Subscription services are not new. In fact, it might interest you to know that the subscription business model was pioneered by publishers of books and periodicals as far back as the 17th century.

Whether you lease a car, donate to charity or pay for homeowners insurance, you’re probably already paying for subscription services of one kind or another.

Many organizations have been changing the consumption model for their products and services in order to continue to stay relevant and to provide more choices for their customers.

This is a high-growth market, which has seen a recent uptick due to the COVID-19 pandemic. According to the market research firm UnivDavos Market Insights (UMI), the global subscription e-commerce market is expected to reach $478B USD by 2025, representing a growth of 68% CAGR.

What are software subscription services?

The traditional way to purchase software – where you make an up-front purchase then continue to pay for an annual support and maintenance program after the first 12 months – is declining. Depending on the application, this initial investment can sometimes be a barrier to entry due to budget constraints or the need for executive level sign-off, often requiring a business justification including the calculation of return on investment (ROI).

Even paying for ongoing support and maintenance can be a struggle for some companies.

According to a 2020 survey by 2Checkout, which looks at worldwide subscription usage patterns, 49% of respondents indicated they had bought at least one SaaS subscription in the last 12 months, with 46% favoring an annual billing cycle.

The cost-effectiveness of the software or service appears to be the greatest driver of subscription service purchases, with 46% of consumers choosing a subscription to save money. Efficiency in time, usage and convenience were also popular factors, with 28% of respondents choosing subscriptions for these reasons.

With software subscription services, you get a number of benefits:

  • Lower up-front cost
  • Immediate access to the software
  • Ability to scale usage up or down quickly
  • Automatic updates to the latest versions
  • Automatic security patching, where applicable
  • Support and maintenance built in
  • Simplified licensing and asset management

For many software companies, a subscription service such as SaaS is the go-to model since it offers the opportunity for recurring revenue: revenue that is generated continuously. This leads to better predictability for the vendor and happier customers who get increased stability.

What are the different types of software subscription services?

In terms of subscription-based software services, there are a number of well-known examples that were previously only available as traditional desktop-installed software, such as Office 365 and Adobe Creative Cloud.

Software as a service (SaaS)

Software as a service is a licensing and delivery model where you subscribe (either annually or monthly) to cloud-based services and log in to a website where the software is located.

The user experience is very similar to what you would expect from a desktop-installed application.

Examples of SaaS are Office 365, Adobe Creative Cloud and Quest Spotlight Cloud.

Desktop as a service (DaaS)

Desktop as a service is a multi-tenant virtual desktop infrastructure (VDI) that is hosted in the cloud. These subscription services come with applications pre-installed so that companies can deploy them across their organization and stream them to users’ devices. Users access the desktop via a web browser.

Examples of DaaS include Citrix Managed Desktops and Amazon Workspaces.

Desktop subscription

Desktop subscription is a relatively new offering and is basically renting a software license for a desktop-installed application on a year-to-year basis. These subscriptions include support and maintenance as well as automatic updates.

Examples of desktop subscription include Autodesk and Quest Toad for Oracle Base Subscription.

What are the pros and cons of software subscription services?

For many, your expected frequency of use will determine whether you use subscription software or pay for a license up-front. For example, you may use Dropbox every day, so a subscription would be a good way to reduce your cost. On the other hand, if you use Adobe software for the occasional photo editing, it probably doesn’t make sense to subscribe to the Creative Cloud, but just purchase a license to use Photoshop Elements.

This table compares the pros and cons of software subscription services versus perpetual licensing.

Pros

Cons

Perpetual licensing

You own the asset

Higher up-front cost

 

Pay for ongoing support/maintenance after first 12 months

 

Physical download and installation

 

Software gets outdated unless you pay for support/maintenance

 

Potential security issues unless kept patched

 

You have to manage your own licenses

SaaS

No physical download or installation

 

Lower up-front cost

Higher long-term investment

Immediate access

 

Support and maintenance included in price

 

Automatic updates and security patches

 

Simplified licensing and asset management

 

Subscription auto-renew

 

Convenience

 

Education / event invitations

 

Desktop subscription

Lower up-front cost

Higher long-term investment

Support and maintenance included in price

 

Automatic updates and security patches

Physical download and installation

Simplified licensing and asset management

 

Subscription auto-renew

 

Convenience

 

Education / event invitations

 

Other benefits not available in perpetual, such as persistent settings

 

What software subscription services does Quest provide?

Quest Software’s Information and Systems Management business, which provides a broad portfolio of solutions for database and data management, currently offers two subscription products and has plans for more.

Spotlight Cloud

Spotlight Cloud is a database performance monitoring tool for SQL Server and Azure SQL that leverages cloud computing to provide 24x7 monitoring and instant diagnostics.

This no-software, low-cost/low-maintenance solution allows you to respond instantly to SQL Server issues and pinpoint and fix the highest priority issues with ease.

Spotlight Cloud is a SaaS product and is hosted in the Microsoft Azure cloud.

To illustrate the typical savings you could gain by switching from a traditional on-premises product with an upfront cost, the Spotlight Cloud team offers a cost calculator so you can easily see just how much you could save: https://www.spotlightcloud.io/tco-calculator-sql-server-monitoring.  

Toad for Oracle Base Subscription

Toad for Oracle Base Edition Subscription is the first Toad product to offer subscription pricing. It remains a desktop product but offers cloud-based subscription billing and licensing.

Toad for Oracle Base Edition Subscription offers a wide range of features for building and maintaining Oracle database programs, including PL/SQL and SQL scripts. It includes a robust, integrated debugging suite for PL/SQL and SQL*Plus scripts and utPLSQL unit testing so you can easily incorporate testing into your database development processes using an industry standard testing framework. 

Toad for Oracle Base Edition Subscription is individually priced for single users for a single year. Individual Oracle DBAs and PL/SQL developers will save time, reduce costs and risks using the same toolset our enterprise customers use—but at a yearly, subscription rate.

For enterprise users who require multiple licenses priced at a yearly or perpetual rate, Toad for Oracle Base Edition is still available at corporate rates and can be purchased via Quest sales.

Are software subscription services right for you?

Software subscription services are going to be a good fit for many organizations across a wide range of applications, but it still pays to carefully evaluate whether they’re right for your needs. Be sure to consider long-term and short-term cost, frequency of use and any impact on your IT team.

Anonymous
Parents
  • Some software vendors have switched to the subscription business model, but their offer cannot be called “pure SaaS”, since the software is still actually installed on the local machine, instead of being hosted by the vendor, and it is not delivered through the internet. In this case the label SaaS could be misleading and should potentially stand for Software as a Subscription, not as a Service.

    Francis, @builders north shore auckland

Comment
  • Some software vendors have switched to the subscription business model, but their offer cannot be called “pure SaaS”, since the software is still actually installed on the local machine, instead of being hosted by the vendor, and it is not delivered through the internet. In this case the label SaaS could be misleading and should potentially stand for Software as a Subscription, not as a Service.

    Francis, @builders north shore auckland

Children
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