The trend to subscription licensing started by Adobe, is a concern for organizations that use engineering and scientific software. The licensing costs for these applications eat big chunks from the IT software budget, but the tools are essential to the business as a going concern. To best manage costs, companies have traditionally purchased perpetual licenses, based on a maximum number of concurrent users, rather than license-per-user models. However, some software vendors have seen Adobe’s success, admittedly after an initial drop in earnings. The temptation of a steady monthly revenue stream is also far more attractive that the peaks and troughs of annual renewals. Some vendors have taken the plunge: ESRI got massive pushback from their users when they tried to impose a subscription model and had to adjust their thinking in order to appease their customers. Autodesk is unrelenting – they are determined to phase out all perpetual licensing, and time will tell how this strategy works.
Solidworks New Licensing Strategy
Dassault’s Solidworks subsidiary has been watching developments and has also entered the subscription versus perpetual licensing fray. However, they have kept options open for their customers by offering as much flexibility as possible. In view of their product portfolio, this makes sense. While computer-aided-engineering (CAE) products could be software that a company uses on occasion, a full product lifecycle management (PLM) suite is obviously a long-term investment and a perpetual license would make more sense.
In order to make subscription licensing more attractive, as well as more affordable for small and medium enterprises (SMEs), Solidworks offer a 3-month subscription model, rather than locking the customer in for a full year. This would make sense where a steel engineering company has designed a product that requires plastic molding, for instance. The Solidworks Plastics application is dedicated to designing injection molds for plastic products, and if this is a once-off design by the company, they can opt of the three-month subscription to get their product to market without having Plastics lying on the shelf for another nine months.
Existing and potential customers are sitting up and taking note; however many of them are asking for a one-month license too. Whether Solidworks decides to add this to their offerings remains to be seen.
The Thinking behind the Strategy
Solidworks CAD is the leading 3D CAD software, but it comes with a $4000 price tag for one perpetual license. Large corporations can manage this, and where their user to license ratio is over 2:1, this is the best priced and easiest to manage option. The same does not hold true for small and medium businesses, where the high upfront price makes these companies purchase competitor products. The subscription license removes much of the barrier to entry and can bring in new customers who balk at the perpetual cost, but can afford a 12-month subscription, or even put their toes in the water with a three-month subscription.
What gives Solidworks the edge in this circumstance is their extensive academic reach. They have built a large footprint of schools, colleges and universities that have Solidworks on campus and made it engaging for students by offering certification and work-anywhere options. So, when the student is no longer a student, but in business, they are comfortable with the product and don’t have the learning curve that investing in a competitor product will bring.
Another incentive to invest in Solidworks is their Entrepreneurship Program, which assists small startups and entrepreneurs to get going via partnerships with a large community of incubators and accelerators.
Clearly, these strategies are all aimed towards building market share in the long-term, but they are far more customer-centric that Autodesk’s uncompromising approach.
The Problems with Subscription Options
The main problem with a subscription option is that it is not a long-term or lifetime relationship. It is fine while it lasts, but what happens when the break-up comes? If the subscription was cloud-based, what happens to your drawings and models? They are your intellectual property, but how are they going to be returned to you and which file formats will be used?
This is something Peter Rucinski, SOLIDWORKS Director of Product Portfolio Management, points out in engineering.com, giving the analogy that it would be like asking for your color prints back, but getting black-and-white images instead. 3D imaging is rich and complex and it could be hard to get back your full intellectual property as you designed it.
This should not be the make-or-break factor in deciding which software to purchase, but the implications should be thought through carefully.
Rent or Buy – Find the Best Fit
Clearly, the decision is dependent on your own business model. Any software that supports a core competence needs a long-term relationship, and the perpetual model is the best fit if you have a medium to large number of users. Where you only have a few users, the subscription license is probably the most affordable option, although you will still need to monitor usage to keep costs down.
If you have a situation where you need to design and build a once-off product that is not part of your normal line of business, the 3-month subscription can work, remembering that the software is unavailable once the period expires, although you will have your drawings, models or tests and simulations. However, you are always welcome to subscribe again. Solidworks tries to offer the most flexible options to customers, so a hybrid solution with a mix of perpetual and subscription licenses on-site or in the cloud is perfectly viable. You may need help with managing this hybrid option, which is where OpenLM can help you keep costs and productivity optimized. Solidworks are really trying to reach the widest target market audience possible, and have created a new app suite that definitely steals a march on their competitors.
You are Never too Young for Solidworks
Well, that is not quite true, if you are under 4 years old, the following does not apply. Following on the successes gained by focusing on schools and universities, which is where the customers of the future come from, Solidworks has taken the Jesuit saying to heart
“Give me the child for the first seven years and I will give you the man.”
Although this saying is attributed to Loyola, and is probably apocryphal, it has elements of truth to it.
So Solidworks have launched a new product in beta called “Solidworks Apps for Kids”. According to Solidworks, this product is aimed for kids from 4 to 14, but can be accessed by kids of all ages. This is a great opportunity for children to get immersed in STEM learning as early as possible. The beta mode is free; it remains to be seen if it will be monetized at a later stage, but in the interim, why not introduce your kids to it, or even better, indulge the kid in yourself!