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The shift to subscriptions for Architecture, Engineering and Construction (AEC) software, evolving rapidly over the past decade, has pleased some users, and rankled others. Holders of perpetual licenses may be used to the days when they could realize exceptional value out of a package purchased years, or even decades ago, for specific end uses. In such cases, the value of a subscription might not seem too appealing by contrast. But does that ownership model make sense currently and moving forward?
AEC, and the requisite software are continually evolving. We are riding a paradigm shift from an analog, compartmentalized, 2D past to digitalized, 3D, 4D, virtualized, and with interdependencies in processes across all infrastructure lifecycle phases — planning, engineering, construction, and operations.
It is not inconceivable that a practitioner, doing a specific task amid the new workflows, could use legacy software. I can still boot up AutoCAD 2.5 (1986) on an antique 286 PC. And by using a pile of user derived AutoLISP (a programming language adapted for AutoCAD) routines, I can reduce data, draft, and export linework to present day AEC software. But no, that is working harder, not smarter — not to mention slower.
The 1980s heralded the advent of affordable and accessible CAD and design software. There is nostalgia for certain aspects of those halcyon days (so apologies for all the 80’s music references in this article). But like hairstyles and fashions of that decade, we would like to forget the limitations and struggles with early software. The evolution to fully digital AEC has taken these intervening decades. Early on, when advances were slower, one could keep in the optimal productivity envelope for many years with the same perpetual license. Now, it is as if we have turned off a rural road onto an Autobahn — change comes almost as fast as we are willing to venture.
Rules-based and generative designs have matured, we have gone from 2D to 3D, to Cloud processing, advanced visualizations, and immersive experiences. Online collaboration services, shared models, and synced field software pervade construction — long overdue for digitalization. BIM, GeoBIM, VDC, 4D Construction, Constuctioneering — whatever name it takes — the wave is forming, and it takes new skills and software advances to ride it. Subscriptions, for many, are the key to accessing a widening variety of tools and solutions, on-demand and (eventually) on a pay-per-use basis.
I will confess, I have wanted to see the advent of full subscription environments for AEC for nearly three decades. Upon experiencing the (publicly accessible) Internet for the first time in the early 1990s, I wondered how long it would be before I could simply check out whatever software was needed, get the latest and greatest version by default, use it only when needed, and only pay for it when I used it. This took many years, with many painful steps in between. Perpetual licenses with annual maintenance agreements were a step forward, but remember the agony of dongles and license servers?
We are presently in a subscription-based world, not only in AEC software, but in so many aspects of our daily lives. And perhaps it is the advent of the latter that has expedited the transition of the former. The move was not without a certain amount of pain, and the evolution is far from complete, but it can be viewed as generally successful.
What parts of our connected lives are not subscription based? Few. Online entertainment, communications, shopping, rideshare, even at coffee chains — we have grown accustom to these and have even come to expect them. The comfort level with these made adaptation in AEC easier, but also raised new expectations for service and ease of access.
The concept of living and working in a completely immersive and collaborative environment can seem both dystopian and liberating. Ernest Cline’s science-fiction book Ready Player One dishes up visions of the former, where society is hooked on a virtual gaming universe. But it also shows the potential benefits of appropriately adopted aspects of such virtual environments. Autodesk CEO, Andrew Anagnost mused on several themes from the book in a 2019 essay, particularly about the VR collaboration aspect. If I put on a cynic hat, I could paint a dystopian picture from the advent of any technological advancement, as people have done through history. For instance, we lament folks staring at their screens all the time, but today we could not work effectively in AEC without such connectivity. Let’s accentuate the positive.
Imagine, you as an AEC professional or technician, connecting by a named account to a virtual environment where your chosen tools, settings, preferences, Cloud processing and storage, shared design models and project management suites all reside. You can join in immersive experiences, evaluating work sites without having to be present. Your preferences and settings are remembered, you can work online or offline, you are apprised of new features, and you do not have to worry about versions. Such a subscriber environment is essentially here.
Almost without exception, the top providers of AEC software and services offer subscriber options or have completely moved to such models. An Esri ArcGIS Online login opens up tiered subscription access, as does accounts for providers familiar in the AEC space, like Bentley Systems, Trimble, Hexagon, Topcon, Autodesk, and more.
Subscription levels can include multi-user licenses, though managed online rather than onsite license servers, but we are seeing a rapid move towards named user access. Accounts can still be managed in pools, but named user offers so many more options for maintaining settings and preferences, tracking design changes, and linking to project communications, tracking usage and productivity.
Autodesk, which has been offering various subscription options for many years, has just begun a transition to named user accounts. And more recently, they have offered (with incentives) pathways to move away from the remaining perpetual and enterprise licenses. We spoke with Carl White, Vice President, Business Models and Platform Strategy and Nicolas Mangon, Vice President, AEC Business Strategy & Marketing, for their insights on the Autodesk transition process so far, and what might be ahead.
