SOFTWARE LICENSING

Licensing Design Should be Based on Value, Not CPU Cycles

By Mae Kowalke, TMCnet Contributor

Licensing based on CPU might be the wrong way to go.

“For several years I have done everything I can to steer potential software licensing designs away from any CPU-based licensing model,” wrote Flexera Software in a recent blog post.

That’s because, although basing pricing off of CPU cycles is common, there’s much dissatisfaction with the practice among users.

“In reviewing many software vendors licensing practices with an eye towards improving them,” noted Flexera, “I've come across a general dissatisfaction with CPU-based software licensing and pricing models.”

The four most common CPU-based licensing models include number of CPUs/cores, size or capacity of a CPU, amount of CPU time consumed, and specific CPU processor model or type.

While such licensing models don’t sound bad on the surface, they don’t necessarily reflect software usefulness or are able to keep up with technology trends.

“Even if Moore's Law doesn't continue on its past path, changes in CPU capability, size, model, cores, etc., occur far too rapidly compared to the lifecycle of most software,” the blog noted.

As an example, the blog points out that CPU power has improved a lot from where it was in the past, and technologies such as virtualization make CPU-based licensing increasingly irrelevant.

Knowing if all four cores of a CPU are being used, for instance, also is a problem for customers when determining their usage needs.

Licensing based on usefulness is a better model.

“The best licensing is tied to a value metric. Feature capabilities or transactional capacities are good examples,” the blog noted.

But capability metrics must be chosen with care. The metric needs to be easy to understand in terms of software use and it must be measureable—database size is measureable, for instance, but employee headcount is usually not. It also must be enforceable.

It need to be “enforceable or the value can be aggregated over time and reported upon in support of post use payment models,” wrote the blog.

The setup of the licensing model needs to be build around actual value, too, the blog post stresses.

“If I have a per-use licensing model and I consume a license at startup but then immediately shutdown, have I derived any value from running the application?” asked the blog.

“You can take a good value metric and make it a bad one through poor business rules or enforcement policy. My suspicion is that you can never take a bad value metric and make it a good one through policy.”

To learn more about Flexera and its software licensing solutions, products and services, visit www.flexerasoftware.com.

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