If you lose employees, you now have an unused inventory of software. You can no longer pay for the software because the employee is no longer there. Short-Term Commitment. Buying a perpetual license means you commit your money to that license forever. A rental plan means you commit only for the time you need to use the software. There is no risk in having software sitting there. When you are done with it, you stop paying for it. Fills Temporary Software Needs.
Have an intern? Have a project that has special software needs? Rent the software you need while you need it. When the project is over , so is the rental plan. Office Standard Office Professional Plus Office Personal Office Professional Windows 10 Pro bit or bit. For some users, it's a much cheaper way to use Adobe product.
For some, slightly more expensive. But one thing holds true across the board: if you're on Creative Cloud , you're never out of date. Not only does the Office and Google Apps approach to software bring new features to users at a much faster rate, but they also solve this oft-forgotten IT black hole: many on-premise servers remain unpatched for months, if not years, over the course of their lifespan.
Even larger organizations with dedicated IT staffs aren't always shining stars as you may suspect. You don't want to know how many times I've been met with blank stares by IT staff when I was brought in for consulting projects and the question of "what kind of patching routine do you have? Shocking, but not surprising, knowing how many IT pros prefer a path of least resistance in keeping systems up and running. Swinging back around to an earlier point, I wonder how much tougher it is to justify the expenditure of new software suites like Office when you know for a fact that Microsoft will have a new release available in just months time?
Sure, you could opt to skip releases like many organizations regularly choose to do, but at what point will falling further behind become a business need that has to be addressed? Google Apps has perhaps one of the fastest agile development schedules in the cloud email industry. The above screenshot from my company's Google Apps domain above shows the existence of an option Google offers just so companies can slow down the pace at which new features are introduced to their internal users.
Microsoft is moving Office to a similar release schedule with each passing month. But I don't see this as necessarily a bad thing. The margins of competitive edge are being driven closer and closer together. Having those extra few features that save you just a little more time and allow for an extra couple dozen of sales will increasingly mean the difference between leading your industry and being left in the dust.
I may be ahead of the curve with this assertion, but give the business world years. Being editions out of date will be the death of many if software development cadence keeps moving in the direction it's already headed. We started the software space race in the realm of the cloud; slowly shifted over to virtualization; now the next big battlefields are already shaping up in unified communications UC and Desktop as a Service DaaS.
Renting software is becoming increasingly key to maintaining competitive advantage by avoiding software stagnation. Organizations such as the Business Software Alliance BSA work on behalf of software big shots like Microsoft, Adobe, and Apple to name a few, in cracking down on all things related to illegal licensing practices.
Piracy among large organizations is still a big issue for the industry, no doubt, but a lot of the unsung victims of software licensing messes are far from determined white collar criminals. They're business owners like the ones I consult with regularly who merely don't have licensing experts on staff that have a degree in the byzantine rules set forth by the likes of Adobe or Microsoft.
They get entangled in honest mistakes of over-installing copies of Office or Creative Suite on their machines, and get penalized in the form of audits by the software makers. I feel sorry for those who get dogged in penalties but never meant to do any harm; those who actually really tried to keep in line with proper licensing. Even simple calls to my rep at CDW about licensing for things like SPLA from Microsoft leads to days of delay and numerous rounds of emails between "licensing experts" at the distributor's offices.
I guess I'm not the only business owner who can't wade through the volumes of licensing SKUs and subtext without coming out more confused afterwards than when I started. And if you think having a coveted "Enterprise Agreement" with Microsoft is some sort of panacea, guess again. I spoke candidly with an industry colleague who works for a to-be-unnamed cloud tax software company in northern Illinois USA , that happens to have an EA with Microsoft, and she was brutally honest about what getting and keeping such licensing status entails.
Hours upon hours wasted in preparing usage counts in huge spreadsheets, determining shortcomings or over-allotments of given licenses, and then re-negotiating pricing with a Microsoft representative. This is a yearly or bi-yearly affair, mind you. Microsoft touts its Enterprise Agreements as a way to "streamline" licensing for organizations, but anyone with insider knowledge knows this is anything but the case.
Rented license platforms like Office put the ball squarely in Microsoft's court for keeping accurate license counts, and prevents companies from overpaying on unused licenses. It forces an honest hand from each side of the table, and eliminates the dizzying self-policing organizations under EAs with Microsoft had to endure.
In a KPMG survey released during the period in which public companies were transitioning to the new standard, respondents reported that identifying embedded leases was one of the most challenging aspects of the transition. The contract lists each item, along with an identification number, that will be used for this contract. Company A will have full control over the monitoring equipment, and will obtain substantially all of the economic benefits of the security equipment.
The equipment portion of this contract meets all of the standards required for an embedded lease:. LeaseQuery offers an embedded lease test to evaluate each of your contracts for embedded leases:. If you find a contract that contains a lease, use our lease asset tracker to keep a detailed record. We also have a lease asset tracker specifically for government entities. The new rules for lease accounting raise questions about the treatment of expenses related to fees for software as a service SaaS fees and software licenses.
Many software contracts grant customers the right to use an intangible asset. GASB 87 also excludes intangible assets. Under IFRS 16, intangible assets and therefore software licenses can meet the qualifications for a lease. For companies reporting under IFRS, it is vital to work with your auditors to make sure you interpret the guidance correctly.
Usage of cloud-based software was already on the rise before the pandemic. Non-public entities are required to follow the new guidance for all annual reporting periods beginning after December 15,
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