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Optimize IBM licensing with LicenseQ

IBM Licensing & Contracting Services
Optimize IBM software licenses

Besides Microsoft, IBM has one of the most complex software licensing models. LicenseQ offers independent software asset management services for IBM customers. Our services are designed to help clients throughout their IBM software lifecycle, eliminating costly licensing or subscription pitfalls on-premises or in the cloud.

The difficulty of IBM licensing lies in the wide range of products and services on offer, the complexity of the licensing agreements and the different licensing metrics. According to IBM, there are lots of tools that can help you detect and control your license use. However, no matter how good these tools are, they still need to be correctly set up and implemented, and they cannot replace real expertise.

Note: We are not an IBM partner, nor do we sell IBM's products or services/licenses.

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The complexity of IBM Licensing and Contracting

About IBM Software Licensing and Contracting

IBM frequently acquires software companies, divests companies and rebrand products. And thanks to its large portfolio of software products and wide variety of license metrics, IBM is a true moving target in terms of compliance. Which makes IBM one of the most complex software vendors to manage from a license compliance perspective. The majority of IBM’s current software sales is on-premise software, together with new cloud and SaaS products. LicenseQ has deep technical, licensing and auditing knowledge on the full stack of IBM software products and the know-how to overcome any IBM Licensing challenges.

Highlights and what you can expect from LicenseQ
  • We can replicate the external audit approach for all IBM licensing models
  • Evidence-based audit approach, tailored to produce solid audit-ready compliance report
  • Benefit from our market insights while being secured of unbiased and no commercial license resell interests

The services we offer:

IBM Audit Defense

The IBM audit procedure is dynamic and unpredictable, with financial implications that become increasingly complex when conducted by third-party firms like KPMG. LicenseQ offers unbiased audit assistance, handling everything from reviewing and rectifying licensing risks to providing guidance for your audit strategy and communication with IBM and other involved parties. We scrutinize the audit findings to remove expensive errors and negotiate favorable terms in any audit settlements.

IBM License Review

Our IBM Licensing Review service targets organizations seeking to independently evaluate their IBM software assets. LicenseQ has expertise in all IBM software products and can confirm your compliance status for both on-premises and cloud-based deployments. An autonomous IBM License Review does more than just solve compliance issues; it also validates your ILMT reporting or other Software Asset Management (SAM) tools.

IBM Cloud Migration

LicenseQ provides a specialized service supporting your migration to the IBM cloud, tailored to your unique circumstances. Our aim is to help you avoid introducing compliance risks into your cloud environment, provide clarity on the financial implications of various cloud migration options and help you steer clear of common, costly cloud issues. Our IBM licensing specialists make sure your cloud usage aligns effectively with your actual needs.

IBM License, Contract and Support Optimization

We specialize in optimizing IBM licenses, contracts and support as a core component of our service offerings. Many IBM clients find themselves stuck in contracts, licenses and support without a roadmap for more economical options. LicenseQ’s optimization services help you understand your alternatives and their financial repercussions, offering you guided support as we implement an optimization strategy tailored to your needs.

LicenseQ’s IBM service helps clients:
  • Stay compliant!
  • Optimize license portfolio and costs
  • Avoid common but expensive licensing pitfalls
  • Navigate audits & cloud migrations
  • With License remediation
  • Compile IBM License Compliance Report
  • Get the best terms and conditions for your ELA, IULA, ESSO, ISSO and more
If you are interested in what we can do for your case specifically, or if have a generic question; please reach out to us via the button below. We will come back to you as soon as we can.
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IBM licensing - a comprehensive guide

IBM logo

Topics in this guide

  • Who is IBM?
  • What products does IBM offer?
  • How to license IBM products
    • International Program License Agreement (IPLA)
    • International Passport Advantage Agreement (IPAA)
  • Top challenges IBM licensing
  • How to deal with an IBM audit

Who is IBM?

IBM, short for International Business Machines, is one of the world’s largest tech companies. The company is known for its hardware and software products, including computers, servers, storage systems, networking equipment, and for its consulting, technology and business services, such as cloud computing, data analytics, and artificial intelligence (AI).

IBM has a long history of innovation, dating back to its founding in 1911. The company has played a key role in the development of many important technologies, including the punched card, the mainframe computer and the relational database. IBM is also a player in the field of artificial intelligence with its Watson AI platform. IBM’s products and services are used by organizations of all sizes, from small businesses to large enterprises.

What products does IBM offer?

IBM offers a wide and diverse range of products and services across multiple domains of technology such as blockchain, cybersecurity, the cloud, IT infrastructure, and more.

Domains IBM products

Some of the most popular products include:

  • SPSS Statistics – Comprehensive statistical analysis software platform offering advanced statistical analysis, a vast library of machine learning algorithms and data analysis capabilities, enabling organizations to analyze and interpret complex datasets to inform data-driven decision-making.
  • Watson Studio: Develop, train and managed AI models in an integrated environment. It provides tools to collaboratively work on data and build models on any cloud that uses visual modelling or open source code.
  • Watsonx Assistant – Provides customers with quick, reliable and consistent answers across any device, application or channel.
  • Cognos Analytics on Cloud – Watson co-pilot ensuring businesses can navigate through their data in a secure cloud environment. Providing customers with smart analytics.
  • Maximo – This suite offers integrated asset management, providing insights and tools for monitoring, management, maintenance and security.
  • Blueworks Live – A cloud-based business process modeling tool helping organizations fostering collaboration among teams and facilitate better workflows.

How to license IBM products

IBM software licenses typically include a base license and the first year of support, called Software Subscription and Support. You cannot buy these components separately as they are offered as a composite solution.

