Perpetual vs Subscription Licenses: Which One Works for Your Business?

Understanding how to acquire software licenses for your organization’s use can be a challenging task. Your IT team should be on top of their review skills to arrive at which license best suits and meets your needs. It is essential to make sure that the software is one you can afford, is secure, and meets your roadmap requirements.   

Hence the need as an organization to have a comprehensive understanding of the various Microsoft licensing models available. You are or will get to the point where between perpetual licenses (on-premises) and subscription licenses (cloud), you will want to know which one to settle for.   

This piece will share with you some factors to consider. However, our team of licensing experts are on standby to give further clarity if desired.   

What is a Perpetual License (on-premises) and how does it work?   

Perpetual licenses (on-premises) are the traditional approach for acquiring Microsoft software licenses. Essentially, with perpetual licenses, a company can buy software and own it for as long as they want. Your organization can use the software for as long as it meets your needs, and the publisher gives support.    

Perpetual licenses are available for a one-time fee, and your organization can use the license as deemed fit. Microsoft offers spread payment option when you add Software Assurance to your Perpetual license. Perpetual licenses have also several key features that your organization would want to look at. Amongst these key features are:  

  • Offering significant long-term savings since the costs are upfront.   
  • There are no ongoing payments attached to their use.    
  • Control of your software investment costs that can in the long run be critical in budgeting and forecasting.   

Advantages of Perpetual License to your organization   

Microsoft Perpetual licenses have several advantages that can benefit your organization. You should ensure that your organization has access to the most reliable, efficient, and cost-effective software solutions.   

The advantages of Perpetual licenses are;

  • License ownership: You own the software outright. This also means your organization can use the license forever. Perpetual licenses are typically more expensive than subscription licenses, but the caveat to saving on your purchase is using it for the long run. However, take time to make your calculations and scenarios well before your purchase.   
  • Ample control over your license: Decisions on how your data is saved or used, how you want your hardware and software infrastructure to operate are entirely yours to make. You decide on the system changes (configuration, upgrades and operational flexibility).     
  • No recurring payments (cost savings): This option ensures that your organization does not need to pay for the same software product each year. This eliminates recurring costs and freeing up finances for other business operations.   
  • Offline use of software: Your organization gets to use licensed software offline without relying on validation from a central server to proceed.    
  • Flexible deployment options: Your organization can choose to install software locally on your own infrastructure, which is beneficial if you have specific security or compliance requirements. You can control updates and customizations according to your needs as at when.   

Disadvantages of Perpetual licenses are:   

  • Higher upfront initial cost: Your organization will have to part with large sums of money to purchase licenses outright, which is expensive. This may be burdensome if you run a tight budget and lack options of purchasing licenses. Our team of experts can help in this direction. Contact us.   
  • In charge of maintenance: Your organization is responsible for seeing to the maintenance of all software updates. Ability to backup data, expand storage limits, disaster recovery and up to date activities are all your duties. This also requires a dedicated level of time and monitoring to stay on top of your IT infrastructure to avoid outmoded scenarios.   
  • Software installation is time consuming: The complete implementation or installation on servers or devices on-premises takes a longer time compared to subscription licenses.  

Opting for Microsoft Subscription licenses. What you should know.   

Subscription licenses are subscribed to by the user allowing for continuous use of the software only when subscription is maintained. Subscription allows you to use the software per the license obtained on your device (s).    

Subscription licenses are a newer approach to software licensing with Microsoft pushing for clients to get into Microsoft Cloud. Microsoft subscription model operates on the principle of a recurring payment plan.   

Advantages of Subscription Cloud licenses to your organization   

  • Ability to forecast cost: Since this option allows for flexible payment options  and you choose between monthly or annual payments, you know how to add these expenses to your budget. You can do this cost spreading over time.   
  • Up-to-date software and services: The subscription license gives you access to the latest versions of Microsoft software and services. You always have access to the latest features, security patches and updates. Safer data in the cloud with frequent backups.   
  • Scalability options: You can add or remove user license as your needs change. This works for organizations with fluctuating users and will need seasonal access to licenses. You can adjust the number of licenses required to meet your users and cut down on expenses.   
  • Multiple devices quick deployment: Microsoft subscription license allows the installment and use of software on multiple devices. Within a short period of time, the software is installed and ready for use.   
  • Saves time: Since subscription licenses are managed centrally, IT managers can save time and resources that they would typically spend managing and maintaining on-premises infrastructure.   

Disadvantages of Subscription licenses   

  • Cost overtime: This option requires ongoing payments, which can accumulate over time and potentially exceed the cost of purchasing a Perpetual license.    
  • Dependency on continuous payments: A subscription license requires consistent payments to gain continuous access to the service. Unable to pay will mean loss of access to associated data or information.   
  • Internet connection requirement: Without an internet connection you are unable to access the service or product.   
  • Vendor lock: This becomes an issue because the client becomes heavily dependent on a particular vendor’s products and services, making it difficult or costly to switch to alternatives. Again, in instances where there are other innovative solutions you may want to explore from other vendors, the switch may be costly.    
  • Overpaying: Subscription license at the on-set requires payment for a period when license is needed for use, .ie. monthly or annual subscription. Although this may seem flexible, over time, it is costly. 
  • Lack of visibility: This is because the user of subscription license is locked to a particular vendor who leads or manages your activities, and you may not have complete access to data as and when needed to make timely or crucial decisions.  
  • Limited customization option: Subscription license comes with updates but with predefined features and configurations. This may deprive you of customization of products to meet your specific needs.   
  • Licensing structure: The way cloud use and license works are different from on-premises and needs understanding to know how your needs can be met appropriately. Your inability to understand the complexities, terms and how license models work can lead to bad purchasing decisions. 
  • Not Understanding Bundles and Plans: This can lead you to select plans that do not align with your organization’s needs resulting in unnecessary expenses. 

Perpetual or Subscription: which works for your organization?   

To attempt to answer this question is not a straightforward one but requires research into various in-house and sometimes external factors. There will be the need to look at your financial books and what your budget is like when purchasing licenses and determining usage.    

There will also be the need to look at your roadmap and see what products and services will meet specific needs. You need to consider your users and what support system you want to adopt to keep the wheels running.   

Is your IT team up to keeping tabs on frequent updates and licensing usage changes to stay compliant? This is also a factor worth considering before taking a final decision.   

Your choice on either Perpetual or Subscription license should not be made abruptly, but rather after a thorough deep dive into what will work for you. Our team of experts can share various scenarios to help you make an informed decision.   

All you need to do is contact us. We will take an expert look at your entire IT infrastructure and environment, observe how your current license structure is and what your future projections are after which we will come up with a comprehensive strategy to assist your organization.   

Alternative license purchase option   

With the perpetual license, there is the option to purchase a pre-owned or used license. These licenses come with the same benefits as new ones and even better. Yes. With a second-hand license, you get to save up to 70% depending on how negotiations are done.   

When it comes to Subscription license, we can assist you with integration scenarios provided you are currently on-premises or wish to start cloud use entirely. We also have tools in place to help you monitor real-time resources used on cloud and share with you how best to save on cost by subscribing for exactly what license you need.  

We have assisted a varied number of organizations take advantage of second-hand licenses to save extra on costs to run other operational needs.

Our experts have achievedtargetsover and assisted various organizations and we canassist your organization too. Contact us now!

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