Times are Changing: Software Purchase vs. Subscription

Just 10 or 15 years ago, if you said the word “subscription,” the first thing that would come to mind would be a subscription to a magazine or newspaper. Today, that’s not necessarily the case, particularly when you’re talking software.

When I first joined an IT team after being in the legal secretarial ranks for 21 years, software was bundled with hardware; it simply came with the computer. Later, we purchased software such as WordPerfect, Adobe Pro and Microsoft Office separately. They came in pretty boxes with CDs or DVDs and a license code.

The Evolution of Software Purchasing

Shortly thereafter, specialized software was introduced, software that really helped us get our jobs done – products like template packages, document management software and document comparison software. We would purchase the software license and then pay a small fee to the company each year for “maintenance.” That meant we could call their tech support team when something didn’t work properly and get minor updates and bug fixes.

Those days seem a distant memory.

About five years ago, SaaS (software as a service) was a buzz word you’d hear frequently when talking about software. We don’t hear that term as much anymore, but the trend has been for some time to purchase software as a subscription. You don’t own the software, but instead subscribe to the software on an annual basis. Each year’s subscription includes maintenance/support and at the end of the year, you do not have a substantial investment, nor do you have an obligation to keep using that software if it no longer meets your needs.

Another change . . . we used to license software to the computer. It didn’t matter if you had cycled through 10 users, the software was happy as long as it was installed on the computer it was first installed on. If your computer died unexpectedly, well, that was a bit of a quandary. Software needed to be uninstalled before it was reinstalled, again to satisfy the license requirements. Now, software is licensed to a user and follows the user.

Today, you can still purchase software, but you will frequently see the term “perpetual” licensing – that is, buying the software and paying for maintenance, which allows you some upgrades, bug fixes, tech support and other services.

However, if you want to always have access to the latest version of the software, a subscription model may be best for you.

Office 365

Office 365 has been a game changer on the subscription front. Rather than buying MS Office with your new computer, you now buy an Office 365 subscription. Office 365 has also helped us move away from the need for Exchange servers, because Exchange is hosted “in the cloud.”

There are other advantages. When we used to purchase MS Office, we were stuck with that version of the program. Now, Office 365 entitles you to download and use the latest version of the program. Not only that, but you are allowed to install Office 365 on up to five computers used by the same user. You also have the convenience of logging into Office 365 on the web, so you can get to your email anywhere, at any time.

End Result: Flexibility

It isn’t always clear-cut whether it’s better to go with a purchase and license arrangement or a subscription. Terrapin Technology’s team is happy to help you assess the options and find a solution that works best for your business model.