Guidewire self-managed licences are the software licences that let an insurer install and run Guidewire InsuranceSuite in its own or its chosen infrastructure. Guidewire says it offers term licences primarily for existing on-premise customers, and it presents subscription as the main path for new sales.[1] Its corporate statements name InsuranceSuite for self-managed installations alongside InsuranceSuite via Guidewire Cloud and InsuranceNow as its core operational products.[2]
Licence types
Guidewire’s revenue policy names the performance obligations it generates, and one of them is self-managed software licences related to term or perpetual agreements.[1] In practice the term licence is the dominant form. The filing says the majority of Guidewire’s licence revenue consists of term licence fees.[1]
| Type | Description in Guidewire’s filing | Catalog row |
|---|---|---|
| Term licence | Initial term generally two years, with optional annual renewals; fees billed annually in advance during the term, including renewals[1] | Self-managed term licence |
| Perpetual licence | Exists as an agreement type; excluded from Guidewire’s Annual Recurring Revenue because it is not expected to recur[1] | Self-managed term licence |
| Support | Fixed percentage of licence fees, annually in advance[1] | Support for self-managed licences |
| Subscription | The cloud alternative, covered in a separate article | Guidewire Cloud Platform subscription |
Longer arrangements exist. Guidewire says it enters into licence arrangements with an initial term of two or more years and renewal terms of more than one year, which recognise significantly higher revenue in the initial year of the committed term than subscription arrangements do.[1] The filing also says that, because term licence revenue is recognised upfront while subscription revenue is recognised over time, an increase in term licences from renewals or expansions or a decrease from migrations or non-renewals can affect quarterly results.[1] For a customer, the relevant point is that renewal terms are negotiated and can span more than one year.
Metrics
Term licence fees are generally priced on the amount of Direct Written Premium (DWP) that will be managed by the licensed software.[1] The wording differs from the subscription statement, which refers to DWP managed on the platform. A self-managed licence is therefore described as sized on the premium the software will manage, which implies a forward-looking estimate that is reconciled at renewal, although the filing does not describe the reconciliation. Variable instalments under self-managed licences are generally subject to changes in a customer’s DWP or Gross Written Premium.[1] The catalog metrics are Direct Written Premium (DWP) and Gross Written Premium (GWP).
The filing publishes no counting method. Questions to resolve in the contract include whether the DWP basis is set at signature or re-measured annually, whether it covers all legal entities and brands in the group, whether it counts premium on policies that are only administered in the system versus premium that is also billed or claimed in it, and whether the basis is per application or enterprise-wide. These are commentary prompts and not Guidewire rules.
Support
Guidewire provides support to its licence customers for an annual fee based on a percentage of the licence fees.[1] Support fees are typically a fixed percentage of the associated term licence fees, invoiced annually in advance, and support for term licences follows the same contract periods as the licence.[1] Guidewire’s revenue note describes support as email and phone support, bug fixes, and unspecified software updates and upgrades released when, and if, available during the support term.[1] The percentage is not published (Percentage of term licence fees (support)).
Two consequences follow. A support fee that is a fixed percentage of the licence fee moves with the licence fee, so a DWP-driven change in the licence fee moves support too. And because support follows the same contract periods as the licence, the two are generally renewed together.
Billing and cash flow
Consideration for self-managed licences is typically billed in advance on an annual basis over the licence term, even though revenue for the licence is recognised when the licence is made available to the customer.[1] The invoice pattern, not the accounting pattern, is the one that matters for budgeting.
Virtualization and partitioning
Guidewire’s public documents set no processor, core or virtualisation restrictions for self-managed InsuranceSuite. Any such restriction would be in the licence agreement. Infrastructure choices, such as the application server and database used under a self-managed installation, are separate from the Guidewire licence and subject to the third-party vendors’ terms.
Moving to the cloud
Guidewire’s filing calls out migration explicitly. Agreements to migrate an existing term licence customer to subscription services contain multiple performance obligations, including a provision to continue using the term licence during the subscription service implementation period.[1] During that period, customers may be under contract for self-managed licences and support in addition to subscription services.[1] A portion of the total contract value related to subscription services could be allocated and recognised as term licence and support revenue in the period renewed or delivered.[1]
For the customer this has four practical points, each of which should be checked in the executed agreement:
- The length of the overlap period and whether licence and support fees continue during it.
- How the combined contract value is split between licence, support, subscription and services, because the split can affect later renewal pricing and tax treatment.
- What happens to the right to use the self-managed software at the end of the overlap, including any decommissioning or certification obligation.
- Which capabilities exist only in the cloud, such as Integration Gateway, which Guidewire states is available for Guidewire Cloud only.[3]
Guidewire has also run migration programmes. The release highlights page for the November 2020 release describes CloudDirect, a combination of tools and upgrade expert services to enable self-managed InsuranceSuite customers to upgrade directly to Guidewire Cloud.[4] Guidewire Digital is included with InsuranceSuite on Guidewire Cloud but can be licensed separately for self-managed implementations, so a customer’s digital entitlement may change on migration.[5]
Programs and partners
Guidewire sells directly, through a direct sales team that is its exclusive sales channel and account management function.[1] System integrators and PartnerConnect partners provide implementation and integration capacity, and the filing describes partners that develop integrations, many of them in Guidewire Marketplace.[1] Marketplace extensions are free to download, but an extension that connects to a partner’s service needs a separate agreement with that partner.[6]
Compliance
The documents cited here contain no audit clause for self-managed licences and no usage-reporting tool. The 10-K states that Guidewire is not party to any material pending legal proceedings.[1] A self-managed customer should expect that DWP-based fees are verified through contractual reporting, and should document the premium figures supplied at each renewal.
Out of scope
This article does not cover Guidewire’s cloud subscription, data products or the open-source Gosu language, which Guidewire describes as open source.[7] It does not give prices; Guidewire publishes none.