Industry Perspectives on Utility Pricing of Software

SUMMARY

This IDC study introduces the notion of utility pricing and presents empirical data that demonstrates there is, in the software industry, both interest and skepticism around utility pricing. The study also talks about some of the challenges to adoption of these models and describes a few utility pricing models that are in operation today.

There has been much discussion in the IT industry about utility pricing for IT products and services. Most examples of IT utility pricing models in existence today are for systems and storage products rather than software. However, this is changing as customer interest in utility pricing of software grows, technologies to meter software proliferate, and software vendors increasingly offer customers a range of software purchase options.

"While there is growing interest in software utility pricing models, customers and vendors are still uncertain of how these models will unfold," said Amy Konary, program director for Software Pricing, Licensing, and Delivery at IDC. "In addition to software utility pricing models, the software architecture and delivery methodology must enable the flexible deployment of software resources."

TABLE OF CONTENTS

• Table of Contents
• IDC Opinion
• In This Study
  • Methodology
• Situation Overview
  • Introduction
  • The Concept of Utility Pricing
  • Software Utility Pricing Today: Interest and Skepticism
  • Table: Plans for Moving Toward Pay-As-You-Go Utility Pricing over the Next Year by Software Type (% of Respondents)
  • Table: Desired Price Model Changes (% of Respondents)
  • Software Licensing Focus Groups
    • Lack of Familiarity Is an Issue
    • Cost Impact Is Difficult to Determine
    • Preferences Vary by Application Usage Levels
    • Adoption Inhibitors for Utility Pricing
    • Payment Preferences
• Future Outlook
  • Enabling Technologies
  • Table: Plans for Tracking Software Usage over the Next Year by Software Type (% of Respondents)
  • Table: Acceptance of Software Asset Management Tools by Software Type (% of Respondents)
  • Table: Level of Importance of Software Usage Tracking Tools by Software Type (% of Respondents)
  • Table: Types of Software License Relationships Information Tracked by Software Type and Licensing Model
• Essential Guidance
  • Actions to Consider
• Learn More
  • Related Research
  • Methodology
    • Volume Licensing Focus Groups
      • Focus Group Demographics
      • Demographic Breakdown
        • Position at Company
        • Software Purchase Responsibility
    • The Future of Software Licensing Study
    • Software Licensing QuickLook Survey, May 2004
  • Synopsis