Are Software Subscriptions Really a Better Value Than Purchasing?

latest-creative-cloud-adoption-chart (1)The transition to mobile applications and cloud computing has brought with it many benefits, including added convenience and efficiency. However, as technology has evolved, so have the means of delivering it. We used to physically buy software on disks at the local computer shop. Now we can download and install at the click of a button. Now, led by software giants like IBM, Microsoft and Adobe, subscription-based software has become popular among developers and users alike. In fact, according to the Harvard Business Review, Adobe’s launch of Creative Cloud garnered over 700,000 paid subscribers by 2013. It has gone on to collect approximately 8 million users, and continues to be a resounding success for the company. Microsoft has found similar success; their Office 365 software subscriptions grew from 4.4 million in 2014 to 18.2 million, quadrupling their numbers by the end of 2015.

Subscription-Based EMR Software Has Real Benefits.

Despite these numbers, there are still sceptics of subscription software , particularly when it comes to considering the costs. After all, even though the upfront costs are significantly smaller, it seems obvious that over the long run, subscription software is likely more expensive than outright purchasing. What’s important to consider is that subscription software comes with other significant benefits that improve subscriptions’ overall value. There are several reasons why the subscription model of software licensing is beneficial for users and vendors alike.

  1. Subscriptions are an operational rather than capital expense.
  2. Dynamic subscriptions mean no unused keys or licenses.
  3. Cost predictability.
  4. Easier IT maintenance.
  5. Automatic upgrading and syncing
  6. Simpler license management and support help keep costs down.

As software vendors continue to move towards subscription-based services, it’s important to understand the key benefits they provide. These are just some of reasons that businesses and vendors alike have embraced software subscriptions.

Capital Expenditures vs. Operational Expenditures

Because of their expensive, one-time purchase nature, perpetual software is often considered to be a capital expenditure (CapEx) by many clinics and businesses. By adopting a subscription-based software, the monthly subscription fee can often be moved to Operational Expense (OpEx) budgets. This better reflects a clinic’s regular operational reliance on the software, while leaving capital budget available for other projects.

Dynamic Subscriptions

Another serious advantage of subscription-based software is that it can be easily scaled according to an organization’s use, often according to the precise number of licenses required. Synoptic, for example, allows clinics to purchase or deactivate licenses month-to-month as required. This way, you’re never paying for unused licenses or software keys. Perpetual licenses, on the other hand, rarely provide the same flexibility.

Cost Predictability

reduced costsAlthough costs may vary slightly from month-to-month if the number of licenses being used changes regularly, subscription software costs are generally very predictable, especially when compared to outright purchases. Perpetual software purchases often show up as single, large expenditures and then are forgotten about. That is, until it requires updating (and potentially even retraining due to gaps in software versions) at which point a large, unexpected invoice shows up on the accountants’ desks.

No Need to Update

Updating software can be expensive and time-consuming for perpetual software. It’s not unheard of for IT departments to face serious resistance to the idea of investing in new software versions. What’s more, when they fail to secure the upgrade, they begin to face needlessly complex support issues, especially if the vendor has stopped providing support for older versions. Subscription-based software, however, is always up to date. Automatic upgrading means everyone in an organization has access to the latest features and security enhancements.

File Syncing

Subscription-based software often features automatic file syncing between devices. File syncing means everyone in an organization always has access to the latest working version of a project or file.

Reduced costs through simpler license management and version support

One of the reasons software companies prefer subscription-based models is because they make it easier to track and manage licenses. Although this is an obvious benefit to vendors, it’s also beneficial for clients as well. The overall cost is reduced because subscription based models are easier to enforce. In fact, Adobe discovered that thanks to reduced upfront costs, many users who had pirated copies of the company’s expensive creative software made the transition to legitimate user of the subscription service. Subscription models help reduce the number of illegitimate users. Client’s pay less in terms of the piracy costs passed on to them as a result.

In addition, the fact that subscribers are always on to the latest version of the software can help keep costs down. Rather than supporting older versions, which can be expensive and time consuming, the vendor only supports the latest version. This can dramatically reduce costs, leading to savings for clients that would otherwise be paying for multiple support teams and expertise.

The Downside

The move to subscription-based software has a great many advantages over one-off purchases, but it’s not without its limitations. Not only do clinics have to be sure their new subscription service meets regulatory standards, but they also become more reliant on their vendor to ensure access to the service.

IT Governance

When it comes to medical reporting software, it’s important to be sure your vendor is experienced in the regulatory environment it exists in. IT departments may love that subscription software is always updated, or that license management is significantly simplified. However, neither of those facts release organizations from their regulatory obligations. Synoptec, for example, is HIPAA compliant, and uses HL7 standard messages. When considering subscription software, be sure it meets the regulatory requirements for specific industries.

An inability to “own” software

Another concern clinics may have about subscription software is their lack of ownership over the software. This makes the organization more reliant on the vendor.Without ownership of the software, businesses could suddenly find themselves without a critical digital tool if the vendor suddenly goes out of business or suffers some other catastrophe. Fortunately, escrow agreements curtail this problem nicely. Source code escrow agreements give clients access to a program’s source code in the event the vendor ceases business operations so that the business can continue to use it.

Compared to the convenience of predictable software costs, simple and dynamic license management, and automatic updating to the latest version, the downsides of subscription software are insignificant. Overall, subscriptions represents a significant step forward in software quality for clinics.