Buzzword Bingo 2020 - Perpetual, Subscription and SaaS

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Perpetual Subscription SaaS

Published on 30 November 2020 by Christopher Lewis. Words: 828. Reading Time: 4 mins.

Since VMworld 2020 and the announcement of vRealize Cloud Universal subscription licensing, I have been working and speaking with a lot of customers who get confused with different key terms around software licensing. More than any others, the terms Perpetual vs Subscription vs Software-As-A-Service (SaaS) is confusing a lot of people! These terms are not new for 2020, but they are definitely becoming more important in my day job and maybe they are for you too. Hopefully this post will give some clarity to these key terms!

What is a Perpetual License?

If we consider when we used to buy software, such as Microsoft Windows, Microsoft Office (pre-Office 365) or any other application from the internet, direct or through a shop, we were (most likely) buying a Perpetual license. Essentially, Perpetual licensing is the traditional licensing mechanism for software.

A perpetual license means that you actually own a specific version of a product and you have the rights to deploy/use that product in perpetuity (forerver). When you want a new version of a product, you either choose to buy the latest version again or you can typically pay a discounted rate to upgrade from version x to y. The important point is that, even if you decided to stop using the product, you still own a license to deploy it in the future at the last version you owned.

What is a Subscription?

A lot of software consumption has now moved into a subscription model, if we consider products like Microsoft Office 365, Adobe Creative Cloud or ServiceNow. These are all subscription services.

A subscription entitles you to consume services provided to you as long as you continue to pay the (typically) monthly/annual subscription. As you are paying for a service, the subscription normally includes a support contract that continues to be active as long as the subscription is. If you decide to stop using the service and stop the subscription, you give up all rights to the service and are no longer allowed to consume the service or deploy any related software.

What is Support and Subscription (SnS)?

For lots of enterprise software (including Microsoft and VMware), along with the perpetual license, you also can choose to pay something (normally) called Support and Subscription (SnS). Typically, SnS provides a level of production/premier support for the license owner and, more importantly, upgrade rights for the software. The SnS contract normally lasts for 12 months (or to the end of an Enteprise Agreement) and can be renewed (assuming the software is still available and is not End of Support). If you decide to not renew the SnS contract, you still own the software (including deployment rights) at whichever version you’re are currently on, but do not have any ongoing support or upgrade rights.

Is Subscription and Software-as-a-Service (SaaS) the same thing?

NO - Software-As-a-Service (SaaS) is a delivery model/mechanism for consuming software. SaaS typically provides software that is hosted, managed and maintained by a supplier and consumed by the customer. Subscription is just the payment plan/method that is typically associated with SaaS.

And for those people who are still confused…

It may be easier to think of this in terms of something in your everyday life… your mobile phone.

Whilst not software, when you purchase your mobile device, it could (at a stretch) be considered a perpetual license for the hardware. You pay for the phone and you own it. Unless you break it, it gets stolen or the next version is released (and you just have to have it!), you own it forever (lucky you!). Also, if you change provider you can (normally) take the phone with you.

The call + text package is a subscription. You do not own the 4G or 5G network, you rent the connection to it. You decide whether you would like Pay As You Go (PAYG) or a pay monthly call contract. If you take the contract it is normally for 12/24/36+ months. You pay your monthly bill, and you can continue to use the services (make calls, send texts) that are offered by your supplier. If you have a monthly subscription, and stay within your call/text package allowance, you do not incur any extra costs (also known as overage) at the end of the month. If you go over your monthly allowance (or, as I found out recently, send a picture in a text message) then any overage is added to your bill. If you signed up for a 12+ months contract, once your initial period is up, you can decide to stop using the service and walk away.

Final Thoughts

As we continue to move towards a world where consumption through subscription is the norm, I hope the information within the post have gone some way to help explain the differences between those common licensing terms (Perpetual, Subscription and SaaS). There are plenty more terms and acronyms to be confused about and maybe we will tackle those in another post!

Published on 30 November 2020 by Christopher Lewis. Words: 828. Reading Time: 4 mins.

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