Major IBM Passport Advantage contract changes on top of 24% price increase
There has been an increased amount of coverage of IBM in the press since the 24% price increase before Christmas.
IBM have now announced significant changes to one of the key elements of their customer contracts — the International Passport Advantage Agreement (IPAA) and the corresponding Passport Advantage Express agreement. This part of a contract with IBM covers taxes, liabilities, warranties, termination and, importantly in this case, compliance verification also known as audit.
Amongst other things included in version 11 of this agreement, customers must establish a licensing baseline so that they can provide this within 30 days of it being requested.
IBM’s own partners have estimated that the initial work can take up to 6 months!
As an #Ibm licensing consultant with extensive experience in IBM license optimisation and management, I have drawn out the key changes which I believe will be of most interest to customers and have also provided some useful advice below.
I use IBM software under these agreements so when does this take effect?
IBM state in version 11 of the IPAA “For existing Clients, the effective date of new IPAA terms will be three months following the document publish date and changes are not retroactive. Changes will apply, as of the effective date, to new orders and renewals. Client accepts changes by placing new orders or allowing transactions to renew after the effective date of the new IPAA terms”.
You could, however, argue that for existing contracts, this can only take effect upon your signing up to a new contract which should allow you a little more time to get your licensing position in order.
I use IBM software under these agreements so what exactly do I have to do?
Clause 4.1.a of the IPAA obliges customers to “ … create, retain, and each year provide to IBM upon request with 30 days’ advance notice: i) a report of deployed Programs, in a format requested by IBM, using records, system tools output, and other system information; and ii) supporting documentation (collectively, Deployment Data).”
I have outlined the 30-day advance notice above but the statement “ … in a format requested by IBM …” differs from the previous version issued some 5 years earlier.
This presents a risk that upon signing up for a new contract or a renewal, you become obliged to present data which you are not comfortable providing for various reasons such as security or commercial sensitivity.
You may wish to request clarification (or reach an agreement) on what this format will be and ensure that you are happy with it before concluding negotiations about a contract or contract renewal. Alternatively, formalize that this was not agreed upon at the point of signing the contract.
To fully understand and manage this situation, you will need a decent understanding of IBM licensing to be able to establish your license baseline and importantly remediate it to ensure you are in your most commercially favourable position.
I recommend setting aside some time to read the blogs I produced as an introduction to IBM licensing — they provide valuable insights as well as some useful tips.
If you choose to manage this ‘in-house’, I recommend leaving plenty of time for developing your knowledge of IBM licensing and ensuring you have sufficient knowledge of the market and IBM behaviours as well as your rights.
There are numerous costly ‘gotchas’ in IBM licensing, many of which are only learned through experience and observation of different scenarios. When it comes to defending yourself in an audit scenario, this can be a wholly different skill set and given the pressure often involved, is not for everyone.
If you choose to seek out IBM licensing support, there are a few things to consider:
· This contract change is going to create a bow wave of work for IBM licensing SMEs so I would move quickly to secure the right type of independent consultant.
· I would consider the nature of the IBM licensing services provider. Do they already work alongside IBM in an audit or IASP capacity? Are they part of a wider software reseller? Or are they one which is wholly independent from IBM and software resellers?
Companies such as Version 1 are fully independent from IBM and resellers and, furthermore, are accustomed to developing internal SAM teams to become self-sustaining in IBM licensing.
Are there any other changes?
There are other important changes which come with IPAA version 11 including the need to give evidence 30 days in advance of reducing maintenance volumes, changes to subscriptions such that they can’t be terminated early and IBM no longer emailing you if they change the IPAA terms again.
If you want to discuss the other changes further, contact me directly.
Why have IBM made these changes?
In short, I believe IBM are finding their audit process inefficient. By transferring the responsibility of assessing their own licensing position to their customers, IBM not only save cost, but they reduce the time to audit.
Once the customer has provided the data stipulated in the IPAA, IBM will have actionable intelligence and be able to easily decide whether to come to a settlement or progress with a full audit.
Leaving the definition of the format of the data to be provided during an audit also gives the IBM auditor wiggle room to ask for different data each time, so if they choose to enquire about an additional aspect of your IBM licensing position, they can.
For more information
As IBM license experts, we are deeply familiar with a wide range of license considerations and are happy to help with any license queries you may have.
We are offering a complimentary licensing advisory session to understand any license concerns or projects that may impact your compliance position and to advise on the best way forward.
Alternatively, we can look at your ILMT Audit Snapshot and provide a recommendation as to how you might carry out exclusions or classifications and an indication of how much this might save you in financial terms.
To arrange one of these sessions, please go to our website or contact us.
About the author
Kevin Barnes is an IBM SAM Consultant here at Version 1.
