Why Autodesk Shifts to Subscription Based Model

Pankaj Gauba, Country Manager Channels- India and SAARC, Autodesk, talks about their new subscription based model and how it benefits businesses.

For some time now we have been talking about the change in our business model. Way back in October 2014, we had announced business model transformation and we communicated the same to our customers and our partners, that we are moving from perpetual licensing to subscription-based model, we had had clearly spelt out the roadmap about this journey. So we began the journey in India on 1st November, where one of our most popular product AutoCAD LT moved subscription based only. From 1st Feb, 65% of our portfolio which included products like AutoCAD, 3DSMax & Maya moved to subscription based models and 1st July onwards rest of our products will be moved to this model. Subscriptions based is a term based model, it is time bound for quarterly, annual, 2 yearly or 3 yearly, unlike the previous offering which was perpetual license, they are not time bound they are valid as per End User agreement for life. It was customized in a way that it was maintained for a higher fee, to keep it current in order to get all the updates and upgrades.  On the other hand, the subscription model allows greater flexibility, it offers consumers ways to align the software according to individual/business needs along with low cost trials and multiple machine/device access and immediate cloud access. What are the key drivers of this subscription based model? The driver is about the changing needs of customers. The advantages of this model are:

  1. It reduces the acquisition cost as you start working on CAD technologies, because, my upfront investment goes down significantly and it helps me to plan my investments based on how my workload moves. So maybe I get a project today and I take 10 licenses of subscription, whereas one year down the line I may not have a project or I may have a larger project, so I can upscale it to 20 or downscale it to 5 depending on my requirement.
  2. The other big advantage is that Autodesk has a very wide portfolio from AutoCAD at one end of the spectrum and it caters to the changing market demands like Cloud computing, 3D printing etc. What use to happen in a perpetual environment was that when I use too take a software, because of the capital investment that I do, I continue to be on that technology. Also, because the initial cost are lower I do a mix and match of 2D and 3D, and also I can go up the value chain. My ability to change gets restricted in perpetual license because I have already invested a certain amount.
Who are your customers and how this change will benefit them? AutoCAD 2017 is available at an affordable cost for large businesses, SMBs, Makers, Start-ups, freelance designers. It comes with updated/ new features (e.g, 3D printing) powered by cloud (Autodesk 360). Adoption of AutoCAD 2017 will not only benefit its prominent customers but also the key Industry sectors in India. If you look at the Architectural Segment, all the leading architects are our customers. When you look at all the engineering construction companies like L&T, and power sector companies like BHEL, they are our customers. In the SME sector there are a lot of SME’s that use our software, a lot of leading animation and M&E companies use our software. How is this model helping startups? Our subscriptions based model resonates very well with startups. This is an OPEX based model instead of a CAPEX, as the startups don’t have to make huge capital investments, they don’t have to use path breaking CAD technologies by putting in a lot of money, they can take quarterly licenses or yearly ones and see how it works for them, and then invest in a 3 year license. In terms of Cloud capabilities, again startups are something who adopt future technologies faster than the rest, and most of our software products give you access to certain cloud services that are not installed on the computer, so it resonates pretty well with startups. The Cloud is a single point of access—a central coordination place—for everything designers, engineers, and makers need to get their jobs done from anywhere, at any time, from any device What are your top business priority moving forward? Our biggest priority is to make sure that each of my customer understands the new business model and the direction in which Autodesk is going. Make the pay as you go model more comfortable. It’s more about the change in the model, but the software does not change, whatever software was coming with perpetual it is the same software which is coming with the subscription based model. Subscription gives access to Autodesk software—the same full version as with a perpetual license, but with a flexible, pay-as-you-go approach for a software budget that’s easier to manage. So it is more of ensuring that the customer understands it completely, so that they embrace it well and leverage the benefits of this model and understand how to get those benefits, which is what is our biggest priority as of now. What are your top challenges? Piracy. It is a complete no brainer. And I think again the new business model is the answers, because piracy is a function of affordability and this new business model is actually hitting that very well. We are making the software more affordable, so that we can decrease Piracy. Piracy is my challenge and at the same time what I am offering now is actually helping to curb Piracy. Are you part of any initiatives with government of India? Currently we are working on a lot of initiatives like Make in India, Digital India, and Smart Cities and under this banner there are a lot of activities that are happening in various states. We are working with both the government and private sector to try and make this new model more aware and pervasive so that customer can utilize the advantages. So we recently signed a MoU with government of Maharashtra for the MSME. You will hear about this a lot more in the coming few days. Autodesk signed a MoU with the Maharashtra government during the Make in India week in Mumbai, to help designers and promote their work. We are working very closely with them to make customers derive benefits of this new technology.

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