Buy or Rent a Software?

Buy or Rent Software?

For many people, the purchase of a house represents the epitome of security and long-term investment.

But if they wish to remain flexible, renting a dwelling might make more sense and it was a similar story with software for a long while. Renting frequently presented no real alternative because customers don’t own the software at the end of the rental period.

With the advent of Cloud Computing, however, renting has become more attractive. Major software companies are increasingly focusing on rental offerings. This trend provides many benefits to businesses, such as IT flexibility, foreseeable and understandable costs, and access to software that is always up to date with no extra costs.

Purchasing software represents an investment that drains liquidity and ties up capital for a long time. Should a business decision to rent software, on the other hand, its only costs will be the monthly rental payments, resulting in less need for financing and greater liquidity.

Companies have rearranged their product offerings to include interesting extras such as email applications, calendar functions or document storage in the cloud now. The result is that users can now access their data anytime and anywhere while simultaneously cutting both IT costs and the need for internal storage capacity.

In addition, businesses can immediately deduct the monthly rental fees from their taxes. If they purchased the software, on the other hand, they would only be able to take advantage of the yearly depreciation allowance.

Moreover, it is not possible for customers to return software licenses once they have been purchased, hence they must run the risk of having too many licenses. Renting enables IT managers to react flexibly, adjusting licenses to varying needs at any time and administering licenses also becomes clearer because often there are not enough licenses in a company.

In the case of an audit, things could get expensive, businesses may have to purchase licenses retroactively or even face legal action on the part of software providers. Renting, on the other hand, involves paying for actual use which means unexpected costs after an audit is a pass.

Another factor in favor of renting is the fact that rented software is always up to date with no extra cost. For all this, renting is no longer an interim solution. Businesses need to ask whether they should continue purchasing software in the future or whether they should just subscribe to it.

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Ali is a seasoned business leader and executive with 10 years of diverse experience in Digital and Commercial areas of IT industry. He gained broad experience in managing on-demand (cloud) and on-premise offerings in both Public and Private sectors in Turkey and UK&I.

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