Common IBM Licensing Mistakes

November 17, 2015
Editorial Staff


Editorial Staff

When it comes to licensing in general, many issues with software compliance are the result of treating licensing agreements the same across all publishers. Furthermore, many IT Managers neglect to follow Software Asset Management (SAM) best practices, resulting in serious organizational issues when it comes to IBM license management and the near-inevitable audit process.

So what is the most common IBM licensing mistake?

From a subject matter point of view, one of the most common pitfalls of IBM licensing is understanding PVU Sub-capacity Licensing. Many customers are unaware of the need to use the IBM License Metric Tool when they do Sub-capacity licensing due to the Passport Advantage Agreement.

The default case is that customers need to have enough Processor Value Unit (PVU) licenses for all physical, activated cores on the server (Full-capacity). Whereas in virtualized environments, customers are allowed to license fewer than all physical cores on the server, so PVU licenses are only needed for those virtual cores that are available to the IBM program (Sub-capacity). Of course certain exceptions apply:

  1. If the ILMT does not yet support a customer’s eligible virtualized environment.
  2. If the Client has fewer than 1,000 employees.

In those cases, customers can also do manual reporting (which isn’t necessarily easier).

Moreover, customers often struggle with Authorized User Licensing, which is licensed per-user. If they use technical accounts, they need to ensure that each user accessing the account has an Authorized User License. On the other hand, customers can have multiple installations because, again, it is licensed per-user and not per-device. But as the licensing rules apply at product level, the Software License Agreements and the IBM Announcement Letter provide official information on the licensing usage.

Some of our customers have also struggled with the IBM test and development environment. Sometimes there are special part numbers for test environments available, but in the case that there aren’t dedicated ones, SoftwareONE can support customers in getting special discounts as well.

If there are no dedicated part numbers customers need to the sign the Attachment for IBM Software Non- Production Licenses. The purpose of this Attachment is to provide incentive pricing to customers for certain non-production licenses used only in a test and development environment.

Especially from a SAM perspective, it is hard to differentiate those entitlements from the “normal” ones because they have the same part number. And last but not least the licensing of the Complete Enterprise Option (CEO) is challenging for IBM customers as well. The CEO Licensing within Passport Advantage enables the company-wide licensing of set of commonly used products, e.g. the Lotus Communication Bundle consisting of the IBM Domino Enterprise Server and the corresponding Enterprise Client Access Licenses (CALs).

Compared to the Passport Advantage Agreements, which states, “[…] Client must acquire licenses for all users in their Enterprise who have been assigned a machine capable of accessing any Program in the CEO Product Category.”

Based on a per-user licensing model the products can be deployed within the company. Basically all qualified users/employees of the company need to be licensed. Especially in terms of mergers or acquisitions, customers need to take care to adjust the number of CEO users!

Why is IBM Software License Management important?

There are approximately 18,800 different part numbers available within the IBM Passport Advantage Pricing Catalog, each available in 9 different price levels. From a Software Asset Management (SAM) perspective, this presents a serious challenge since the licensing rules apply at product level depending on the version, release, and fix pack. IBM has roughly 270 different license metrics, from which the metric “Processor Value Unit (PVU),” in particular the PVU Sub-Capacity Licensing, is the most challenging.

Also increasing business dynamics makes IBM licensing complex. IBM has acquired nearly 130 companies since 2000, mainly in the software space. Between 5 and 100 announcement letters in which IBM communicates product innovations or licensing changes are published from the United States weekly in the aforementioned IBM Announcement Letter.

In a nutshell, the complexity of IBM Licensing that come along with extremely high software prices result in significant compliance and financial risk. Unfortunately, when applying Passport Advantage Sub-capacity, customers wrongfully fall back to Full-capacity.

What can a company gain from focusing their SAM efforts on IBM Licensing?

Companies can improve transparency to ensure their compliance, realize savings, and minimize their financial business risk. Moreover, they can ensure that they are ready for an IBM audit and do not need to fear unknown financial risks.

It is important to understand the IBM pricing policy. Generally, IBM is giving customers huge initial projects discounts, but by the time IBM decreases these discounts, most IBM customers will be facing increased maintenance costs over several years. If a license gap is discovered as an outcome of an audit, then IBM reverts customers back to the original list price

I have met several IT Managers facing unexpected licensing gaps and costs as a result of an IBM Audit. At one customers’ site, the costs to cover the license gap were even higher than the IT budget for the upcoming fiscal year. These audits put significant pressure on IT Managers to report these additional costs to upper management because these costs haven’t been budgeted for the current fiscal year. In such cases, an effective SAM practice would have prevented such a drastic mismanagement, or in the worst case scenario, have better prepared to have a good business explanation.

With such a broad portfolio of products, maintaining IBM license management best practices can be a struggle. Fortunately, we have the expertise to help guide you along the way. If you would like to discuss your IBM management with one of our experts, then click the banner below and complete the following form for an expert to reach out to you.

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