Win Customers with Better Software Licensing Agility

Channel partners who provide more flexible, inclusive licensing solutions will capture sales.

Kamal Srinivasan , SVP of Product

June 16, 2024

4 Min Read
Software license

What's the worst thing you can do when serving your customers who are navigating a changing economy and deliberating on strategic artificial intelligence investments, among other concerns? The answer is locking them into a multiyear software licensing contract with little to no room for making changes as needed.

That's exactly the scenario playing out now in the end-user computing industry with virtual desktop infrastructure (VDI) and desktop-as-a-service (DaaS), which we all know is undergoing a seismic shift of corporate reorganization.

Burdensome VDI-related licensing requirements don't benefit the customer, nor do they benefit channel partners who want to deepen customer engagement by offering their customers more attractive licensing agreements with sufficient options.

Some VDI vendors are forcing customers into longer license terms, increased complexity and less granular choices for a higher cost. The cost of these heavy license requirements has customers frustrated and many channel partners in disbelief. By eliminating flexibility and, in some instances, cutting channel partner rebates, the VDI industry appears to be going in the opposite direction of what customers and the channel want in a dynamically changing market.

It's Time for Software Licensing 2.0

We're in our third decade of VDI, a concept that took hold in 2002 when Windows desktop virtualization was first put into use. The software vendors that emerged then, unfortunately, have continued their legacy practices of complex, rigid licensing models, even as the end-user computing market evolved and companies began looking for less vendor lock-in, more granular choices and licensing flexibility.

Today, with a proliferation of applications and a hybrid workforce, we need a more modern software licensing approach that reflects the current nature of business and the accelerated speed of software technology innovation.

Static licenses with a year or more lock-in hinder rather than help customer innovation and channel partner sales. Customers need the resilience of retooling their software investment to respond to market demand for new products. The channel needs to be able to redesign a software platform for customers without the barrier of a long-term license.

It's Time to Modernize Licensing Strategies

Here are five ways some software vendors are modernizing their licensing strategy to provide the agility customers and channel partners require.

  • Single-user, inclusive, concurrent license. Channel providers can offer their customers the benefit of concurrent-user licensing. This means that a user can establish any number of connections to the software if the number of users simultaneously accessing the software doesn't exceed the number of concurrent user licenses.

One license is all that's needed to accommodate one user, one or multiple devices or multiple connections. In the event there are multiple users — each establishing one or multiple connections — a license is needed for each user. When all licenses are used, other users must wait for one of the current users to log out from all sessions.

  •  Hybrid environment flexibility. Customers don't want to manage different licensing admin tasks when their employees move workloads between hybrid or public cloud locations or to on-premises deployment. A modern licensing agreement that supports and manages this hybrid environment, from a single portal, results in greater efficiency and time savings for the customer and provider.

  • An à la carte approach. Avoiding long-term pressure to sign one year or longer license commitments is a key objective, notably in the SMB market that has found VDI to be too complex and out of budget range. The solution is to offer a renewable subscription that can be purchased for a predefined period, either one month, one year or several years. The subscriptions may be renewed either directly or via a reseller if purchased through the reseller.

  • Improved channel incentives. Managed service providers and resellers are also looking for a more dynamic and nimble approach to growing their software and VDI business. Vendors who support improved margins for the channel, transparency in their pricing and who offer tiered channel discounts will drive more business for themselves and their partners. To encourage continuing revenue, vendors should provide visibility and notifications when subscriptions are getting close to renewal, to give resellers a head start on renewals.

  • Simplified MSP billing. A modern approach is a usage-based single licensing model with automated usage and billing reports, so a business only pays for what it uses. Rather than annual up-front payments, businesses can benefit from monthly partner billing for service provider license agreements (SPLAs).

Modern Equals Margin

MSPs and resellers can grow their VDI and software revenue despite the instability in the legacy vendor landscape. They can do so by partnering with vendors who are offering the flexible licensing options SMBs and larger enterprises demand today. By offering subscription options, concurrent licenses and hybrid cloud environment management, channel partners can grow revenue and experience better margins.

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About the Author(s)

Kamal Srinivasan

SVP of Product, Parallels

Kamal Srinivasan is senior vice president of product and program management at Parallels, a part of the Alludo portfolio. With more than two decades of experience in the field, he is known for building robust enterprise technology platforms. He previously served as the head of product at Blink Health, contributed to Microsoft's Azure team and led incubator efforts to build drones and develop machine learning on satellite imagery for its infrastructure security business, and was a cloud product lead at Oracle. He holds a doctorate in computer engineering from the University of Wisconsin-Madison.

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