A year ago, ESRI caused quite a bit of consternation among their customers by changing their licensing model. Engineering software licenses are notoriously expensive, and Esri’s ArcGIS license is no exception. Most engineering companies invest in concurrent use licenses, as this is generally the most cost-effective and efficient license model. Esri announced that their new product, ArcGIS Pro, would be sold with single-use or named-use licenses from the beginning of 2017 and concurrent use licenses were to be phased out. Unfortunately this announcement was made very shortly before the end of 2016, leaving ArcGIS license owners with very little time to understand the implications or react to the change. We wrote about the change earlier in 2017, in some detail in this post.
How the ArcGIS Product Line is Changing
In order to move to a 64-bit architecture, Esri is phasing out ArcMAP, the GIS workhorse of the suite, and replacing it with ArcGIS Pro, which is available within ArcGIS Desktop and can be used if the customer has a maintenance agreement with Esri. The challenge was that ArcGIS Pro’s default license was a named user license, and it seemed obvious that Esri was trying to phase out concurrent licenses. Although we will never know for sure, it is likely that many existing customers were resisting the upgrade to ArcGIS Desktop 10.5, the version that was closing the door on concurrent licensing. The previous version, ArcGIS 10.4, will only be available for purchase until the end of January 2018, which means that customers are now forced to make a decision about their future with ArcGIS.
The Economics of the Named Use License versus Concurrent Use License
The license is a material contributor to the ArcGIS software cost, and CIOs and the license administrators who report to them ensure the best bang for their buck via concurrent user licenses, aiming for a ratio of 3 users per license or better. The best ArcGIS license option for any organization is the concurrent license, and it did not matter what sweeteners Esri offered, such as a 3-for-1 license swap, the customers were not taking the bait. It seemed an impasse had been reached, but Esri finally started listening to their customers.
The Power of the Crowd
ESRI’s ArcGIS license owners have a vibrant and active community of user groups, both in the US and global chapters in countries throughout Europe and the Middle East to Asia Pacific. There are location-based groups and SIGs (special interest groups), such as water management and local government. Esri also encourages the creation of groups for collaboration as an integral part of their software. Regular user group events are held, both in the US and globally, and this is where customers voiced their feelings about the new licensing model.
Esri had always prided themselves on being a customer oriented company, but their strategy to move to named user licenses was definitely not a good customer experience, and their customers were letting them know. They did some introspection and then issued the following message to all their customers:-
In this announcement they stated: “We are extending the availability of Concurrent Use licensing for ArcGIS Desktop (ArcGIS Pro and ArcMap) to all of our customers, new and existing. Your feedback has helped us better understand how Concurrent Use licensing provides you with the flexibility to deploy ArcGIS Desktop in a way that best fits your workflows.”
Restoring the Preferred ArcGIS License Model
This change takes effect from 1 January 2018 and brings back a flexible license model that can be tailored to fit any company’s requirements, but will help to rebuild the relationship between Esri and its customers. The enterprise that uses ArcGIS for their mapping will be able to optimise their licensing model through concurrent use, a licensing model that is best suited to managing and monitoring license use for the foreseeable future.