Many vendors are pushing customers to move to subscription licensing models, so I thought it would be helpful to explore why subscription licensing is not only inevitable, but also very beneficial for everyone involved.
A lot of it has to do with adopting more of the benefits of cloud—without having to adopt a full cloud infrastructure or prepare for your migration to the cloud. Even the on-premises deployments of modern Unified Communications (UC) or Customer Experience (CX) solutions have already adopted many of the characteristics of cloud, as defined by the National Institute of Standards and Technology:
- On-Demand Self-Service
- Centralized Pooling of Resources
- Broad Network Access
- Rapid Elasticity
- Measured Service
However, that last one—Measured Service—was always somewhat missing from the story. At the time, vendors really just didn’t have a good way of charging for pro-rated usage (or what we’d call “variabilized consumption”). Well, that’s changed. And, interestingly, their reasons for doing it go way beyond just changing from a CapEx (Capital Expenditure) model to an OpEx (Operational Expenditure) Model. It’s certainly a powerful side benefit, but it really isn’t their main driver.
The biggest reason that vendors need to go to this model is because they’re finding out that it is the only way to effectively charge for a complete solution when key architectural components of the on-premises solution can only be delivered from the cloud. This new variabilized consumption model frees up the vendor to deliver all the required components within the solution, regardless of where the components are. This prevents customers from having to piece together the modular environment themselves. It gives vendors much more flexibility to put pieces that were traditionally on-premises into the cloud without it impacting the customer’s investment in the solution. If the vendor’s architecture was 100% on-premises to begin with, but now some components needs to move to the cloud, they are able to tell the customer, “Don’t worry, it’s in there.”
Cloud Services Needed for On-Premises Deployments
A great example of this is if you want your solution to play effectively with any of the devices that are already “cloud-first.” I’m thinking of mobile devices. Specifically, I’m thinking of iPhones. Apple has added a lot of innovation to their devices, with the primary goal of extending battery life. An iPhone saves battery by intelligently putting apps into a dormant state. This sounds great for some apps, but it’s a nightmare for real-time communication apps that need to stay awake so that they can receive a call. To deal with this, Apple created a thing called the Apple Push Notification Service that allows providers to tell Apple to go wake up an app on an iPhone so that it can receive the information that it is coming its way. To reduce the complexity of the solution, most app vendors will stand up a centralized Apple Push Notification service (APNs) that is authorized to talk to Apple’s APN Servers, rather than have to set one up for each of their customers. You can see where a customer must consume a variabilized cloud service in order for their “on-premises” solution to work correctly.
Another great example of needing to use a cloud service for your “on-premises” solution is when you need to consume features that are constantly evolving and innovating. The obvious one that comes to mind for me is in the Artificial Intelligence and Machine Learning space. There is so much innovation happening there, and improvements occur at an insane pace. It rarely makes sense to “install” it on a server on your premises. You’d have to upgrade that software constantly to keep up with the innovation. Subscribing to a cloud service version of the software is a better approach, because you benefit from the enhancements as soon as they’re ready.
Continuous Improvement Continuous Delivery
This second example leverages a new term called CICD, or “Continuous Improvement (sometimes called Integration) Continuous Delivery.” It’s the idea that “versioning” is becoming irrelevant and is a key concept associated with “agile” development methodologies. Instead of waiting to save up all your cool new features for a major release every year or two (which, from a development perspective, is generally referred to as “waterfall”), you are “continuously” improving the product. No need to wait for a new release; you get new features the second they become available. You can imagine that “buying” a license doesn’t really work in this model. By subscribing to the license, you become entitled to use the software—and all of its enhancements—for the duration of the subscription.
Clearly, this model is better suited for a cloud environment than it is for an on-premises model, or even for a “hosted” environment. Pushing features out on a single cloud architecture allows you to immediately impact all of its subscribers. For on-prem, you need to get creative about how you constantly deploy these new features, as you’re constantly needing to “upgrade” your system the way you have in the past. But this is exactly what most vendors are working on feverishly. The goal is to automate the feature delivery in more of a “DevOps” model, letting on-premises customers take advantage of CICD. But this model can ONLY work with a subscription model. Fast forward to the end and this will be one of the primary reasons why all software vendors will only offer their solutions via cloud. It’s so much easier innovate, develop, and deploy. It keeps everyone current and able to realize the value of the most current capabilities.
Baby Steps to the Cloud
There’s another huge benefit for the customer to use subscription licensing: it gets them one step closer to a cloud model. I still have a lot of customers that tell me they’re not ready to fully transition to the cloud. Yes, we all know it’s inevitable, but they’re still not ready for one valid reason or another. For these types of customers, the subscription model lets them realize the benefits of the “Measured Service” aspect of cloud, variabilizing the consumption of their solution. Use it a little or use it a lot, pay for what you need—and don’t worry, it’s all in there.
Another very popular concept in the UC space is “Device as a Service,” which in our case is specifically applied to the physical communication devices (e.g., phones, huddle room cameras, speaker phones, etc.). The idea is that you subscribe to the use of your phone for a period of time. Aligned with subscribed user licenses, you’ve now variabilized the full cost of the end-user experience. Vendors with Device as a Service offers often let you stay current there, as well. If you’re using last year’s model, but love the innovative features associated with this year’s model, just send back your old one and get the new one. No charge. If you want to upgrade to a more expensive device, you just pay the difference for the remainder of the subscription. Easy. Don’t be fooled by people saying this is the same as leasing. It’s not. With a traditional lease, you’re simply using a different financing method for payment. With true subscription, you are subscribing to a capability (with all the new CICD capabilities that go along with it) not only in software/firmware, but also in hardware!
With major vendors like Cisco already announcing the End of Sale of traditional “perpetual” licenses, subscription is something you have to take seriously. It frees up the vendors to innovate at an ever-increasing rate, and it gives you the flexibility to stay as current as you want/need to be. It also lets providers like ConvergeOne offer the best solutions, knowing that customers already have the entitlements needed to enable and deploy it. There are great incentives to transition from “owned” licenses to subscribed licenses.
However, you need to act fast. The next generation of vendor solutions will all have the assumption of subscription-based licensing—and without it, you will fall behind very quickly.
CUSTOMER SUCCESS PACKAGES FOR AVAYA AND CISCO COLLABORATION SUBSCRIPTIONS
Avaya and Cisco have evolved their portfolios to an “as a service” subscription-based model to support IT complexity and the “need for speed” for faster innovation delivery. This transition could leave you needing help reconciling and accessing your entitlements and managing new buying models, delivery techniques, and consumption options. In addition, you need an accelerated process to achieve your most critical business outcomes and to reduce your time to value realization.
ConvergeOne Customer Success Packages for Avaya and Cisco Collaboration Subscriptions reduce your time to value realization for your purchased software solutions, improve adoption, elevate the customer experience, and have a more proactive approach for day-two support that allows you to focus on delivery of features to continue to drive business value of the solutions and outcomes.
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