2010 Software Licensing and Pricing
Survey Results and 2011 Predictions
Amy Konary
Director, Software Pricing and Licensing
IDC
Copyright 2007 IDC. Reproduction is forbidden unless authorized. All rights reserved.

Resources
Lead Vocals
• Summer 2010 WW survey of 77 Enterprises. Primarily North
American (NA) firms
• Summer 2010 WW survey of 156 Software Publishers. Split
70/30 software firms/high tech manufacturers
Backup
• Winter and Spring 2010 surveys of 1500 NA Enterprises
• IDC Enterprise Panel, Quarterly, ~250 NA Enterprises
• My iPod, iTunes, eLyrics and Google Images
© 2008 IDC Oct-10 2

Agenda
© 2008 IDC Oct-10 3

There’s Traffic in the Sky
Cloud Adoption by Application “There’s traffic in the sky,
Q: Rate your likelihood to pursue the cloud model for the following
and it doesn’t seem to be
Collaboration Apps
getting much better”
Web Apps
Data Backup/Archive
-Jack Johnson
Business Apps
Personal Apps
Public
Storage on demand
Private
IT Management
Server on demand
BI/Analytics
App Dev/Test/Deploy
Technical Apps
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
% rating 3, 4 or 5
Source: IDC Enterprise Panel – (scale: 1 = not at all likely, 5 = very likely)
public: 3Q09, n = 263; private: 4Q09, n = 240 ©2010 IDC | 13
Research Notes:
Most ISVs(60%) believe that their licensing will need to
change in some way in the next 24 months to adapt to cloud
computing, with around 30% expecting significant change
© 2008 IDC Oct-10 4

Key Characteristics of Cloud
Business Processes
Consolidate:
Reduce Costs
Interface & Access & Improve Quality
System A Virtualized System C
Virtualize:
Service/Resource Mgmt
Applications
Key Cloud Characteristics Simplify Access,
• Highly-scalable (up/down) System E Improve End-to-End Mgmt
• Self-service provisioning
& Security
Virtualized
• Metering, pay-per-use options
& Maximize Use
Information
• Integrated design, simple adoption
System D
Automate:
System B
Virtualized
Infrastructure
Add Speed, Predictability
& Reduce Labor
Virtualized Virtualized
Storage Processing
© 2008 IDC Oct-10

Most Customers Have Mix of Public and Private
Clouds
Business Processes
Cloud
Collaboration Cloud
Interface & Access Applications
Cloud
Virtualized (Application)
Serv
Service/Resource Mgmt
Service/Resource Mgmt
Applications Platforms
(“Platform-as-a-Service”)
Cloud
Virtualiz
& Security
Virtualized Systems
ed Information
Information
& Security Infrastructure
Software
Virtualized
Infrastructure
Cloud Cloud
Storage Servers/
Virtualized Virtualized Processing
Storage Processing
© 2008 IDC Oct-10

It’s In the Way that You Use It
“It’s in the way that you use it-
It comes and it goes.”
-Eric Clapton
Research Notes
Around 20% of software publishers offer usage-based
pricing today, and 20% more expect to offer it in two years
70% of enterprises indicated that tracking usage is either
important or very important
© 2008 IDC Source: IDC Q1 2009 Worldwide Black Book Oct-10 77

“So don’t you ever abuse it…”
“So don’t you ever abuse it,
Don’t let it go”
-Eric Clapton
Research Notes
One-third of ISVs that have or plan on implementing
usage-based pricing do not track usage at all today
(not even manually).
Just over 50% that have or plan a usage-based pricing
model in the next two years are offering tools
© 2008 IDC Oct-10 8

Show Me What I’m Looking For
Why is Compliance Difficult? “Save me, I’m lost…I’ll pay
any cost, save me from
being confused. Show me
IT too
decentralized
what I’m looking for!”
No automated -Carolina Liar
tracking
Licensing too
complex
Research Notes:
Most enterprises have difficulty tracking usage for the
purposes of software license compliance.
12% of publishers have no enforcement today, compared to
28% in last year’s survey
© 2008 IDC Oct-10 9

“Please, show me what I’m looking for…”
ISVs- What kind of enforcement do you provide?
Enterprises- What kind of enforcement do you prefer?
Physical Audit
Network Licensing (LAN)
Product Activation
ISVs
Dongle/USB Enterprises
Serial # check locally
None
0% 10% 20% 30% 40% 50% 60% 70%
Source: Summer 2010 Survey of ISVs and Enterprises, n=156 and n=77
© 2008 IDC Oct-10 10

You Know That I’m No Good
“I cheated myself. Like I
knew, I would. I told you, I
was trouble. You know
that I’m no good.”
-Amy Winehouse
Research Notes:
According to the 2010 survey, 13% of publishers conduct
physical license audits. This compares to 3% of publishers
in last year's survey.
The audit activity is expected to either stay the same or
increase slightly in the next two years.
© 2008 IDC Oct-10 11

Good Enough
“Don’t tell me I haven’t
Satisfaction with Value
been good to you, don’t tell
60%
me I have never been there
40%
for you, don’t tell me why
20%
nothing is good enough”
0%
-Sarah McLachlan
Research Notes
Most ISVs think current pricing and licensing strategies are
effective in capturing the value of their software
Most ISVs are increasing the flexibility of licensing by
adding more choice, in order to generate more revenue
(72%) and improve customer relations (69%)
© 2008 IDC Oct-10 12

It Was a Very Good Year
“But now the days grow short, I’m in the autumn of the year
And now I think of my life as vintage wine
from fine old kegs
from the brim to the dregs
And it poured sweet and clear. It was a very good year.
It was a mess of good years”
-Frank Sinatra
© 2008 IDC Oct-10 13

“It was a mess of good years”
Worldwide Software Revenues ($) Complexity
Crisis
2.6 Global
2.4
Software
 Individual systems Market
2.2  Technology solution
 Vertical integration
2.0
1.8
 Granular apps to
1.6 solve business
process problems
1.4  Process solution
 Software suites
 Business solution  Complexity crisis
1.2 and software sprawl
 Bi-polar approach
1.0
1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: IDC Beacon III Software Forecastertm
© 2008 IDC Oct-10

Night and Day
Licensing Implications Technology
Cloud Computing • Machine layer • Metering/tracking
• Usage-Based Metrics abstracted/irrelevant • Same technology
• Metered Usage • More dynamic as On Demand and
licensing/pricing Distributed
On-Demand Computing • Business transition to • Authentication and
• User-Based Metrics subscription authorization
• Subscription • Balancing simplicity • Usage-tracking
and flexibility • SLA monitoring
Distributed Computing • Value disconnect • License and
• Machine-Based Metrics • System changes entitlement
• Perpetual License + impact licensing management
Maintenance • Complexity crisis
© 2008 IDC Source: IDC, 2010 Oct-10

Questions/Feedback
Please email me at
akonary@idc.com
© 2008 IDC Oct-10 16