IBM’s new licensing terms for Passport Advantage: major changes you need to know

Navigating the changing landscape of IBM Passport Advantage licensing

IBM has recently introduced new licensing terms for its Passport Advantage (PA) program, which has left many customers scrambling to understand the changes and their implications. In this article, we delve into the details of these new terms, including the timeline for implementation, the significantly increased obligations for customers, and the potential pitfalls they might face.

Key dates for Passport Advantage changes

For new customers, the new PA terms came into effect on February 1, 2023. For existing customers, the changes became effective yesterday (May 1, 2023), three months after the initial announcement. However, it is essential to note that if an existing customer renews its software or makes a transaction after the implementation date, it will be subject to the new agreement terms. This can have a significant effect on your compliance position.

Main changes in the new licensing terms:

• Reporting obligations: One of the most significant changes in the new terms is the increased reporting obligations for customers. Previously, customers only had to provide data during an audit, but now IBM asks that you declare your license consumption at least once a year, and in fact, it can request data from you at any point. Customers are required to keep their data up-to-date and submit it within 30 days upon request in a form that IBM requests. This change means that customers can no longer bury their heads in the sand and wait for an audit; they must be proactive in managing their data and create reports that outline their compliance positions (preferably using IBM tools). Ultimately it is you that is responsible if you violate your compliance position.
• Support and subscription: Under the new terms, Customers can no longer maintain support and subscription (S&S) on only some of the licenses in use. Indeed, customers must prove why they are reducing the number of products under support and services otherwise they will be charged at the full rate for all the software they have. This is a significant departure from the previous process in some regions, where customers could simply inform IBM that they are no longer using the full quantity of the product and wish to reduce the numbers accordingly. Now, customers must conduct an Effective License Position (ELP) to demonstrate evidence to support this reduction.
• Renewal process: Under the new PA terms, customers need to prepare well in advance for renewals. If they wish to reduce the quantity of their software licenses, they must give notice and prove that they have reduced their software usage at least 30 days before the renewal date. If they fail to do so, they will be required to renew their licenses, not to mention the S&S at the full quantity.
• Site-specific licensing: Another notable change in the new PA terms is the requirement for customers to have separate Passport Advantage site agreements for different sites or locations. In the past, customers could hold licenses across multiple sites/ locations under one agreement and treat the S&S differently per site if the physical locations (=sites) were separated. Under the new agreement, customers must have separate Passport Advantage subcontracts/ site numbers for each location they want to treat individually in regard to S&S, which can have significant implications for multi-site organizations.
• Notification of agreement changes: IBM has changed the way it notifies customers about new terms and conditions. Previously, IBM would send out notifications about changes in licensing terms, but now customers must proactively check the IBM Terms website for updates, as only the PA admin (primary contact) will receive a link to the changes that have been made to the PA. This shift places more responsibility on the customers to stay informed about any changes in the PA agreement. Customers are considered to have accepted the new terms if they do not reject them.

The impact on customers

Organizations that do not properly understand and adapt to the new terms may face increased risks during audits. Those that are found to be non-compliant may face hefty fines and penalties, which could be detrimental to their business.