Perpetual Licensing Options

When you buy industrial software, you are not just choosing features. You are choosing a financial strategy that will impact cash flow, P&L, and your ability to modernize the plant for the next 5–10 years (and beyond). Using the example PERPETUAL vs SUBSCRIPTION A) Perpetual + Annual Support = US$20k license (one time fee) + 20% annual support.... ***Means “You are committed to this platform” [Higher CapEx, Lower OpEx] B) Subscription (annually) = (normally is 40% of perpetual license with annual support included).... Means “You are buying optionality and agility” [No CapEx, Higher OpEx] In the example from the chart is: Years 1–4 → Subscription is cheaper Year 5 → Break-even point both models cost ~USD 40k Year 6+ → Perpetual + Support becomes the cheaper option CONCLUSION: Both models cost the same at Year 5. From Year 6 onward, the perpetual + support model becomes cheaper in total cost of ownership. → Perpetual + support tends to win on total cost and control. → Subscription tends to win on speed, flexibility, and lower risk. REFLEXION: So the question for leadership is not “CapEx or OpEx?” The question is: “What does our time horizon and risk profile look like?” If the platform is core to your long-term digital roadmap → Perpetual + support often wins on TCO (time cost ownership) and control, assuming a 5–10 year horizon (and beyond). If you are still validating the use case, consolidating vendors, or the scope may change → Subscription wins on speed, flexibility, and risk management. Each option has its own pros, cons, risks, and advantages. The decision should not be based on “we’ve always done it this way.” Analyze both models for each specific project, and for major decisions, avoid leaving the choice to a single person.... make it a structured collective decision. #DigitalTransformation #CaPex #OpEx #FinancialStrategy #GENESISv11

Here's a somewhat controversial opinion: on-prem, perpetual licenses won't become obsolete because of cloud or SaaS alternatives. While SaaS and Cloud models offer unparalleled flexibility for user-based licenses — allowing companies to scale up or down instantly and stop costs with the click of a button — the conversation shifts when we look at enterprise server software. (Btw, if you think old-school license management is complex, try FinOps). For enterprise systems with a long-term operational horizon, on-prem perpetual licenses still present the most compelling value proposition. On-prem perpetual licenses may involve higher upfront costs, but for systems intended to sustain production for many years, they become significantly more cost-effective. The total cost of ownership decreases over time, making it an ideal choice for established systems where usage patterns are predictable and consistent. On-prem licenses offer complete control over the IT environment, which is crucial for companies with stringent data security, compliance, and governance requirements. This control extends to the software lifecycle, allowing businesses to plan upgrades, downgrades, step-ups, and changes on their terms. For organizations with BYOL agreements, the flexibility to transfer existing licenses to new hardware or cloud-based environments combines the best of both worlds—on-premises control with the scalability of cloud computing. SaaS models have undoubtedly transformed how businesses access and use software, catering to the need for flexibility and scalability in dynamic environments. However, when it comes to enterprise server software, where long-term stability and control are paramount, on-prem perpetual licenses stand out as a better strategic choice. They are not just about cost-saving but about aligning IT infrastructure with business strategy for sustained success. As Ryan Bendana pointed out (link in the comments), don't let sales double-talk confuse you by referring to "perpetual licenses" as "on-premise" licenses to get you into the cloud and help them meet their quota. 

