There are several reasons why businesses are moving today to the subscription model of software as a paid service instead of traditional licensing model. Software subscriptions such as cloud or on-premises models are becoming most popular deployment choices for businesses, whether it is for internal business process or for external website application purpose. The main reason for being beneficial to organizations is because of its easy of use, payment plans based on usage and automatic updates. Especially, small and medium businesses have difficulty in investing on licensing software and feel convenient when they have flexible option such as monthly plan for making payments. SMBs will have limited budgets allocated for software purchase whether it is for internal business processing or for online business promotion. Web based cloud services such as SaaS offers better value to their businesses compared to traditional licensing models as they need not worry about any installations, maintenance or frequent software upgrades.

There are several reasons why software subscriptions are more viable than traditional licensing software.
Offers Better Scalability
Buying software licensing is not only expensive but also has some limitations in terms of usage and scalability. The licenses are given only to particular number of installations and anything exceeding that, the business has to spend for extra licenses. This is not the case when cloud based subscriptions are opted for business processing. For instance, previously organizations used to buy licenses for accounting, payroll system, sales & marketing, invoicing and billing software etc. But today SMBs can avail these services over cloud on subscription basis. They can scale up or down the service based on their actual usage with marginal capital outlay.
Convenience of Access
Licensing software works only on the systems in which software is installed. So basically when SMB businesses have traditional models it is not possible to extract productivity from employees outside the office. Because the SaaS subscriptions are cloud based, the software can be accessed from any place using any device. This way it improves team collaboration as employees can work and share data together when working on different projects.
Better Business Exposure to Customers
Having just a brick and mortar business is not sufficient to get global customer attention. Today with the help of Saas website services SMBs are able to scale-up their businesses to global level. There are many web based software subscriptions available for business websites for site hosting, design, adserver ad placements, website monitoring, content delivery networks etc. This will help SMBs save cost on different software licensing as well as avail the opportunity to reach potential customers.
Flexibility to Opt for Better Service and Features
If subscribers are not happy with the features or service offered by the provider, they can always go for another one with better options. This option will not be there in licensed models because once the software is purchased, the businesses will have no other way than to use the product. Whether the product is specific to their business or not, the SMBs need to adjust their preferences according to the licensed software.
Availability of Upgraded Functionalities
Licensed software get updates in the form of patches which is not very often like cloud based software. But subscription software will have frequent update cycles in order to provide users with better features and functionality. This provides a better opportunity for SMBs to digitize their businesses from traditional framework to online models.