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Autodesk VP Explains Software Licensing Policy Changes

8 Sep, 2015 By: Robert Green

CAD Manager Column: To gain more insight into Autodesk's switch to rental-based licensing, we sat down with Vice-President Andrew Anagnost.


In the previous edition of the CAD Manager's Newsletter, I provided some planning advice for Autodesk customers who must deal with the company's new policy that will end the sale of perpetual software licenses in favor of rental-based licensing starting in January 2016.

Not long after that issue was published, I was contacted by Autodesk's public relations department and was granted an opportunity to interview the Senior Vice-President of Industry, Strategy, and Marketing, Andrew Anagnost. I was given some information about the new licensing policies and was promised I could ask all the questions I wanted, so I jumped at the chance. I found Mr. Anagnost to be forthright and realistic, and I hope you find the conversation as valuable for your software planning as I have.

New Policies on Suite Products

Autodesk announced earlier this year that it intended to suspend sales of single-product perpetual licenses (such as AutoCAD or AutoCAD LT) in January 2016, followed by the perpetual license sales of its design-based suites (which are essentially product bundles) in January 2017. The company released a new policy announcement on September 3, however, that brings the timeline forward and will end the sale of perpetual suite licenses on July 31, 2016 — a full six months sooner than previously scheduled.

My conversation with Mr. Anagnost started with a brief overview of the policy changes, including a timeline of key milestones and a graphic contrasting Autodesk's views of perpetual vs. rental licensing models (see below).

Robert Green: So the suite-based perpetual licenses will go away sooner than expected? Why is that?

Andrew Anagnost: This is a big change for how Autodesk does business, and we expect things to be bumpy as the change occurs. That is a big reason why we've elected to move up the cutoff date for perpetual suite licenses — to complete the transition and move forward.

RG: Can you clarify what "bumpy" means?

AA: We know this is a new way to license software for many of our customers, so we will have to explain it. We fully understand that it will take a while to prove the concept to our long-time customers.

RG: I've heard you refer to the perpetual vs. rental software question as "a tale of two customers." Why is that?

AA: Yes, that is how we see it. Our most loyal long-term customers are our maintenance customers, while our new customers are fine with using rental licenses to meet their needs. In fact, they actually prefer it because they can buy into the software at a lower upfront cost and then bill those costs to their customers as a project expense.

RG: There is some uncertainty about whether "perpetual" really means perpetual. On the Autodesk web site, it says perpetual licenses can be kept on maintenance "for the foreseeable future," yet the press release says "in perpetuity." Can you clarify?

AA: We have no plans to discontinue maintenance subscription plans for existing perpetual license owners.

RG: But you can see how there could be confusion given the difference in wording, right?

AA: I assure you we have no plan to discontinue maintenance subscription plans for existing perpetual license owners.

Customer Experience

Another major topic of conversation had to do with customer acceptance and what Autodesk terms the "customer experience" of a rental software mode of operation. This part of the discussion touched on many themes that are summarized in the comparative graphic below. I asked a few clarifying questions generated by the graphic as a follow-up.

Perpetual vs. subscription (rental) comparison matrix. Image courtesy of Autodesk.
Perpetual vs. subscription (rental) comparison matrix. Image courtesy of Autodesk.

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About the Author: Robert Green

Robert Green

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Comments

Re: Autodesk VP Explains Software Licensing Policy Cha...
 by: adprivette
on: September 9, 2015 - 12:16pm
For very large companies that have thousands of users and hundreds of network licenses, this new licensing policy is a nightmare. We manage software using Microsoft SCCM. Software is scripted and pushed to the users desktop. Mixing in the new licensing model will just create more confusion and additional work. If Autodesk wants to be smart why don't they use the Enterprise licensing model used by Bentley. I would much rather use it than the current or future licensing model from Autodesk. Is Autodesk driving us into the arms of their competitor?
 
Re: Autodesk VP Explains Software Licensing Policy Cha...
 by: LarryNieder
on: September 9, 2015 - 1:19pm
When I first joined my present company back in 2008 I found the CAD department in disarray using no less than three outdated versions of software for their design and drafting needs. Most of the variety of software had been dictated by various customers seeking to maintain data integrity when sharing files back and forth. Although CAD manager is not my primary job responsibility, I could easily outline and sell the idea to management of the financial and productivity advantages of consolidating onto a single platform. I selected and proposed Autodesk Inventor Design Suite as the most versatile tool for our design environment. It was also considered the “hub of translation” for sharing data with customers and vendors. Management agreed to support my efforts with three new workstations and three seats of the Inventor Suite. Cost per seat in 2008 was $4235, plus $1095 per year for subscription. I still have all the Renewal Proposals and receipts for every year since the beginning in 2008. The subscription cost per seat was $1125 for 2015. Adding it all up, those three seats of Inventor Design Suite (now upgraded and called Product Design Suite Ultimate) have cost my little company $39,165.00 to maintain on subscription since 2008. Now, evaluating pricing from the Autodesk site, I find the “Desktop Subscription” cost for Ultimate – with Basic Support will now be $3730.00 per seat when selecting a yearly term. Multiply that by 3, then multiply for the 8 years we’ve owned the software and the total comes out to $89,520.00. That’s a difference of $50,355 for the same eight year period. Do you really see the advantage for Autodesk now Mr. Anagnost? Long term customers such as myself who cannot justify this tremendous price increase to management will be forced to find another way to accomplish our drafting and design goals.
 
