One of the most challenging things for the IT manager to coordinate within network management is the proper licensing of all software. Vendors typically sell customers the right to use their technology. In licensing arrangements, the vendor wants to maximize the economic gain, while also delivering equivalent value to the customer at the established price point. At the same time, the vendor needs to stay ahead of the competition in terms of the price to value equation.
To achieve this balance and optimize network management for the customer, the vendor needs to get create with their approach to licensing. If it is too complex for the customer to make the connection between value and cost – a sale is likely lost. If it is too simple, the customer or the vendor will gain a disproportionate share of the value and someone will end up unhappy.
Here, we will examine a few different licensing practices that are in place right now that can help the IT manager gain value in his network management role, while the vendor is also satisfied in their ability to sell the product for a fair price and stay ahead of the competition.
One price, unlimited use – this licensing structure charges one base price, regardless of the volume of use and is popular at the low end of the price spectrum. In truth, this approach does not sufficiently support the economics beyond a few licensing units and network management can be stunted if this approach does not work.
Tiered pricing, scales according to device – this simple approach provides a good balance of economic gain and value to the vendor and the customer at the same time. Network management is made simple as the IT manager can easily understand and project what the overall cost will be in the long run.
Tiered pricing, scales according to sub-components – even as pricing is still tiered, the scaling becomes more complex as it is based on sub-components of devices. The cost of the software scales quickly as the density of monitoring increases. As a result, cost projections are more difficult.
Instances-based licensing – network management includes multiple copies of the application and each separate instance is charged at a negotiated rate for the base product.
Node-locking licensing – here the licensing is tied to the server on which the software is running, which can make it more difficult to redeploy the software from one machine to another.
Business unit licensing – the use of the software is restricted within an organization and other business units must purchase their own copy of the software.
User-based licensing – this model charges a fee for each user on the network.
Fixed licensing vs. floating user license – in a fixed situation, only an exact number of active user accounts is created on the system to optimize network management. A floating scenario allows only the licensed number of users to work on the system at the same time.
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