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Buying software by subscription ‘can cut upfront costs by 65%’

12 October, 2022

The UK industrial software developer Aveva is offering its products on a subscription model, allowing customers to buy “credits” which they can exchange for any items in Aveva’s portfolio. The subscriptions are available for periods of one to five years, and the credits are consumed on a monthly basis. Traditional sales yardsticks such as I/O and tag counts are no longer used.

According to Steve Treanor, sales operations manager at Aveva distributor, SolutionsPT, buying software by subscription can cut upfront costs by 65% in the first year, compared to the traditional “perpetual licence” model. In some cases the payback can be as short as six months, he adds.

Some – mainly cloud-based – products are only available on the Flex subscription service. Users can swap the products they use during their subscriptions and pick those they need for a particular project. They can access a configurator that calculates how many credits they are likely to need for a project. If they don’t use their credits, they lose them.

Aveva launched the subscription model in a low-key way about three years ago. According to Treanor, take-up has been tripling every year.

But his colleague Andy Graham adds that “the perpetual model is not going away – it’s still a big part of the business and there will always be those who want a perpetual licence” He expects about 25% of customers to stick with the traditional model.

Aveva customers can now buy their software on a subscription basis

• Schneider Electric, which bought 60% of Aveva for £3bn in 2017, is buying the remining 40% of the business in a deal worth £9.4bn.

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