Re: Autodesk VP Explains Software Licensing Policy Cha...
 by: jmaeding
on: September 9, 2015 - 1:55pm
Hi Robert, I love how Autodesk is changing to rental *ONLY*. If what they say is true - that we like it more, why force anything? So while Andrew says certain things, the real actions of Autodesk have taught us there is no plan. On top of that, their desire to experiment is at an all time high. They have money and liberty to do that, but their talk of doing what we want is becoming laughable.
 
Re: Autodesk VP Explains Software Licensing Policy Cha...
 by: mro
on: September 9, 2015 - 2:50pm
This is not the first time I've heard an Autodesk employee mention that renting software allows them to give users access to upgraded features more than once a year. Why is that? What prevents Autodesk from supplying patches, or new modules to customers with a Maintenance Subscription? I do not at all understand Mr. Anagnost's statement "With the perpetual license policy, we only interact with the customer when they purchase a new license. With the new rental policy, the customer has the freedom to not renew every year, so we must interact with and listen to the customer more." What does a customer paying Autodesk once a year have anything at all to do with when Autodesk listens to their customers? We pay a reseller and that reseller pays Autodesk, so Autodesk really doesn't listen to me at all. This comment makes it sound like Autodesk has an internal issue with customer support and is tying to fix it by charging their customers more. Other than the cost it seems like there really is no difference between being on Maintenance Subscription and Desktop Subscription, if you select the yearly term. Well, except for the fact that all our content can be held hostage by Autodesk not allowing the software to run if we were to stop paying the subscription fee. Basically we'd be renting the software AND our own designs. Maybe if we could pick and choose the software that we used for a reasonable price it may be worth it. Last year we purchased some licenses for Factory Design Suite Premium. It includes software that we don't have any intention of ever using. Maybe we will one day, but to use a phrase similar to Mr. Anagnost's 'we have no plans to every use that software.' The only reason we purchased it was because it is less expensive to get a subscription to FDS than it is to get Inventor, AutoCAD Mechanical, and Navisworks. If I could trade the rest of the software that comes with FDSP for a version of Navisworks that includes clash detection for the same, or less than the maintenance subscription of FDS I'd go for it. One last question for today. Will there still be free and downloadable views available for Autodesk products in the future? So if i create a design (which I would then own) would I be able to access and print that design if I should end my subscription? If not, then Autodesk has virtually eliminated any small business from considering using Autodesk software to design.
 
Re: Autodesk VP Explains Software Licensing Policy Cha...
 by: MichaelPartenheimer
on: September 9, 2015 - 3:07pm
Wow! The follow-up answer to the "But you can see how there could be confusion given the difference in wording, right?" question just RINGS with -- dare I say -- corporate evasion and double speak. Of COURSE they don't have plans to discontinue maintenance subscriptions. ...right now. But is that on their projected future implementation goal list? Their 10 possible corporate revenue options list? This entire scheme boils down to one thing: increasing revenue. LarryNieder has it right. I purchased my AutoCAD 18 years ago. The "upfront" cost means nothing to me. The annual cost does. ...and the difference between $550/yr and $1680/yr is over a 300% increase. "No plans to discontinue..." Until the day arrives that Autodesk decides they must "satisfy" their loyal desktop customers by eliminating the "inequalities" of perpetual users who don't pay their "fair share" of the software. If/when that day arrives, there will be a plan. A "frozen" base of perpetual licenses will eventually become an issue requiring some sort of resolution. It's just a question of when. ...and exactly what THAT plan will be.
 
Re: Autodesk VP Explains Software Licensing Policy Cha...
 by: jmaeding
on: September 9, 2015 - 3:17pm
@MRO, only formats that others have the ability to read, like dwg, can be depended on for reading. We have lots of legacy Land Desktop data that is not totally readable anymore, and I'm sure others have more examples. The dumb thing is the real money is in establishing a format as standard, then making the best editor and viewer. The money you lose from not getting all the customers is gained back by the larger volume of customers available. You let the cats out of the bag, and make the best cat herding operation around and you are set. So keeping an eye on adesk specific data, and exporting it somehow if needed, must be done if you want it around for long.
 
