The Great Software Licensing Debate: Should You Subscribe or Purchase Outright?

Choosing an office suite was once a simple matter of accepting the option that came with your operating system. However, in the modern world, many products we once bought in boxes, like Microsoft Office, are now being delivered via a subscription model. 

This move allowed Microsoft to keep up with newer subscription-based services like G Suite. After launching Google Docs and Spreadsheets in 2006, G Suite took a while to find its feet, but the web-based office suite now boasts more than 5 million paying customers

Google’s success with G Suite dragged Microsoft back into the fray of competition, and as IT pros, we now have to carefully consider the subscription model and determine if and when it is right for businesses. Some providers – notably Microsoft Office – still offer businesses the choice to buy boxed products, volume license deals, or subscription licenses. However, this flexibility may not be around forever. G Suite doesn’t offer the physical purchase version and never did. It offers some flexibility in its licensing levels. However, from Basic to Enterprise, every G Suite license is subscription-based. 

As the business environment continues to evolve, subscription models of all kinds will be a growing trend. However, this is more than just something the tech industry needs to face and understand. Our clients rely on software platforms to get work done, and at Invotec, we’ve been fielding many questions about the benefits of perpetual licenses vs subscription licenses. For this reason, we felt now was the ideal time to weigh the pros and cons of the software subscription and perpetual license models.

What Are the Benefits of the Software Subscription Model?

First, let’s outline some of the basic pros and cons of the subscription and purchase models. Many people, especially in IT, assume that subscriptions are designed to extract higher fees from customers. However, at its core, subscription pricing is simply a licensing approach – it doesn’t necessarily mean an increase in cost. In fact, in some cases, subscription models may result in an overall decrease in software expenditure.

Finance Benefits: Budget-Friendly Software with Big Value

Put simply, a move to subscription licensing means businesses are able to move from capital expenses to operational expenses, which is generally regarded as a smart business move. However, the subscription model offers far more value than that. Subscription pricing gives businesses far greater control when it comes to cost predictability.

Using a subscription model for software needs allows businesses to more accurately predict their costs over time, with few unexpected surprises. In the traditional purchase approach, software updates are manual and often forgotten, meaning some users aren’t aware that their platform is outdated until they’re forced to update. This leads to expensive renewal invoices that feel like they came out of nowhere. Even worse, these expenses are often followed by a spike in training costs as it’s essential to help staff adapt to big gaps in software versions.

Subscription pricing is more budget-friendly because costs normally fluctuate fluidly with employee count. This provides optimal scalability potential. As new employees are hired, businesses can predict exactly how much they will cost. Furthermore, when employees leave, subscriptions can be discontinued and costs reduced. 

The need to overbuy in the name of predicted growth is no longer an issue with the subscription model. Subscription licensing also provides huge flexibility and supports business growth by allowing enterprises to pay only for what they use, as they use it.

IT Benefits: The Subscription Model Helps Tech Departments Work Smarter Not Harder

Now that we know it makes financial sense, let’s take a look at the IT benefits gained by adopting subscription licensing. First and foremost, IT efforts are streamlined because relationships with finance and human resources are optimized using the subscription model. This eliminates redundancies and helps every component of your business work in support of the others. 

Of course, the subscription model offers far more IT benefits than that. Let’s take a look at some of the specific ways that the subscription model optimizes business IT:

  • Best Practices and Automatic Updates

Business IT is enriched thanks to the effective enforcement of best practices through the subscription licensing model. Businesses are often on the fence when it comes to investing in new software versions, which results in support issues, unnecessary complexity, and frustrated users. With subscription pricing, IT is constantly supplied with the latest updates, which strongly enriches functionality and user experience. Simply put, the subscription model makes software optimization relatively automatic.

  • Software License Optimization

Speaking of automation, the subscription model also enriches overall IT efforts by optimizing licensing management. The subscription model makes it far easier to determine license availability and need. Internal audits are unnecessary because the licensing process is generally handled via an authentication mechanism with the vendor. This means unless some drastic and specific effort is taken to violate licensing protocols – like cracking software or some other extreme measure – licensing accidents are rare and easy to mediate.

