Over the past decade, I’ve gained extensive experience servicing the world’s top publishers in Computer Aided Design, Manufacturing, Engineering, and Electronic Design Automation verticals. During this time, I’ve witnessed significant shifts in software licensing, driven primarily by cloud computing, evolving business models, and user demand for flexibility. Here, I take a closer look at several licensing changes that have become mainstream and their benefits and impacts on end users.

1. Transition to Subscription-Based Licensing

Shift from perpetual to subscription licensing: Many leading CAD/CAM/CAE software vendors have transitioned from perpetual licensing (a one-time purchase with lifetime usage) to subscription-based models. Companies like Autodesk, Siemens, and PTC have embraced this shift.

Benefits:

• Lower upfront costs: Subscription models reduce the initial investment, allowing smaller firms or startups to access industry-leading tools without significant capital expenditure.
• Access to regular updates and support: Subscriptions usually include automatic updates and technical support, ensuring users have the latest features and security patches.
• Scalability: Subscriptions are easier to scale up or down, providing flexibility for organizations as their workforce changes.

Challenges:

• Higher long-term costs: For businesses that use the software over many years, subscription expenses can accumulate and exceed the cost of a perpetual license.
• Pricing uncertainty: Vendors can increase subscription prices over time, which leaves users with little choice but to accept higher costs to continue using the software, complicating budgeting for businesses.

2. Cloud-Based Licensing and Software-as-a-Service (SaaS)

Cloud adoption: The rise of cloud-based solutions has led software vendors to offer cloud-based licenses that users can access remotely over the internet (SaaS). Onshape (from PTC) is a notable example of a fully cloud-native CAD system.

Benefits:

• Accessibility and collaboration: Cloud-based licensing allows users to work from anywhere, facilitating remote work and seamless team collaboration.
• Reduced hardware needs: Users can run CAD/CAM/CAE software on less powerful machines since processing and storage are managed in the cloud, reducing local hardware costs.
• Automatic updates: Cloud solutions often push updates automatically, ensuring users are always using the latest version without manual installations.

Challenges:

• Dependence on internet connectivity: Cloud-based software requires a stable, high-speed internet connection, which can be a challenge for users in areas with unreliable service.
• Data security concerns: Some users hesitate to store sensitive design or engineering data in the cloud due to fears of cyberattacks or data breaches.
• Potential downtime: If the cloud service provider experiences an outage, users may lose access to critical software and tools.

3. Token or Consumption-Based Licensing Models

Pay-as-you-go licensing: Token or consumption-based models allow users to pay only for the time or resources they use. Dassault Systèmes, through its 3DEXPERIENCE platform, and Siemens offer these flexible usage models.

Benefits:

• Cost flexibility: Users only pay for what they use, which is ideal for businesses with fluctuating project demands or those that need occasional access to software.
• Avoids paying for idle licenses: Unlike traditional licenses that may sit unused during low-demand periods, token-based models ensure companies only pay for active usage.

Challenges:

• Unpredictable costs: Managing expenses can be difficult with pay-as-you-go models, especially if usage spikes unexpectedly during busy periods.
• Limited availability: Certain advanced features or modules might not be included in token-based models, limiting access based on the number of tokens purchased.

4. Concurrent and Network Licensing Changes

Limitations on concurrent/network licenses: Some vendors have introduced stricter policies for concurrent or network licenses, which allow multiple users to share a pool of licenses. These changes can include limits on the number of concurrent users or geographic restrictions.

Benefits:

• Efficient use of resources: When available, concurrent licensing allows multiple users to share a limited number of licenses, maximizing their utility.
• Cost-effective for large teams: Organizations with teams working in different shifts or time zones can benefit from concurrent licenses, which reduce overall licensing costs by sharing resources.

Challenges:

• Stricter usage restrictions: new limits on concurrent licenses, such as user or geographic restrictions, reduce flexibility and may lead to higher costs if more licenses are needed.
• Administrative burden: Managing access to concurrent licenses can be challenging for organizations with large, distributed teams, leading to potential inefficiencies or unintentional overuse.

5. Introduction of Hybrid Licensing Models

Combination of perpetual and subscription: Some vendors now offer hybrid models, allowing users to purchase a perpetual license but requiring annual maintenance or support fees to access updates. Siemens (NX software) exemplifies this approach, catering to organizations not ready to fully transition to subscription-only models.

Benefits:

• Flexibility: Hybrid models balance the one-time purchase of perpetual licenses with the ongoing benefits of subscriptions, letting users retain ownership while accessing updates and support.
• Easier adoption for legacy users: Organizations not ready for a full subscription model can use hybrid licensing for a smoother transition.

Challenges:

• Ongoing maintenance fees: Even with a perpetual license, users must pay annual fees for updates, adding an unexpected recurring cost.
• Complexity: Managing both perpetual and subscription licenses adds complexity, especially for larger organizations with varied departmental needs.

Conclusion

As technology advances, both publishers and end users are adapting to more flexible software access solutions. Software licensing continues to evolve as vendors strive to capture market share and secure recurring revenues. These shifts highlight the trend toward flexibility and cloud adoption, but they also bring new challenges related to cost, license management, access, and data security. Staying informed about these changes is essential for end users to navigate them effectively and maximize their software investments.

At Connor, we understand that the changing landscape of software licensing presents both opportunities and challenges. Our team stays ahead of industry shifts, providing expert guidance to support sales, customer success, renewals, and compliance teams. We’re here to help vendors and end users drive value and align strategically in this evolving environment.

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