“There have been phases, from the one-off floppy install, through dongle licenses, to license servers, all the way to the Flex token services,” said White. “Now we find ourselves going full circle back to where we started — individual users again. Knowing what I can see about the changes in the business models from the time when we had individual single user licenses and networked licenses, there was about a 50-50 split.”
Larger customers tended to prefer network licenses, while small shops and solo practitioners preferred perpetual licenses and then individual licenses, with or without maintenance contracts. The single user did not have the burden of setting up license servers, as White pointed out that early ones were command line to get going.
Removing the challenges that the multi-user licenses and license servers presented, was a long-term goal. One-off purchased copies were the only viable option in the era before advances in the web, Cloud services, bandwidth, and ubiquitous connectivity fully matured. The move to named users is viewed by Autodesk as advantageous to their own business goals, but also ultimately for the end user.
“As we’ve moved forward, into the subscription world, single users have greatly outpaced multi-users,” said White. “The single user gets the value of the Cloud, processing, collaboration, and storage services. The license is named, and a lot of information comes with the naming part of it, for settings and preferences, so it makes a lot of sense.” Enterprises can still easily manage multiple named user accounts, and change names as needed, online and there are some enhanced reporting tools.
But how to move users away from enterprise licenses to named users? Cold turkey is one way, but they have decided against that. Instead, incentives were rolled out. “As we’ve moved on and decided to become a subscription company, we have slowly over time increased prices on multi-user licenses, to encourage people to move over to single,” said White. “But of course, we needed to make the single licenses quite attractive, and we also had to clearly demonstrate the advantages of named user licenses.” Currently, each seat in a multi-user license costs the same as two single users, so one can gain extra seats by converting.
The timeline is just over a year for the transition. “That’s all been laid out, the last date to renew a multi-user license is next year,” said White. “Since the very beginning, we recognize that many of the customers who are doing this are going on a long-term journey with us. So, we put in a program of advantaged pricing.” Without such incentives, and just a street pricing model, a move could look like a price hike. For example, a license on a maintenance agreement could be upgraded to a subscription (at 10%-15% of the original license cost), whereas it would be more initially if it was a new subscription. Even though a new subscription is only about a third the price of an old perpetual license, White said that they needed to keep the ongoing costs low for customers who decide to move from maintenance to subscription.
“We have this mapped out this offer through 2028 which was 10 years when we started the transition,” said White. “No more than a 2.5% increase per year, or more than 5% every two years. Basically, that is a cost of living increase. Committing to this for 10 years is almost unheard of in the industry. The first worry a customer has when they hear about subscriptions is that we might jack it up the next year. Moving forward we will keep those maintenance to subscription price protections in place through 2028.”
When folks hear about subscription models, they also sometimes have visions of a company sitting back, raking in the income, and taking the users for granted. But one way to look at it is that the subscriber may have even more leverage to keep vendor on their toes, keeping up with the R&D and updates, and to listen to customer needs. Unlike a perpetual license, where one pays a lot up front, and may take years to recoup the investment, the subscriber is only on the hook for a year and can walk at any time if they are not satisfied. A company cannot afford to do anything that might drive a customer to walk.
A prime example of this customer leverage was when a group of architects in the UK wrote an open letter to Autodesk, critical of the development cycle of Revit features (for architecture). Revit is one of the most popular tools used, for instance in the rapidly growing world of BIM, but there are alternatives. Autodesk recognized this and responded, openly admitting that the rate of development in that specific area could be better, noted improvements already under way, and initiated new channels for pipelining customer feedback and requests more rapidly into the development cycle.
“This is a key area of focus, becoming more of a customer centric company. Look at Apple, they are a prime example of customer centricity. Steve Jobs cared more about what the customer, the consumer, would want than large customers or industries wanted. We have to focus on the individual user,” said White.
For our AEC users, product features are especially important, said Mangon. “We need to continually add new features and do bug fixes. And there are so many things that go beyond the software, like rendering, and storage. Everybody’s mileage varies there, so the named user licenses are better than the once-size-fits-all world of perpetual licenses. We have even changed from the old suites by vertical, to broader collections, like the AEC Collection.” This presently includes Revit, Civil 3D, AutoCAD, InfraWorks, and Navisworks Manage. “If you use only two of these, you are coming out ahead cost-wise than if you subscribed to two of these separately,” added Mangon.
