Exton, Pa.–based software company Bentley Systems recently caused a dust-up with its juggernaut competitor Autodesk with its pointedly named Autodesk License Upgrade Program. As one may guess, the program targets owners of Autodesk perpetual licenses that, as of Aug. 1, have been phased out under the San Rafael, Calif.–based company’s new monthly subscription model. These users can convert to Autodesk subscription plans or purchase a maintenance plan, but programs running on licenses without a maintenance plan could not be updated after July 3.
Perpetual licenses were once the norm for software purchases. Many companies also included a year of free updates and support, after which owners could usually purchase updates at a reduced price or join a maintenance program. In the past few years, major software companies, such as Adobe and Microsoft, have moved to a monthly subscription model: Stop paying the monthly fee and you lose access to the software. For businesses, this moves software purchases from a one-time capital expense to a monthly overhead expense, similar to a switch from purchasing a car outright to leasing it.
The First Shot
Recognizing an opportunity to entice disgruntled Autodesk customers, Bentley invited Autodesk perpetual-license holders to credit the net value of their licenses toward the purchase of perpetual Bentley software licenses, which the company has committed to offering alongside subscription licenses.
In a July 12 press release announcing the new program, Bentley’s chief product officer Bhupinder Singh stated that “Bentley Systems considers purchases of perpetual licenses to be long-term investments by our users, so we continually innovate to increase their value.” Included in the press release are testimonials from recent Bentley converts who cited the increasing pressure from Autodesk to switch their perpetual licenses to the subscription model in their decisions to switch platforms.
News of Bentley’s Autodesk License Upgrade program prompted a quick response from Autodesk, refuting Bentley’s claims that its perpetual license holders were facing the “write-off of the future value of their investment” and countering with four claims of its own. First, Autodesk said, holders of perpetual licenses do not lose the right to use its software and can continue to receive support and updates through a maintenance plan. Second, the ability of users to pay for the subscription-based licenses only when they need it—for example, during busy months—can actually lead to savings. Third, software-as-a-service (SaaS), also known as Pay-As-You-Go, is an inevitable “technological evolution” that provides users with continuous improvements and support—plus, “the entire software industry is moving in this direction.” Lastly, Autodesk’s switch to a subscription model has resulted in a larger customer base, at least in the first quarter of 2016.
Not willing to drop the argument, Bentley issued a response to each of Autodesk’s statements in turn. If perpetual-license holders without a maintenance plan cannot upgrade their software, Bentley stated, then your software has lost its value and your firm has lost an asset. The company also refuted Autodesk’s claim that SaaS is necessary for the software industry, highlighting its own efforts to extend the benefits of the subscription model across its licensing options.
What does this unusually public scrimmage between two software giants mean for users? Is a software license an asset you own, or a service that you purchase? While some firms prefer the flexibility and low up-front cost of software subscriptions, not everyone benefits from SaaS. For firms that typically do not upgrade their software every year, the subscription model likely costs more over the long term. For example, if a hypothetical CAD package costs $3,000 for a perpetual license and the firm upgrades only once every three years, the cost per user for that software is $1,000 per year. If the subscription for the same software costs $100 per month, the firm will then pay $1,200 per year or $3,600 every three years. For a firm with 10 users, the added expense totals $6,000 every three years. And that’s just for one piece of software.
One factor this debate ignores is the rising costs associated with using a particular piece of software, especially complex BIM and CAD programs. While yearly updates may justify the value of a subscription model from a pricing standpoint, the realities of architectural practice mean that not every firm can afford to take advantage of the latest update—besides the cost of the update itself, users need to be trained and standards and template files need to be revised.
Additionally, design projects often standardize on a specific version. For software that isn’t backward-compatible, upgrading a project model to a new version of the software requires coordination with all team members and extensive testing to ensure the project can continue without interruption.
While the subscription-only model may be inevitable given the direction the software industry is heading, it does a disservice to firms whose investments in perpetual licenses are now in question. For now, switching to another software platform may be one way to maintain that value. However, that comes with a price—retraining staff and converting existing resources, to name two. Asking software companies to respect their customers’ investment is another way to maintain that value. Though eliminating perpetual licenses has helped Autodesk’s bottom line, it will likely cost firms more in the end.
Autodesk and Bentley Systems declined to comment for this article. Bentley Systems will be holding an industry-press conference call on Sept. 26 to address questions about its Autodesk License Upgrade Program.