Re: Autodesk VP Explains Software Licensing Policy Cha...
 by: AA@autodesk
on: September 11, 2015 - 1:14pm
I'd like to address a few of the common questions and concerns raised in this forum.

Question/Comment: Cost of subscription is much higher than the cost of perpetual + maintenance. How do you justify that?

A 3-year subscription to most of our software is comparable to buying a perpetual license with three years of maintenance. Actually, in some instances the cost is less. I appreciate that in the past some licenses were used for extended periods. This often resulted in companies having many different versions of our software in use, which caused significant headaches for the user. We are hoping to address those headaches with our shift to subscription.

Question/Comment: The new licensing policy is a nightmare for large companies with thousands of users and hundreds of network licenses. Mixing the new subscription-licensing model into our existing process will create more confusion and additional work.

We are committed to making the experience better. That’s one of our motivations for shifting the way we deliver software. I get that the onus is on us to prove that. You may not be aware, but we already have offerings today designed to meet the needs of large organizations with large numbers and licenses. In addition, we will be introducing a term network option that can be deployed on the same license server as the current perpetual licenses. This should clean up some of the mess. Send a note via http://knowledge.autodesk.com/contactus and we’ll make sure someone gets to you with all the details.

Question/Comment: Is our content going to be held hostage if we stop paying for subscription? If I create a design, would I be able to access and print that design if I end my subscription?

The work and data you create using our software belongs to you. You can continue to access and view the designs that you have stored locally on your desktop. If you end subscription, and do not have a perpetual license, it is only editing those designs that will no longer be possible.

Question/Comment: Will you ever end maintenance subscriptions, yes or no?

Our lawyers frown on me using words like “never.” Do we have any plans to end maintenance? No we don’t, and our current intent is to keep the program running as long as our customers use it. Just like we don’t have plans to force customers to adopt subscription. If a customer wants to keep using their perpetual license, then they can continue to do so. If they want that perpetual software to be upgraded with the latest and greatest from Autodesk, then I encourage them to take advantage of maintenance. Keeping maintenance for our most loyal customers is the right thing to do.

--Andrew Anagnost, Autodesk
 
Re: Autodesk VP Explains Software Licensing Policy Cha...
 by: bracemac
on: September 21, 2015 - 5:18pm
Ok, I am going to put it simply: Why Can't Mr. Anagnost give us a straight answer? I am tired of, "not at this time", "we have no plans", blah blah blah. But as we all know and have experienced, they will definitely go back on their word. How often have you heard ANY corporation state these things but turn around and do exactly what they said they would not do? Too many times as to be an international joke. Quit lying and tell us when perpetual licenses will go away. You definitely have a plan because your new business model is being structured that way. It makes absolutely no sense to keep a licensing system you don't like or want to use in favor of another that you absolute want to use. Keeping two different business models is costly to a company and you expect us to believe you are NOT going to eliminate the older licenses? And when will the board of director change that? Next year? Three years from now? Let me tell you how this will play out. For the next few years (3-5 at most) Autodesk will inform it's clients once again, that "in order to keep clients happy, meet the needs of new clients and meet business needs (which is another way of saying, "We are greedy and want more revenue."), Autodesk will eliminate perpetual licenses in the coming months. All older clients will need to transition to the new licensing or their product will deactivate." Or something to that point. And we will be told again that the upfront cost is so much less. But you never mention what the ongoing costs will be and how that helps the client. Why does Autodesk continue to rape the client and call it love?
 
Re: Autodesk VP Explains Software Licensing Policy Cha...
 by: AA@autodesk
on: September 24, 2015 - 7:20pm
@bracemac: I don’t like the ambiguity in my statement either, so let me get straight to the point. Maintenance is not going away. Autodesk customers can continue to renew their maintenance for as long as they want. And as stated before, we will not force customers to subscription. If you want to keep using your perpetual license, you can do so, or you can get on maintenance to stay current. You are right, maintaining two different business models is costly, but retaining loyal customers is worth it to us.
 
Re: Autodesk VP Explains Software Licensing Policy Cha...
 by: dmarsden
on: September 29, 2015 - 3:06pm
I'd like to address the pricing option. It is straightforward. Yes in the 3-4 year range the money spent on software does become equal (actually it's about 3 years 7 months). But I digress the real savings happens afterwards. If I were to buy 1 seat of network AutoCAD and without assuming price increases (just made the math easier). My total cost savings in year 10 is $21,015. This is simply taking the difference between the desktop subscription and the perpetual license and adding it every year. -$3,040, -$4,925, -$5,655,(then the swing in positive starts in year 4 -$5,250, - 3,7100, -$1,035, +$2,775, +$7,720, +$13,800, +$21,015. That is the true measurement of what we are spending and savings. Unfortunately my crystal ball is a bit cloudy and I can't tell you that in 5 years we will stay the same software track. Just saying the price differential isn't what it's marketed out to be.
 
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