UC Licensing That's CapEx-Free

In a recent NoJitter post (The Case for Free Enterprise Software), I suggested enterprise communications software should be free with required maintenance. My assertion was based on a key attraction of cloud/hosted services being the lack of upfront capital expenditures. Also, that software is continuously updating and tends to require "maintenance" anyway. I cited Microsoft Lync as a successful example because many organizations obtain the right to use it via Office maintenance agreements rather than actually purchasing the software.

Well, I'd like to take full credit for Siemens Enterprise Communications doing exactly what I described. I'd like to, but I can't.

Siemens Enterprise offers customers three ways to license its OpenScape UC solution. The first option is fairly traditional - buy it (or lease it) and then purchase software assurance to keep it up-to-date. This is the default approach within the industry. The second option is a variation on that theme with newly defined Value Packages which bundle popular options and applications. This will also typically be treated as a capital expenditure.

But it's the third option that earns points for creativity. Siemens Enterprise now allows business customers to obtain rights to use OpenScape via a subscription model. Zero CapEx expenditures. Jan Hickisch, VP of Portfolio Management, indicated the solution was originally designed for Service Provider customers, but was extended to enterprise customers earlier this year.

To subscribe to OpenScape requires an initial contract, typically for a two- to three-year term. The software automatically provides monthly license usage information back to Siemens Enterprise which then invoices for that term's activities. Because the software automatically "phones-home" with usage information, Siemens doesn't impose restrictions on growth.

It provides a new twist on an old model, and can be particularly attractive as a disaster recovery plan. The core servers can replicate databases, and only require full licensing should disaster strike. Also, organizations with seasonal fluctuations will only subscribe/pay for licenses when they are needed.

Siemens Enterprise also made the model channel friendly. Subscription licenses can be purchased through channel partners. The company is setting up an ecommerce front-end to simplify the transactions. The store will support partner rebranding. Partners earn a commission on actual usage. It provides an alternative to public clouds for organizations that want a greater degree of control, but don't want to spend CapEx.

The agreement includes support for mixed license types and software assurance is included. I like the model, and expect to see it grow in popularity. Hickisch said that break-even analysis typically favors a traditional purchase model sometime during the second year, but the flexibility will make the subscription model attractive for many organizations. This model offers several benefits associated with public cloud services, without the public cloud. Though, I would prefer to see it without a two- to three-year commitment. I don't see why Siemens Enterprise would care if a customer only wants it for a few months. An unexpected short-term need could allow an organization to effectively pilot OpenScape. Though without a major commitment, that probably isn't a big stumbling block.