Gartner ITXPO: CA predicts subscription licensing for all

Computer Associates' chief executive officer Sanjay Kumar said that every major enterprise software vendor would have to adopt a...

Computer Associates' chief executive officer Sanjay Kumar said that every major enterprise software vendor would have to adopt a month-to-month licence subscription model during the next five to seven years.

Kumar, speaking at Gartner's ITXPO conference in San Diego, argued that subscription models are better for customers because they allow customers to replace any given vendor without having made a huge financial commitment up front.

"Every software company in this industry will be forced to adopt the same business model that we have in the next five to seven years," Kumar said.

Industry analysts said large software vendors such as Microsoft, Oracle and Computer Associates may have difficulty selling subscription software models to enterprise customers.

Large users have often shown little patience with vendors pushing new pricing and licensing models without the inclusion of substantial value-added services as part of the package.

"If customers feel that this is just another way of increasing [vendor] revenue and increasing users' cost for software, there will be resistance to it," said Audrey Rasmussen, vice-president analysts group Enterprise Management Associates.

"If it is presented as providing additional value, such as automatic updates, simplified update downloads, and distribution throughout a company, that will resonate better. It could go either way," she added.

Rasmussen said subscription-based licensing carries with it a host of benefits, including flexibility, minimal up-front cost, and freedom to migrate from a vendor's software products without a great degree of difficulty. But inevitably some drawbacks cannot be ignored.

"The downside of a subscription model is like a lease - you never stop paying for it," she remarked.

Although subscription-based software should prove appealing to an "exploratory" group of customers eager to inspect its merit before making a commitment, Rasmussen said the onus is on software vendors to convince some of their own customers who have been wedded to long-term licensing deals in the past.

"Granted, Web services is going to be enabling the transition of software [delivery], but it will take people time to change their mindset on the subscription model and change in processes. Vendors will have to be flexible that way," she added.

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