Earlier this month Tableau announced new subscription based pricing for on-premises software. The new model lowers the entry price for users, but is it a good deal?

Many BI and analytic vendors use perpetual licensing plus an annual support fee. Historically, SAS was one of the few vendors that only offered subscription pricing. I have always liked this approach from the customer viewpoint: if the software is not meeting your requirements, you stop paying. It keeps the vendor continuing to engage with and satisfy you, the customer. And it takes the whole concept of “shelfware” largely out of the equation.

And yet, overtime, subscription-based pricing can be more expensive. This is a lot like the lease versus buy debate you may have with your car. If you are a new car fan (like my husband), you want to lease as you may change cars every two to three years. If you only change your car when it’s on its last legs (like me), you’d rather buy. So as you approach these BI investment decisions: think about if you are in it for the short term or longer term. Besides the total cost of ownership over the term of the lease (or the buy plus maintenance), this is a financial decision of whether you’d rather incur an operating expense or capital expense.

The move to cloud has increased the prevalence of subscription-based pricing, but many on premises BI vendors also now use a subscription-based licensing model. With some BI vendors, subscription is the only licensing option.

Beyond the subscription versus perpetual considerations, also consider named user licensing versus enterprise or server-based. Tableau does not publish their server-based pricing so has not disclosed the new subscription price for server. In general, named user works well for smaller deployments, but every vendor has a different break even point for when server becomes more effective.

The good news for BI and analytics buyers is that you now have more flexibility, and for Tableau customers, a lower entry point. This is a fast changing market, though, so we’d recommend before signing any large deals, set up a call with one of us for a contract review.

(About the author: Cindi Howson is a research vice president at Gartner Group. This post originally appeared on her Gartner blog, which can be viewed here).

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