(DAY-2) 🔍 License Types: Perpetual vs. Subscription 🔍 Understanding Oracle's licensing models is crucial for organizations to manage costs, ensure compliance, and align with business goals. Today, let’s dive into two widely used license types: Perpetual and Subscription Licensing. --- 1. Perpetual Licensing A one-time investment that gives organizations indefinite rights to use Oracle software, provided they pay annual maintenance fees for updates and support. Key Features: Upfront cost with long-term ownership. Annual support fees (typically ~22% of the license fee). Common in on-premise environments. Example: A company buys Oracle Database Enterprise Edition for $200,000 with an annual $44,000 maintenance fee. Over 10 years, they spend $640,000 in total. Best For: Businesses with predictable workloads and a preference for long-term ownership of software. --- 2. Subscription Licensing A flexible, pay-as-you-go model, ideal for dynamic businesses needing scalability. Costs are typically billed monthly or annually, making it a popular choice for cloud services. Key Features: Lower upfront costs; predictable recurring fees. Scalability to increase or decrease usage based on need. Includes maintenance and updates in the subscription fee. Example: A startup pays $5,000 monthly for Oracle Cloud services. In the first year, costs are $60,000. In the second year, increased usage doubles their cost to $120,000. Best For: Businesses with fluctuating workloads, limited initial budgets, or those moving toward cloud solutions. --- Comparison at a Glance 1. Perpetual Licensing Cost Structure: High upfront cost with indefinite usage rights; annual support fees (~22%). Scalability: Limited, as resources are fixed. Ownership: Permanent. Best For: Businesses with predictable workloads and a preference for long-term ownership. 2. Subscription Licensing Cost Structure: Recurring monthly or annual payments with lower initial costs. Scalability: Highly flexible; adjusts with usage needs. Ownership: Temporary, based on the subscription term. Best For: Organizations with fluctuating workloads or cloud adoption goals. --- Which Model is Right for You? Perpetual Licensing suits businesses that prefer long-term control and can manage hardware. Subscription Licensing is ideal for organizations seeking flexibility, especially in cloud environments. Both models have pros and cons, so aligning your choice with your organization's operational strategy is key. --- Tomorrow, we’ll delve into Processor-Based Licensing and Core Factor Calculations. Stay tuned! Feel free to share your questions or experiences with these licensing models in the comments. #OracleLicensing #SoftwareAssetManagement #ITCompliance #CloudSolutions #TechInsights #Oracle

Perpetual Licenses vs. RISE with SAP: What You Should Know? SAP customers are at a crossroads. For years, perpetual licenses were working out well for them. You paid upfront, owned the software, and had complete control and a yearly maintenance fee after that. But things are changing fast. SAP is pushing RISE with SAP, a subscription-based model, and the shift isn’t just a suggestion, it’s a very clear push. Here’s what’s happening: Perpetual licenses are no longer promoted, and for many, they are simply no longer available. Please ask me why. AI innovations and new features? They’re tied exclusively to SAP’s cloud offerings like RISE or public cloud. So, sticking with a perpetual license could mean locking yourself out of SAP’s future tech advancements. Yes, It may sound unfair to SAP customers who took the early initiative and moved to S/4 HANA on-prem through a perpetual license.  but that is what SAP is indicating so far and it may or may not change in the future. A few things you need to understand so that you are ready to negotiate when you decide to go that route. The Key Differences  Perpetual License: Upfront cost with annual maintenance fees (usually % of license). Full control of your system, ideal for on-premise setups. Licensing based on Named Users tied to specific roles. RISE with SAP: 1) Subscription includes hosting, updates, and support. 2) 𝗨𝘀𝗲𝘀 𝗙𝘂𝗹𝗹 𝗨𝘀𝗲 𝗘𝗾𝘂𝗶𝘃𝗮𝗹𝗲𝗻𝘁𝘀 (𝗙𝗨𝗘𝘀) 𝘁𝗼 𝗺𝗲𝗮𝘀𝘂𝗿𝗲 𝗮𝗰𝗰𝗲𝘀𝘀: Understanding SAP's FUE (Full Use Equivalent) calculation is essential when transitioning to RISE with SAP. Here’s the deal: SAP uses a weighting system to determine how many FUEs you need based on user roles and their access levels. Here’s how the ratios stack up: 1 FUE = 0.5 Developer Access (1 Developer = 2 FUE ) For developers. 1 FUE = 1 Advanced Use For users with full access to all applications and critical business functions. 1 FUE = 5 Core Use For users accessing specific tasks like forms and reports. 1 FUE = 30 Self-Service Use For basic, infrequent users handling approvals or simple tasks. Why It Matters Careful planning can save you money. What should be your next steps in my opinion? - Audit your users and usage: Why? Full Use Equivalents (FUEs) can be confusing and understanding can help you calculate and keep your budget in check. If you have any questions about it I’d be glad to help. - Think long-term: Will your business need AI and cloud capabilities in the future? If you are not ready yet (S/4HANA on-prem customers) you do not have to move immediately since there is considerable investment is already made. - Plan your budget: Understand the full costs of both models, including hidden ones. While SAP is making a push it may not be all bad news. Whether you stick to perpetual or move to RISE, understanding your options is critical. If you have a question please reach out. Cremencing Solutions #sap #s4hana