Managing IBM Software Licensing Complexity

Understand the challenges of IBM Software Licensing

Many organizations use IBM software products to manage critical aspects of their business. In mid-sized to enterprise organizations, IBM products often represent a significant portion of their overall software estate where licensing needs to be carefully managed to optimize spend. As one of the world's largest software companies, IBM provides thousands of products in its portfolio and uses a variety of license models, contract terms and conditions. These IBM software licensing models can be very complex, causing frequent confusion for organizations trying to grasp the concepts while maintaining license compliance. Even within IBM, there are experts who understand their software licensing policies, while the general population does not. In fact, the IBM sales team uses automated calculators to determine software licensing as they put deals together for their customers.

To understand IBM software licensing, do you need to be a mathematical genius like Albert Einstein? The answer is no. While at first IBM software licensing may seem incomprehensible, some education on the license models and licensing scenarios will help minimize the confusion. In addition, a more automated approach to managing licenses enables organizations to gain control, reduce ongoing software costs and minimize license liability risks.


What are some of the challenges associated with IBM software licensing? To begin, IBM installation media are delivered with no constraint on the number of installations. In other words, IBM customers can download software without restrictions as there are no embedded software keys preventing installations. As a result, in distributed environments, installations of software covered under the same license may proliferate and bring an organization out of compliance.

A second challenge is that IBM uses multiple contractual documents to define license entitlements and product use rights. These documents include the IBM Customer Agreement (ICA), International Product License Agreement (IPLA), International Passport Advantage Agreement (IPAA), License Information (LI) documents, and Software Announcement Letters. Each of these documents carries their own set of terms and conditions which sometimes creates confusion on license rights. Some policies such as backup and disaster recovery license rights are often not detailed in any of the above agreements, but are described on the IBM website, which can change at any time. It is important to monitor the IBM website regularly to maintain awareness of any changes that will impact license compliance. When possible, organizations should capture important policies like these in their contracts to safeguard against the risk of expensive changes. Many enterprises negotiate these potentially volatile policies as addendums to the executed agreements so they only change through bilateral agreement.

A third challenge is the variety of products and license models. IBM products are grouped into the following categories: Infrastructure Software, Operating Systems, Development Tools, Databases, Middleware and Network/Systems Management. The leading brands in these categories are AIX, Websphere, DB2, Lotus, Tivoli, Rational and Cognos. The various license models include: Authorized User, User Value Units, Processor Value Units, and Resource Value Units. The wide variety of license models makes it difficult for IBM customers to get their arms around the IBM software licensing complexity.

Another challenge for long-term IBM customers is that they tend to struggle with shelfware, or software they have purchased that is not being used but is sitting on the "shelf." This is due to Enterprise License Agreements (ELAs) they have signed with IBM, or multi-year, "all you can eat" contracts that provide the end-user with access to numerous products and the ability to substitute one for another. Often times IBM customers cannot find a use for all the software entitlements they have purchased, thus creating a shelfware problem.

Finally, IBM frequently audits its customers and it is important for organizations to be prepared. Audits provide a software vendor with the opportunity to uncover lowhanging fruit, or non-compliance situations that generate "easy" revenue. Recent industry analyst research indicates that IBM is among the top 10 companies most likely to request an audit. IBM customers need to fully comprehend licensing policies and know their actual state of deployment and compliance prior to the commencement of an audit. Doing so can eliminate or at least reduce the probability of an audit before it happens.

IBM License Models

Let's examine the most common license models, which IBM separates into 3 categories: User-based, Capacitybased and "other" licensing.

User-Based Licensing

User-based licensing is one of the most common IBM license types for both its desktop and server software and aligns to the number of unique individuals given access to an application. There are several classifications:

Authorized User
An Authorized User is defined by IBM as a unique person given access to an application. Much like other major vendors with server based access, especially by thin or web client, it can be very challenging to determine all the end-users that need a license.

Concurrent User
A Concurrent User accesses an application at the same time as other users, up to the number of concurrent licenses purchased. Each Concurrent User may simultaneously access the software multiple times (i.e. using different 'Installs') under a single license. Typically, the software may be installed on any number of machines for use by those users.

Floating User
Each Floating User may only access a single install of the program at any given time under a single license. The Floating User can 'float' around from one install to another. Like with Concurrent User licenses, typically there is no restriction on the number of times an application may be installed to support licensed users. An organization might choose the Floating User license type when the number of active users at any given time is a fraction of the number of total users. Many Rational products, for example, offer a choice between Floating and Authorized User.

User Value Unit (UVU)
The number of users who have access to a specific software program are converted to the required number of point-like UVU entitlements per IBM's UVU tables and methods, which vary substantially from product to product.

Capacity-Based Licensing

Capacity-based licensing aligns to the available hardware resources (processor cores, memory, etc.) on the machines where a software program is installed or on the machines that the program manages. There are several types:

Processor Value Unit (PVU)
A processor, or central processing unit (CPU), is the logic circuitry that processes the basic instructions that drive a computer. IBM continues to define a processor, for the purpose of PVU-based licensing, to be each core on a processor chip. With PVU licensing, the required value units—which vary by processor technology (vendor, brand, type and model number) per the IBM PVU table, are calculated for each activated processor core that is available to the software program.

Server Based License
An IBM server license is required for each server that is available to the software program, regardless of the number of processor cores or partitions in the server or the number of copies of the program on the server.

Virtual Server
A virtual server is generally a virtual machine created through either hard or soft partitioning, but can also be an unpartitioned physical server. An IBM virtual server license is required for each virtual server made available to the software program, regardless of the number of processor cores or installs on the server.

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