Several months ago, Ipswitch engaged Enterprise Management Associates (EMA) to research and provide an independent opinion on network management software licensing options, which base price on either devices or active elements being monitored. One outcome of this research is a white paper EMA authored, “What You Should Know about Licensing for Network Monitoring Solutions.”
I recently met with Daniel Okine, Senior Technical Product Manager here at Ipswitch and our resident guru on pricing strategies to ask him why we engaged EMA to research this subject. “IT professionals know that licensing options can be confusing and that clear information on the true costs of ownership is valuable,” commented Daniel. “We also wanted an independent point of view to challenge our pricing approach and be sure it is the best option for our customers.”
The EMA research paper explains the three most popular pricing strategies for network management systems, each of which is based on the number of:
(1) Devices or
(2) Active interfaces/ports or
(3) Active measurements/test.
EMA discusses the pros and cons of each approach, and the reader can complete a questionnaire to help him/her determine the best pricing strategy based on their organization’s requirements.
“Ipswitch follows the device-based licensing approach,” Daniel explained. “With device-based licensing, IT can more easily calculate the total cost of ownership (TCO). We have learned that this type of licensing also delivers the best TCO.” EMA agrees that device-based licensing is the best alternative if your network changes frequently or if you are uncertain how many interfaces or ports you will need to monitor on-going.
One of the biggest problems with element-based pricing is that it’s hard to calculate accurate license count requirements. Some vendors, for example, will undersell the license count and then exercise their audit rights at the end of the year. If they find that the customer is using more licenses than what they paid for – which often happens – they will charge the customer with “True up” costs. Nothing disturbs the CFO more than True up costs.
The white paper is a quick read, and for those of you have yet to buy network monitoring software or are reviewing your current costs, you may want to keep this research and the short questionnaire handy.
For those of you who have purchased a system, please share your experience on what pricing strategy works best for you and why.