Early in my IT career, a friend who owns a software company told me he had been informed by a peer that he wasn’t charging enough for his software. This peer advised him to adopt a “flinch-based” approach to pricing. He said my friend should start with a base licensing cost that meets margin requirements, and then keep adding on other costs until the prospective customer flinches. My friend found that approach offensive, and so do I. I don’t know how common the “flinch-based” approach is, but as a purchaser of technology goods and services I learned to flinch early and often. I was reminded of this “flinch-based” approach when evaluating some traditional enterprise storage products. Every capability was an extra-cost “option”: each protocol, each client connection, each snapshot feature, each integration point. Happily, this a-la-carte approach to licensing is becoming a thing of the past as vendors embrace all-inclusive licensing for their all-flash array products.
The Trend Toward All-inclusive Licensing in All-Flash Arrays
In the process of updating DCIG’s research on all-flash arrays, we discovered a clear trend toward all-inclusive software feature licensing. This trend was initiated by all-flash array startups. Now even the largest traditional vendors are moving toward all-inclusive licensing. HPE made this change in 2017 for its 3PAR StoreServ products. Now Dell EMC is moving this direction with its all-flash Unity products.
Drivers of All-inclusive Licensing in All-Flash Arrays
Competition from storage startups has played an important role in moving the storage industry toward all-inclusive software feature licensing. Some startups embraced all-inclusive licensing because they knew prospective customers were frustrated by the a-la-carte approach. Others, such as Tegile, embraced all-inclusive licensing from the beginning because many of the software features were inherent to the design of their storage systems. Whatever the motivation, the availability of all-inclusive software feature licensing from these startups put pressure on other vendors to adopt the approach.
Technology advances are also driving the movement toward all-inclusive licensing. Advances in multi-core, multi-gigahertz CPU’s from Intel make it practical to incorporate features such as in-line compression and in-line deduplication into storage systems. These in-line data efficiency features are a good fit with the wear and performance characteristics of NAND-flash, and help to reduce the overall cost and data center footprint of an all-flash array.
The Value of All-inclusive Licensing for All-Flash Array Adopters
All-inclusive licensing is one of the five features that contribute to delivering simplicity on all-flash arrays. Vendors that include all software features fully licensed as part of the standard array package create extra value for purchasers by reducing the number of decision points in the purchasing process and smooths the path to full utilization of the array’s capabilities.
All-inclusive licensing enables agility. Separate license fees for software features reduced the agility of the IT department in responding to changing business requirements because the ordering and purchasing processes added weeks or even months to the implementation process. With all-inclusive licensing eliminates the purchasing delay.
The Value of All-inclusive Licensing for All-flash Array Vendors
All-inclusive licensing translates to more sales. Each decision point during the purchase process slows down the process and creates another opportunity for a customer to say, “No.” All-inclusive licensing smooths the path to purchase. Since all-inclusive licensing also fosters full use of the product’s features and the value customers derive from the product, it should also smooth the path to follow-on sales.
Happier engineers. This benefit may be more abstract, but the best engineers want what they create to actually get used and make a difference. All-inclusive licensing makes it more likely that the features engineers create actually get used.
Bundles May Make Sense for Legacy Solutions
Based on the rationale described above, all-inclusive software feature licensing provides a superior approach to creating value in all-flash arrays. But for vendors seeking to transition from an a-la-carte model, bundles may be a more palatable approach. Bundles enable the vendor to offer some of the benefits of true all-inclusive licensing to new customers without offending existing customers. In cases where a feature depends on technology licensed from another vendor, bundling also offers a way to pass 3rd party licensing costs through to the customer.
Vendors that offer all-inclusive software feature licenses or comprehensive bundles add real value to their all-flash array products, and deserve priority consideration from organizations seeking maximum value, simplicity and agility from their all-flash array purchase.