I’ve been recently asked to answer a few questions by Nancy Spurling Johnson, a journalist writing for Cadalyst. As agreed, she didn’t publish my interview verbatim but instead used my answer to write a white paper sponsored by IMSI, the company that makes TurboCAD. The white paper was published on May 25th, 2016. I assume I’m not allowed to post the white paper PDF, but I can at least post my original answers to Nancy’s questions.
Users with a very stable setup, allowing them to plan ahead the number of licenses or the set of features needed in the near future, can afford to give up the flexibility of the rental option. For those users, perpetual licenses can be the most cost-effective solution. —Franco Folini
Nancy: What do you feel are the benefits of software “ownership” (vs rental)?
Franco: Users with a very stable setup, allowing them to plan ahead the number of licenses or the set of features needed in the near future, can afford to give up the flexibility of the rental option in favor of the stability of perpetual licenses. For those users, perpetual licenses can be the most cost-effective solution. Some others are simply more comfortable with perpetual licenses, and they are not yet ready to switch to the rental option.
Nancy: What types of organizations/workflows are best served by a perpetual license?
Franco: Companies with a very strict internal software certification process can have some problems in switching to rental licenses. Those companies are best served by perpetual licenses with a release cycle of at least 1 year. Even if they adopt the rental licensing model, they might not be able to take advantage of the frequent software upgrades typical of the rental model.
Nancy: What do you hear from customers in terms of their reasons for choosing a perpetual license over a rental?
Franco: Some users prefer ‘to own’ the license because they have purchased perpetual licenses for years; they don’t feel yet comfortable with the rental option. We are seeing the same resistance we observed when the delivery of many software products shifted from physical DVDs to simpler download links.
Nancy: Does Novedge help customers determine which option (own vs. rent) is best for them? If so, how do you go about it?
Franco: At Novedge, we are committed to providing our customers with the best solution that better fits their needs and budget. When the choice is between a perpetual and a rental license, we strive to provide customers with all the information they need to make the best decision. Ultimately, it is always the customer’s choice, his or her decision. We never push them in one direction (rental) or the other (perpetual). Our website provides very clear information on the costs for all the rental options. On every product page, our customers can easily compare these options (perpetual license, 3-month rental, 1-year rental, etc.) and find the one that best fits them.
Nancy: What are you seeing in terms of the move toward software rental in the CAD market — is it happening quickly? Do you believe a day will come when software rental is the only option available? How does all this affect a company like Novedge?
Franco: I don’t know what direction the market will take in the future. For sure, the rental options are here to stay. Rental may not be the best option for everybody, but if we look at the big picture, the advantages are clear. Design firms are expected to become more flexible, more efficient, and rental is certainly part of this transition. The more flexibility software manufacturers will add to their rental offer, the more quickly designers will switch.
Nancy: Anything else you’d like to add?
Franco: The transition from perpetual licenses to rental licenses also implies a transition from product to service. This is a very important transition with huge implications for software products. Software manufacturers will be relieved from the pressure to constantly add new features just to feed their marketing department and to justify the cost of the most recent upgrade for existing users. They will focus more and more on core features, with a significant positive impact on the designer’s productivity.
The transition from perpetual licenses to rental licenses also implies a transition from product to service. This is a very important transition with huge implications for software products.