Why is the demand for used software still growing?

Rising licensing costs, cloud risks and sustainability considerations  

"The current growing demand for used software reflects the growing need for companies to optimise costs and respond flexibly to current market developments. Our customers see the integration of open market software licenses in the form of private cloud or hybrid solutions as the key to sustainable financial relief and strengthening of their IT infrastructure," says Martin Predný, CEO of PREDNY SLM, the largest supplier of Microsoft secondary licenses to the public sector in the Czech Republic.

Since the legality of the resale of secondary software licenses was confirmed by judgments of the European Court of Justice (ECJ) and later the Federal Court of Justice (BGH) in 2012/2013, more and more companies, organizations and public authorities rely on the integration of used software licenses into their IT system infrastructure. In the Czech Republic, this has been driven in particular by the final decisions of the Office for the Protection of Competition (ÚOHS) in 2021 and 2023, the former confirming the legitimacy of the purchase and the latter dealing with rogue sellers of such software. The IT environment has long evolved into complex hybrid structures in which decision-makers combine on-premise and subscription models in the way that is most efficient and cost-effective for their individual needs. In IT, millions of dollars of savings can be made by the judicious purchase and use of software licenses (see our case studies). 

This is also why the plans of big software players such as Microsoft and Adobe to move completely from licensed software to cloud-based products and services are not working out. Many IT managers and software asset managers appreciate the benefits of using on-premise solutions. This is especially true for the purchase or sale of high-volume license packages, for example, for application software such as Microsoft Office, operating systems such as Microsoft Windows, or various server licenses for Windows Server, SQL Server or Exchange Server.  

There are many reasons for buying used Microsoft licenses.

The reasons for rejecting a total cloud solution vary from company to company. From a large number of interviews with customers and prospects, the following are particularly noteworthy:

Skyrocketing costs of cloud services 

Since the tech giant's Europe-wide price increase for its cloud products in spring 2023, demand for used Microsoft licenses has increased significantly, by an average of around eleven percent. In addition, there is a cloud sprawl phenomenon, especially in large companies with many branches and organisational units, as the software is available and accessible at any time. On this basis, cost dynamics can quickly develop that are difficult to calculate and pose a significant financial risk.    

Security risks in full cloud solutions  

Whether it's ransomware, malware or availability attacks such as DDoS attacks, the threat scenarios for cloud service providers and their customers are vast. It's not for nothing that Microsoft recently announced that it is investing a double-digit billion-dollar investment in securing its cloud infrastructure.   

Danger of over-dependency 

More and more companies are consistently trying to reduce unilateral dependence on cloud providers, for example in the form of vendor lock-in.Instead, it is increasingly popular to use your own on-prem solutions where cloud services are not necessary or are at least partially dispensable due to workplace requirements.    

Aspects of sustainability and reducing a company's carbon footprint:  

The new EU disclosure obligations, which will extend to up to 50 000 companies across Europe from 2024, and will also affect medium-sized companies, ensure increasingly sustainable measures at all levels. This does not apply to the information technology sector. The software used supports an active circular economy and can - especially in combination with extended hardware lifetimes - make a significant contribution to reducing a company's indirect CO2 emissions.

Other reasons or country specificities also play a role. In some sectors, such as public administration, energy supply or healthcare, there are particularly high requirements for data sovereignty and security and strict compliance guidelines. In France, this means, among other things, that hospital companies are not yet allowed to implement and use cloud-based software. Combined with the already high cost pressures in the healthcare sector, this is leading to an increased interest in low-cost on-premise licenses.

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