Another point of pressure for vendors in a subscription business model, in addition to ensuring that things work smoothly, and continually evolve to provide value, is that the solutions need to play well with other solutions. No large construction project is green field when it comes to software, tools, and processes. You will rarely (if at all) find a project that falls entirely under a single vendor umbrella. The owner, GC and subs may all be using different solutions. There needs to be simple and clean access, compatibility, if not interoperability with the tools and services your project collaborators are using. Ongoing partnerships with other vendors are key. For example, the collaborations between Esri and Autodesk, Leica Geosystems (Hexagon) and Autodesk, Bentley Systems and Topcon, Esri and Trimble, and many more.
The new model does not mean that users cannot use their old perpetual licenses, folks can boot up their copy of AutoCAD R13 (Ok, maybe we should forget that version) or say, R14. “With a subscription, they do have the option of going several versions back,” said Mangon. “As they might be working on projects that span many years.” But Autodesk is trying to slim down the support for license activations, and they limit this to three versions. That is of course for software packages that still have versions, as some no longer do. What we are seeing is the emergence of software solutions that are on more of a continuum.
Autodesk BIM 360 is an example of a solution that has no version. It is incrementally updated on a granular level, like the online streaming apps you use. In a subscription environment, this is possible. A huge advantage is that development cycles can be more responsive. While not commenting directly on any specific plans at this time, White and Mangon did indicate that we should see more version-less solutions moving forward.
Good news for AEC users is, as investor reports from Autodesk indicate, that for many years, AEC has represented around 45% of all company revenue. As such a large end user constituency, AEC should expect a lot of love.
AEC software in Autodesk has evolved. Long ago, much of the work was done in AutoCAD, with certain add-ons, and user developed routines for surveying and civil design. With the acquisition of DCA, which begat Softdesk Civil, which evolved into LDD, then Civil 3D. But as Mangon noted, their AEC software portfolio has expanded beyond civil design, to include the planning, construction, and operations phases of infrastructure lifecycles. Project and asset management solutions have been added. These include InfraWorks, Navisworks Manage, and a recent investment, Aurigo, a suite that owners can use for capital project planning, project, and asset management. Aurigo will integrate into the Autodesk Construction Cloud. This underscores the point that in collaborative environments moving forward, with so much being done in the Cloud, the tools will be continually evolving. This will only truly be practical in a subscription environment.
Are the new subscription models being adopted by Autodesk and other AEC solution vendors going to serve the industry well as it evolves further? Are annual subscriptions for specific products, or functional groups of products the right way to go in the long run? Or to be more responsive to changing needs, does this need to evolve into access-to-anything-in-the-portfolio on a pay as you go basis?
The lines are getting blurred in the increasingly digitalized world of AEC. While there is specialization among work tasks, the design, construction, and operation firms are working outside compartmentalized hard lines, needing to work in collaborative environments, and in management suites. It is much harder to predict which software one may need, or need to learn and adopt rapidly, through the course of a project. Especially this is the case for design-build-operate (DBO) firms — a growing trend for big ticket infrastructure projects.
“We’ve had a new business model for a number of years,” said White. “Currently with about 500 customers, a pilot of sorts, we call Token Flex. What it does for those customers is they buy a pool of tokens and then they can consume them on an as needed basis. Each product has a different token burn rate. ACAD is 7, Revit is 12…. effectively they are subscribing by the day.”
Users can choose anything in the portfolio. Mangon calls this their pay per use model, “We have actually just started to bring the model downhill, to our small and medium customers. We are piloting it to make sure we have the bugs worked out of it, have the business model all set up, and our customers understand it. More to the point, we need to make sure we explain it properly.”
“Long term, the pay per use model, is what we want to offer customers,” said White. “It doesn’t mean we won’t have a subscriber model as well because it will cost you a little bit more to have access to everything, and choose what you want to use on a given day.”
A model like this would give AEC users the complete freedom to use exactly what they want and only pay for what they use use. “That’s a big tenet of where we are going, which is aligning the value that customers get to their usage, and the outcomes that they get,” said White.
“Customers usage might evolve over time, and so can their choices. Like in providing more Cloud -based products, renderings, light studies, etc. Think about things like generative design that are starting to catch on in the AEC space. Those are the outcome-based workflows that they want.” Pay per use, and named users also make it easier to tie cost and labor to the financials of a project.
“Should I stay, or do I go?” is the line from an 80’s song, and is a question many AEC users probably asked when they learned that nearly all of the major AEC software and solution vendors were moving to subscription models. How long can I keep an old perpetual license copy working and compatible with broader project teams and processes? Are the many small ticket alternative software offerings powerful and flexible enough to meet my needs? The answer, from looking at the financials of Autodesk and several of the other major vendors, is that most users have chosen to migrate to the new model, and new accounts (despite some 2020 dips) continue to grow.
The real pressure in a connected environment is on the vendor; things must work smoothly, keep evolving to provide value, and there needs to be access to compatible, if not complete interoperability with the tools and services your collaborators in project life cycles are using.
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