Software Licensing and Pricing: What are Floating Licenses?

The question of floating licenses has come up quite frequently in the past 3 months. Floating licenses and concurrent user licenses are the same thing. However, the term floating license is more prevalent in developer environments and in the context of server software. The term has been popularized by Macrovision, a software company that provides software publishers with OEM license management products. Users pay for a total number of access not unique licenses per client. Here's why its a benefit to users over named user licensing:

• Delivers cost savings. Users buy what they need to run at maximum capacity instead of an individual license per user which wastes capacity - which leads to the capture of true capacity. Enterprises end up buying less licenses and dealing with less shelfware.
  
• Works best in 24/7 environments. Traditionally, concurrent user licenses have been popular in manufacturing and call centers.Global development organizations, call centers, enterprises with 2 or more shifts, and international enterprises can take advantage of a set number of licenses throughout various time zones and work shifts.
  
• Addresses licensing compliance. A set number of users have access to the system at any point in time. No requirements exist for licensing by an individual user - thus no wasted usage. Often, the process includes automatic license sharing where a license server will allocate a license until the total limit is reached. When a user leaves, a new slot is opened. Some systems have mechanisms to flex up and buy additional licenses on the spot when capacity is reached.

The bottom line for users.
In general, there are minimal drawbacks to users for floating licenses or concurrent users. Vendors who have moved to named user licensing just wanted to charge more. Typical conversion credits should be anywhere from 1 concurrent user license to 2.5 to 4 named user licenses. In the SMB space, Microsoft, Epicor, and Agresso have led the way by maintaining concurrent user licenses, providing SMB's with a cost advantage that many enterprises no longer enjoy.

(The personal contents in this blog do not reflect the opinions, ideas, thoughts, points of view, and any other potential attribution of my current, past, or future employers.)
Copyrighted 2008 by R Wang. All rights reserved