Embracing the Subscription Economy Era
Kerry Grimes, Head of Global Partners, AVEVA, shares insights on how the subscription economy is disrupting traditional models and why partners must optimise the prospects it offers
The age of the subscription economy has arrived. The concept is growing at a rapid pace across the US and Europe for services of all kinds. In the last decade, subscription models – such as Netflix for TV, Spotify for music, Adobe Creative Cloud for design services and Ring for home security – have steadily weaved themselves into our everyday lives and businesses. Given the rapid pervasiveness of the model, it is clear that companies and individuals are realising the many benefits of access to flexible, scalable technology on their terms.
In the world of software, subscription models are radically disrupting the traditional perpetual licensing model and revolutionising the way companies, partners and customers work together.
In the last fiscal year, AVEVA registered record subscription growth as businesses sought access to transformational technology on an agile basis. According to ARC Advisory Group, subscription models are predicted to grow at a pace nearly four times that of traditional software over the next five years in the industrial automation software markets, with Enterprise Asset Management and Field Service Management software markets leading the global transition.
In the first instance, software subscription differs from traditional licenses because it allows customers to spread payments and only pay for what they need as they go. This flexibility provides advantages to customers that want to manage cashflow.
What’s more, through subscription licensing, the cost to use software in the first year is far less when compared to an outright purchase. When software is subscribed to, customers pay just a fraction of the total cost in the first year. This means software acquisition is shifted from the capital budget (CapEx) to an operating expense (OpEx), capital spending can be reallocated to other expenditures. This means customers can potentially fund other high-priority capital projects.
The subscription model also affords customers unprecedented access to technological innovation and transformation at a lower-entry price point, as well as flexibility, scalability, and in-built customer support. You buy only what you require and scale it as your needs change, while your cybersecurity needs are fully managed by the service provider.
For example, our subscription program ‘AVEVA Flex’ affords customers the rights to use and continually receive updates to software innovations. A huge advantage of this model is that as soon as features are added to the software you are using, it’s automatically available with no new roll out or purchase required.
By removing the traditional barriers to software adoption, customers are empowered to leverage leading technologies and respond quickly to evolving market demands, without having to navigate onerous capital budgeting cycles.
A case in point: AVEVA Operations Control software is available on a subscription basis – delivering a game-changing mix of cloud, on-premise and hybrid solutions across the company’s entire industrial portfolio.
For the first time, businesses of all sizes will be able to focus on enabling their workforce, leveraging agility and flexibility to optimise their operations. From industrial IoT architectures and cloud-drive remote edge management to multi-site control, our software is now available via a flexible usage model under a simplified subscription.
Subscriptions-based software allows access to a variety of market-leading technology solutions on-premise or in the cloud – all in one bundle. Companies can flexibly monitor and operate systems from a variety of platforms, such as web, mobile, cloud and desktop. Organisations can also benefit from various “sized to fit” scalable options with the capacity to adjust scale usage and data points as needs evolve.
This type of model also lends the flexibility required to enable a variety of architectures and integration capabilities with an array of open, seamless, hardware-agnostic solutions. With subscriptions, the capacity to implement technology across a variety of industrial applications is greatly enhanced and simplified. It also means clients are afforded the flexibility to adapt the solution architecture at any point in the project lifecycle – including prototyping, design, commissioning and expansion.
With such powerful benefits, it’s no surprise that the subscription model is gaining rapid global dominance. Its unique combination of commercial, architectural and technical advantages is set to continue disrupting the world of industrial software and beyond – allowing customers to leverage the power of world-class technology on their terms.