Named User vs. Concurrent User
Named User vs. Concurrent User describes two ERP licensing models: with named users you pay per individually named person, with concurrent users you pay per simultaneously active login regardless of how many people exist.
Named User vs. Concurrent User describes the two most common licensing models used to charge for ERP systems per user. In the named-user model, the license is permanently tied to an individually named person: every employee who works with the system needs their own license, regardless of how often or how long they actually use it. In the concurrent-user model (also called a "floating license" or "simultaneous users"), by contrast, the number of concurrently active sessions is licensed: ten concurrent-user licenses allow a maximum of ten people to be logged in at any given moment, drawn from an arbitrarily large pool of named users.
The difference is purely commercial and contractual, not functional: both models grant the same technical access to the same modules. What matters is a company’s usage profile. If many people work in the system continuously and in parallel, named user is often cheaper and easier to administer. If, on the other hand, many occasional users – such as warehouse, shift or field staff – only access it intermittently, concurrent user can significantly reduce license costs. The choice of model therefore directly affects the ongoing software costs and the total cost of ownership of an ERP project.
At a glance
- Named user = a license per permanently named person, no matter how intensively used
- Concurrent user = a license per simultaneously active login from any number of users
- Functionally identical – the difference lies only in billing and administration
- Concurrent pays off with many occasional and shift users, named with continuous users
- Cloud/SaaS ERP almost always uses named user per month, on-premise often uses concurrent
Named User vs. Concurrent User: how the models work
In the named-user model, the administrator creates a dedicated user account for each person, linked to a paid license. The license "belongs" to that user and cannot simply be reassigned to a colleague. If a company pays for 50 named users, exactly those 50 named people may use the system – theoretically all at once, but in practice rarely all at the same time. Billing is simple and predictable: cost per head times number of heads.
In the concurrent-user model, the ERP system manages a pool of session licenses. When a user logs in, they occupy a license from the pool; when they log out (or are automatically disconnected after inactivity), it becomes free again. Once the pool is exhausted, the next user has to wait until a session frees up. So with ten concurrent licenses, 40 or 60 different people can easily work over the course of a day – as long as never more than ten are logged in at the same time.
The term "concurrent" is open to interpretation
What counts as "concurrent" usage is defined differently by each vendor in its license terms. Some count every open session, others only active requests to the server within a time window, while still others automatically disconnect inactive sessions after a few minutes. These details determine how many concurrent licenses are actually needed – and should be checked carefully before signing a contract.
Cost impact: when each model pays off
The decisive metric is the ratio of total users to simultaneously active users. If 30 people in accounting, purchasing and sales are in the ERP practically all day long, concurrency is close to 100 percent – here concurrent brings hardly any advantage, and named user is usually the cheaper, simpler choice.
It is different in the warehouse, in production or in the field: if 120 employees spread across three shifts only make short entries (goods receipt, picking, time recording), rarely more than 15 to 20 are active at the same time. Instead of 120 named-user licenses, perhaps 20 concurrent licenses will then suffice. For the business case of an ERP project, it is worth surveying the real usage profile per department and calculating both models – the effect on TCO over the contract term can be considerable.
Role-based and mixed licenses
Many providers additionally differentiate by depth of use: a "full user" with write permissions across all modules costs more than a "read user" or a pure self-service access (for example only time recording or leave requests). In practice, companies therefore often combine several license types – such as named user for the core departments and cheaper, role-based or concurrent licenses for occasional users. The license assignment ideally follows the system’s authorization and role-permission concept.
Named User vs. Concurrent User in the ERP system
Technically, ERP systems map both models via user and license management. With named user, each account is permanently assigned a license type; the number of active accounts must not exceed the purchased license quantity. With concurrent user, the system monitors the number of parallel sessions and rejects a login as soon as the pool is full. In multi-tenant systems, licenses are often counted per tenant or across tenants – an important point for corporate groups.
The chosen model also affects operations: named user makes traceability and the audit trail easier, because every action is assigned to a unique person – with concurrent sessions the assignment to a person is also possible, but license counting is decoupled from it. The trend in cloud and SaaS ERP clearly points to named user as a monthly subscription component, while classic on-premise systems more often offer concurrent or mixed models. Anyone comparing systems should assess the licensing model, user definition and price per user together, not in isolation.
DACH specifics and contractual practice
In the German-speaking region, the precise definition of the "user" is a central negotiating point in ERP contracts, because it determines the ongoing costs for years. Especially with on-premise systems using a concurrent model, it is advisable to set out in writing how simultaneous usage is measured and how technical double sessions (two devices for one person) are handled. With cloud subscriptions, watch out for minimum terms, notice periods and the option to reduce licenses mid-year – not just to increase them.
For cost-effectiveness it is also relevant that many providers now bill named-user licenses as a monthly or annual subscription instead of a one-time purchase. This shifts costs from an initial investment towards predictable operating costs and makes the licensing model a key lever in the TCO analysis. Anyone scaling up should check how license costs develop as the workforce grows – linear named-user costs can quickly become more expensive than a well-calculated concurrent quota for large but sporadic user groups.
Example
Example: a trading company with office and warehouse
A mid-sized online and wholesale trader employs 25 office staff in purchasing, sales, accounting and customer service, plus 90 warehouse workers across two shifts who post goods receipts and picking via handheld scanners. For the office teams, the company opts for 25 named-user licenses, because these colleagues work in the ERP all day and a clear assignment is wanted for approvals and the audit trail.
In the warehouse, one named license per worker would be uneconomical – of the 90 people, never more than about 18 are logged into the scanner at the same time. The company therefore buys 20 concurrent-user licenses for the warehouse area. This way all 90 warehouse workers use the system, but payment is made only for the 20 simultaneously active sessions. The mixed model reduces license costs by more than half compared with a pure named-user solution.
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