  • Software Customization and User Control

The subscription model also offers a huge boost when it comes to software customization and user control. Some employees require a more dynamic feature set than others. In the traditional license purchase model, complex processes would be required to designate user permissions and customize account controls. With the subscription model, licenses can be purchased at the minimum level and upgraded as needed. The model offers the ability to easily customize per user, over time, and around a variety of other needs. This makes it easier than ever for administrators to customize access and optimize the user experience.

Okay, The Subscription Model is Great – But Should You Go Microsoft or Google?

Understanding the benefits of the subscription model is just the first part. While there are many providers on the market, the clear leaders are Microsoft’s Office 365 and Google’s G Suite. While both offer their service through a subscription pricing model, there are some key things to consider when choosing a provider. 

Both research and experience have led us to side with team Microsoft. To make our reasoning quick and easy to understand, we’ve broken it down into the following benefits and limitations of each platform:

Microsoft Office 365

  • POWER

Office 365 is the market champion when it comes to business software. It’s familiar, integrated, and has a legacy all its own. Under the subscription model, users can subscribe to on-server versions, cloud versions, or both. This sets the scene for ultimate workforce flexibility. Additionally, since Microsoft has been on the market for so long, they’ve worked out bugs and created a truly optimized package of integrated apps.

  • CUSTOMIZATION

Customization and user control runs at optimal levels in Office 365. Licenses can be customized to set user permissions and integration with other apps. Microsoft’s feature-rich and comprehensive approach makes Office 365 a value-packed platform that can be scaled to meet changing business demands over time.

  • PRICE

The subscription pricing model for Microsoft has a variety of different tiers for business, depending on the extent of services required. While most of Microsoft’s subscription price-points are slightly higher than those for G Suite, the value offered in Microsoft software packages outweighs those in G Suite. Further, since Microsoft still has its non-subscription version on the market, subscription customers can keep tabs on purchase price options to ensure software pricing isn’t being arbitrarily increased.

Google G Suite

  • POWER

G Suite is a great cloud platform that offers a very similar set of applications to mirror Office 365. However, the suite is much more basic than Microsoft’s well-honed platform. G Suite offers a sleek interface and applications to match Microsoft favourites like Word, Excel, and PowerPoint.

However, when it comes to overall operational power, G Suite doesn’t have the same powerhouse status that Microsoft has earned thanks to years on the market. Furthermore, since Google doesn’t have native versions of their web-based apps, the ability to work offline is far from optimized.

  • CUSTOMIZATION

Certain G Suite packages allow for some customization and integration with other business apps – including Office 365. Furthermore, G Suite does offer a variety of customization features when it comes to user control and experience. However, these features simply don’t live up to the customizing power offered by Office 365. G Suite is better suited for businesses that need relatively simple access to a basic platform.

  • PRICE

G Suite subscription pricing is very affordable, making it appealing to businesses seeking a basic and relatively easy-to-use platform. The pricing tiers for business cover Basic, Business, and Enterprise users, with an increasing price-per-user to match. 

At face value, the G Suite pricing plan may look more cost-effective thanks to the lower price tags. However, it’s essential to consider value for money when weighing up software licensing options. G Suite doesn’t match up to the power or customization capabilities of Office 365.

Finally, since Google doesn’t have a purchase licensing option, customers have no way to compare prices or hold Google accountable for pricing decisions or increases.

How to Choose the Right Software for Your Business

When it comes to business operations, software isn’t something that needs to be owned. It may help to look at it as just another tool for getting work done efficiently. From this angle, it’s clear that business software should be implemented in a way that makes operational and financial sense. That’s why the subscription model is likely to become the new normal.

Overall, we’re in support of the subscription model. Subscription services help business owners make more informed technology decisions. They offer flexibility, making it easier for elements of the enterprise to flow more naturally as business needs change. However, we also understand that making the switch to a new pricing model after using the traditional one for years isn’t easy. It’s even more difficult when you have to decide between competing vendors.

If you still have questions about the subscription model or choosing the right software for your business, call 1300 468 683 or email sales@invotec.com.au to get in contact with one of Invotec’s IT experts. 

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