For decades, business executives and IT leaders purchased Microsoft software with perpetual licensing. In a world of Cloud-based services and subscription-driven software, many executives make the mistake of thinking that a Microsoft perpetual license is a thing of the past. It’s important to know that your organization does have the option to hold onto perpetual licenses. Deciding whether or not it’s smart to do so, though, means that you’ll need to weigh several different factors.
Understanding Your Microsoft Licensing Options
If you’re responsible for Microsoft software management at your enterprise or are about to undergo a Microsoft license audit, it’s essential that you understand what license options are available to you. In general, Microsoft offers three levels of licensing to business customers.
Open Licensing is targeted at small-to-medium businesses. These licenses allow businesses to secure access to subscription-based software or software that is perpetually licensed for a fixed period of two to three years. These agreements may include the rights to upgrade to new versions of software in the future.
Select Plus Licensing is targeted at medium-to-large businesses. This type of licensing provides a perpetual license plus software assurance (SA) services over a set period of time. This type of license can also be used for online, subscription-based services.
Enterprise Agreement Licensing is targeted at medium-to-large businesses. With EA licensing, businesses can elect to acquire traditional perpetual licenses that have no expiration date. Microsoft has also introduced options for clients using EA licenses to invest in two-to-three year contracts for subscription-based, online software services.
Does it Make Money Sense to Keep Your Microsoft Perpetual License?
Whether you’re currently using products with a perpetual license or are considering investing in new software, it pays to take some time to think about whether keeping a perpetual license makes fiscal sense. It can be tough to know where to start when it comes to evaluating your licensing options, so start by weighing these three key factors.
1. Is your software outdated? If your software works correctly and is likely to function well for the next several years, it’s probably smarter to stick with perpetual licensing through an EA agreement than it is to invest in subscription-based Office 365 services. While the upfront costs of investing in a perpetual license might seem steep, it’s generally much less expensive in the long run to opt for a perpetual license.
2. How much support do you need? Many Microsoft licensing options include costly software assurance (SA) and maintenance agreements. Evaluate whether or not you really need all this extra help. Most organizations simply don’t, which means that you could save big by simply sticking with a perpetual license instead of investing in a subscription-based product or extending an SA agreement.
3. Have you considered depreciation for taxes? Like other equipment that you use for your business, software depreciates in value as time goes on. Talk to your accounting staff about the tax benefits you might be able to realize from sticking with a perpetual license. Remember that there’s no depreciation with subscription-based services.
Reviewing complex licenses and taking care of Microsoft software management can be a difficult task for even the most experienced IT professionals. If your enterprise is coming up on a Microsoft license audit or simply needs to expand its software portfolio, it’s well worth considering perpetual licensing under an EA agreement over other license types. Of course, you might need to call in professional help too. Earth & Sky Inc. has deep experience with software licensing and can help you determine which licensing options are best for your business. Call us today at (858) 914-4167 or visit our assessment page and fill out our form. One of our experienced partners will be delighted to start a conversation with you.