Sami's business review – The impact of software licensing on organizations – how to remain competitive?

Sami Koponen, Vice President: Process & Industry, discusses the impact of software licensing on organizations and how they can remain competitive.

« All Blogs

Written by Sami Koponen

Posted on September 22, 2020

Typically, CAD software licencing costs represent some of the largest software costs to engineering and design companies. The current tough business environment has highlighted the importance of flexible CAD software licencing options to better meet diverse needs and manage the associated costs. While some CAD software providers are, for example, doing away with network licencing, at CADMATIC we believe that this option and other flexible licensing options are crucial for many companies to operate efficiently and remain competitive.

Engineering and design companies appreciate the ability to have many different users in the organization that can use software as the need arises, as opposed to licenses that are assigned only to named users. Many users may only need the design software for a limited number of hours per month, or to quickly adjust a diagram or implement a change. Shifting licenses between users in such cases can become an unnecessary administrative headache.

Being forced to change from network licensing to named user licensing also often does not come at favourable terms. The annual cost per user can even double! There is a perception out there that CAD software suppliers are adjusting licensing policies just to increase revenue without adding tangible benefits. 

5 network licenses and 25 users become 10 named users

On network licensing, a company with 5 network licences can, for instance, have about 25 different users that use the licenses flexibly when needed. Imagine now that the company is informed by their CAD software provider that their network licences will be replaced with named user licenses at a ratio of 1:2, a typical offer out there in the market.

This means that they would only receive 10 named user licenses, which is clearly not enough to meet their needs! They will have to purchase more licences or reduce the number of designers, which is not a practical option if they want to retain their profitability levels or capacity to perform projects.

Constantly shifting licenses between designers not practical

But can’t these named user licenses be shifted to other users? It seems they can, but this comes with additional management tasks. The ICT department needs to know which designers do not need licences at a particular time and to whom they can be shifted and for how long etc. For many organizations, these additional management tasks are not very practical. Every minute spent on these management tasks also represents an unwanted extra cost.

From the designer’s point of view, user licenses can be limiting. Sometimes you just want to make a small modification to a design. Without network licensing, and if a license is not currently assigned, the designer would have to shift this work to another designer that has a license or request a license. All of this takes time and eats into efficiency and the bottom line.

So, what is the alternative?

If the inflexibility of your CAD software provider is hurting the bottom line, one alternative is to identify a CAD software provider that matches your company’s needs. This will obviously incur costs and it is important to understand what that cost is, what the return on investment (ROI) is, and how fast ROI is generated. 

CAD software is typically a long-term investment and an essential part of company operations, which is why the cost/quality ratio is so important. A key issue here is how easy it is to implement and learn the new CAD software. The goal is to get designers up and running with as fast as possible.

CADMATIC Primary is powerful, yet affordable and flexible

For small and medium-sized companies that are faced with the challenges I have highlighted here, CADMATIC Primary is a gamechanger. In Primary, CADMATIC’s powerful 3D plant design features can be accessed via a competitive yearly subscription fee with network licensing. The primary package includes the 2D drafting, 3D Plant design and P&ID modules.

Read more about CADMATIC Primary and our ValoSys customer reference story.