After purchasing a new IBM software license, you have the option to renew the IBM Software Subscription and Support annually. To maintain access to software subscription and technical support, you must renew your subscription each year.

International Program License Agreement (IPLA)

The licensing terms and usage conditions governing the use of IBM software are specified in the International Program License Agreement (IPLA). It outlines permissible and impermissible uses of the software, ensuring users adhere to stipulated guidelines and limitations. The IPLA addresses legal and contractual obligations, liabilities, warranties, and other aspects to ensure regulatory compliance in software usage. It is a global framework, but it may have country-specific terms.

International Passport Advantage Agreement (IPAA)

IBM offers software licenses through two main programs: the International Passport Advantage Agreement (IPAA) and the International Passport Advantage Express Agreement (IPAEA). The IPAEA is aimed mainly at smaller organizations and does not have a minimum purchase requirement.

The IPAA is generally aimed at larger enterprises. It is a comprehensive licensing agreement that allows customers to purchase IBM software licenses, subscriptions and support under a single umbrella – similar to Microsoft’s Enterprise Agreement. A customer can sign up to the IPAA by submitting an enrollment form. This can be done online or through an authorized IBM Business Partner. The online enrollment option is not available for all countries.

After you are enrolled on the IPAA, you can purchase IBM software licenses through the IBM sales office, through a business partner or online via Passport Advantage. This last option is only available to existing customers. For more information on the IPLA and/or the IPAA, please visit the IBM website here.

Main benefits of the IPAA

  • Volume licensing discounts
  • Flexibility – range of licensing options
  • Software Subscription & Support – offering access to software updates, releases, and technical support
  • Online portal to manage licenses
  • One single agreement
  • Global reach – designed for global organizations
  • Some offerings in IPAA also facilitate access to specified IBM Cloud services, aligning with modern cloud-adaptive business models.

You can find more information on the advantages of the IPAA here.

How to renew your IPAA

Your renewal quote for your IPAA will be sent roughly 100 days before your anniversary date. The Relationship Suggested Volume Pricing (RSVP) is calculated based on the initial purchase of your licenses and subscriptions. It is recalculated after each transaction, taking all entitlements purchased in the same agreement into account.

Top challenges IBM licensing

1. Complexity of Licensing Models

Navigating the various licensing models, suites and bundles as well as keeping up with updates, specific terms, documents and compliance can be intricate and overwhelming for customers.

2. Variety of models

IBM software is licensed using a variety of models, including user-based, capacity-based, and other licensing. IBM software that is licensed on a user-based basis can be easily over-deployed, as there are no built-in controls to restrict usage.

3. Licensing per Tebibyte (TiB)

IBM licenses storage-based products by Tebibyte (TiB), which is 1.1 terabytes. This can be confusing for customers, as it is a non-standard way to measure storage.

4. In-depth Knowledge

You need in-depth knowledge on your transactions, migrations, metrics, quantities, order owners, etc. to understand all the details in the licensing agreements and to be able to reconcile licenses and support transactions.

5. Managing and Optimizing Licenses

Keeping track of licenses, usage and budgets in line with dynamic licensing needs, cost-effectiveness and ROI is challenging, especially for large organizations.

6. Software Audits

Ensuring continuous compliance with licensing terms and preparing for audits requires diligence and robust SAM practices. The rights and limitations of IBM software licenses are described in the product license information documents and announcement letters, not in the contracts themselves. These documents are published online and can be changed by IBM at any time.

IBM’s sub-capacity licensing, which allows for licensing less than the full capacity of a server, can be complex to manage and requires stringent reporting to ensure compliance.

How to deal with IBM audit

Navigating an IBM software audit can be a multifaceted process and involves thorough preparation to ensure compliance with IBM’s licensing terms. The high number of different licensing models and documents in IBM software licensing make compliance challenging. Additionally, IBM has a large number of metrics that may be difficult to measure, which can make reliable reporting methods unavailable for all IBM software and metrics.

The auditing process typically begins when a customer receives an audit notification from IBM or one of its authorized auditors.

Guide on how to deal with IBM audit, incl. common challenges:


1. Preparation:

If you are facing an IBM software audit, it is essential to have a defence strategy in place. Being prepared for an audit is your best means of defence. To prepare for an IBM audit you need to understand your licensing entitlements, including license metrics, quantities, and any restrictions or conditions. Verify all purchased licenses and ensure accurate documentation through Purchase Orders, Invoices, and Proof of Entitlement (PoE) documents.

2. SAM:

Leverage a Software Asset Management (SAM) tool or hire a SAM consultant to inventory and manage software installations, usage, and licenses. Make sure IBM’s License Metric Tool (ILMT) is properly deployed. Keep track of all installed IBM software, ensuring adherence to license entitlements and usage restrictions. Remember: a tool cannot replace expertise!

3. Internal Audit:

Conduct an internal audit before the official IBM audit to identify and address any non-compliance or discrepancies. Compare installed software and actual usage against entitlements to pinpoint any shortfall or surplus.

4. Review obligations

Review all contractual obligations, including the IPLA and any specific License Information documents. Ensure understanding of IBM’s sub-capacity licensing and reporting obligations, where applicable.

5. Involve Key Stakeholders:

Engage with IT, legal, procurement, and business units to ensure collective understanding and collaboration in managing and optimizing software assets. Establish clear communication channels with IBM or their auditing partner to facilitate an organized and transparent audit process.

6. Documentation:

Maintain comprehensive documentation of all licenses, renewals, software deployments, and usage, ensuring easy retrieval during the audit. Validate and secure historical data, as auditors may review license compliance retrospectively. Software audits are time and resource intensive and may disrupt regular operations due to the effort required to compile and validate information. Get support – contact our licensing professionals now.