
and it doesn’t seem to be
getting much better”
-Jack Johnson
Research Notes:Most ISVs(60%) believe that their licensing will need to
change in some way in the next 24 months to adapt to cloud
computing, with around 30% expecting significant change
©2010 IDC | 13
Cloud Adoption by Application
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Technical Apps
App Dev/Test/Deploy
BI/Analytics
Server on demand
IT Management
Storage on demand
Personal Apps
Business Apps
Data Backup/Archive
Web Apps
Collaboration Apps
Public
Private
Source: IDC Enterprise Panel –
public: 3Q09, n = 263; private: 4Q09, n = 240
Q: Rate your likelihood to pursue the cloud model for the following
% rating 3, 4 or 5(scale: 1 = not at all likely, 5 = very likely)
Oct-10© 2008 IDC
Business Processes
System ASystem C
System B
System D
System E
Consolidate:Reduce Costs
& Improve Quality
Virtualize:Simplify Access,
Improve End-to-End Mgmt
& Maximize Use
Automate:Add Speed, Predictability
& Reduce Labor
Key Characteristics of Cloud
Serv
ice/R
eso
urc
e M
gm
t
& S
ecurity
Interface & Access
Virtualized Applications
Virtualized Information
Virtualized
Storage
Virtualized
Processing
Virtualized Infrastructure
Key Cloud Characteristics• Highly-scalable (up/down)
• Self-service provisioning
• Metering, pay-per-use options
• Integrated design, simple adoption
Oct-10© 2008 IDC
Serv
ice/R
eso
urc
e M
gm
t
& S
ecurity
Serv
ice/R
eso
urc
e M
gm
t
& S
ecurity
Business Processes
Interface & Access
Virtualized Applications
Virtualized Information
Virtualized Infrastructure
Virtualized
Processing
Virtualized
Storage
Virtualized Information
Serv
Most Customers Have Mix of Public and Private Clouds
Cloud
(Application) Platforms
(“Platform-as-a-Service”)
Cloud
Collaboration Cloud
Applications
Cloud
Systems
Infrastructure Software
Cloud
Storage
Cloud
Servers/
Processing
Oct-10© 2008 IDC 7Source: IDC Q1 2009 Worldwide Black Book
It’s In the Way that You Use It
7
“It’s in the way that you use it-
It comes and it goes.”
-Eric Clapton
Research NotesAround 20% of software publishers offer usage-based
pricing today, and 20% more expect to offer it in two years
70% of enterprises indicated that tracking usage is either
important or very important
Oct-10© 2008 IDC 8
“So don’t you ever abuse it…”
“So don’t you ever abuse it,
Don’t let it go”
-Eric Clapton
Research NotesOne-third of ISVs that have or plan on implementing
usage-based pricing do not track usage at all today
(not even manually).
Just over 50% that have or plan a usage-based pricing
model in the next two years are offering tools
Oct-10© 2008 IDC 9
Show Me What I’m Looking For
“Save me, I’m lost…I’ll pay
any cost, save me from
being confused. Show me
what I’m looking for!”
-Carolina Liar
Research Notes:Most enterprises have difficulty tracking usage for the
purposes of software license compliance.
12% of publishers have no enforcement today, compared to
28% in last year’s survey
No automated tracking
Licensing too complex
IT too decentralized
Why is Compliance Difficult?
Oct-10© 2008 IDC 10
“Please, show me what I’m looking for…”
0% 10% 20% 30% 40% 50% 60% 70%
None
Serial # check locally
Dongle/USB
Product Activation
Network Licensing (LAN)
Physical Audit
ISVs
Enterprises
ISVs- What kind of enforcement do you provide?
Enterprises- What kind of enforcement do you prefer?
Source: Summer 2010 Survey of ISVs and Enterprises, n=156 and n=77
Oct-10© 2008 IDC 11
You Know That I’m No Good
“I cheated myself. Like I
knew, I would. I told you, I
was trouble. You know
that I’m no good.”
-Amy Winehouse
Research Notes:According to the 2010 survey, 13% of publishers conduct
physical license audits. This compares to 3% of publishers
in last year's survey.
The audit activity is expected to either stay the same or
increase slightly in the next two years.
Oct-10© 2008 IDC 12
Good Enough
“Don’t tell me I haven’t
been good to you, don’t tell
me I have never been there
for you, don’t tell me why
nothing is good enough”
-Sarah McLachlan
Research NotesMost ISVs think current pricing and licensing strategies are
effective in capturing the value of their software
Most ISVs are increasing the flexibility of licensing by
adding more choice, in order to generate more revenue
(72%) and improve customer relations (69%)
0%
20%
40%
60%
Satisfaction with Value
Oct-10© 2008 IDC 13
It Was a Very Good Year
“But now the days grow short, I’m in the autumn of the year
And now I think of my life as vintage wine
from fine old kegs
from the brim to the dregs
And it poured sweet and clear. It was a very good year.
It was a mess of good years”
-Frank Sinatra
Oct-10© 2008 IDC
“It was a mess of good years”
1.0
1.2
1.4
1.6
1.8
2.0
2.2
2.4
2.6
1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Complexity
CrisisGlobal
Software
Market
Worldwide Software Revenues ($)
Source: IDC Beacon III Software Forecastertm
Individual systems
Technology solution
Vertical integration
Software suites
Business solution
Bi-polar approach
Granular apps to solve business process problems
Process solution
Complexity crisis and software sprawl
Oct-10© 2008 IDC
Night and Day
Source: IDC, 2010
Cloud Computing
• Usage-Based Metrics
• Metered Usage
On-Demand Computing
• User-Based Metrics
• Subscription
Distributed Computing
• Machine-Based Metrics
• Perpetual License + Maintenance
• Machine layer
abstracted/irrelevant
• More dynamic
licensing/pricing
• Business transition to
subscription
• Balancing simplicity
and flexibility
• Value disconnect
• System changes
impact licensing
• Complexity crisis
Licensing Implications
• Metering/tracking
• Same technology
as On Demand and
Distributed
• Authentication and
authorization
• Usage-tracking
• SLA monitoring
• License and
entitlement
management
Technology
