IBM Cost Optimization and Shelfware Reduction: A CIO’s Advisory Playbook
Introduction
Understanding the Shelfware Problem: Shelfware refers to purchased software licenses that sit unused on the shelf, often still incurring support fees. Organizations accumulate shelfware for many reasons: buying more licenses than needed (e.g., anticipating future deployments or as part of an audit settlement) and lacking visibility into actual software usage.
A common mistake is simply renewing the same IBM software quantities year after year without evaluating current needs. The financial impact is significant – studies show companies waste roughly 30–40% of their software spend on unused licenses.
In one study, the global average was 37% waste, translating to $259 of unused software per desktop.
For CIOs managing large IBM portfolios, that level of inefficiency is costly and unacceptable. IBM’s expansive product catalog (analytics, middleware, databases, security, etc.) and complex licensing models can further exacerbate shelfware if not proactively managed.
IBM enterprise agreements often bundle “nice-to-have” products with must-haves, creating a risk that half the bundle becomes shelfware – yet you still pay maintenance on it.
This playbook provides independent advice on how CIOs can identify underused IBM software and systematically reduce unnecessary spending. We cover techniques to discover IBM shelfware, methods to align entitlements with usage, strategies to optimize or terminate support for unused products, ways to leverage IBM’s license conversion programs (e.g., Cloud Paks), and approaches to rein in IBM license sprawl.
Each section concludes with Recommendations for CIOs, summarizing specific actions. The tone is practical and vendor-neutral, focused on what’s best for your organization’s bottom line.
By treating IBM software licenses as a lifecycle – from acquisition to retirement – CIOs can convert shelfware from a budget drain into an opportunity for optimization. In short, stop paying for what you don’t use and redeploy those resources to what matters.
Identifying IBM Shelfware Across Software Portfolios
Assess the Full IBM Estate:
The first step is gaining a comprehensive view of all IBM software in your organization. IBM’s portfolio spans analytics (e.g., Cognos, SPSS), middleware (WebSphere, MQ, integration brokers), databases (DB2, Informix), security tools (QRadar, Guardium), and more. CIOs should ensure an inventory that cuts across silos, capturing every IBM application deployed across business units and geographies.
This inventory should list each product, version, and the number of licenses owned versus those deployed. Often, companies are surprised to find that duplicate tools or legacy IBM products are still in use long after they have lost their usefulness.
Common shelfware candidates include products purchased for projects that never went live, “throw-in” licenses from past bundle deals, or components of suites that are not being used. For example, an IBM middleware suite might include a business rules engine that your team never deployed – that unused component is shelfware, incurring support costs with no return.
Use Tools and Data to Pinpoint Under-Usage:
Modern Software Asset Management (SAM) practices and tools are essential for identifying underused IBM licenses. IBM provides the License Metric Tool (ILMT) to inventory and measure the usage of IBM software in your environment. ILMT is especially useful for IBM products licensed by processor value unit (PVU) or virtual cores – it can report actual consumption on each server.
Regular ILMT reports highlight which installations are consuming licenses and their respective capacities. In addition to ILMT, consider broader SAM platforms, such as Flexera or ServiceNow SAM, that integrate IBM license data. These tools can automatically detect installed software and track usage metrics, such as user counts, CPU hours, or transactions.
Leverage any available usage logs: for example, IBM Cognos can show active user counts vs. licenses purchased, and WebSphere usage can be inferred from server uptime and load. Compare these metrics to the entitlements – if a tool is barely used (or not used at all) compared to what’s licensed, flag it as potential shelfware.
It’s also important to involve application owners and architects: conduct surveys or workshops to identify which IBM tools are mission-critical and which are candidates for decommissioning. Often, business units may cling to a software out of habit, even if an alternative is available, resulting in overlapping capabilities.
Spotlight on Overlapping and Legacy Products:
IBM’s portfolio has evolved through acquisitions and new offerings, so check for functional overlap. You might find, for instance, both Lotus Domino and newer IBM collaboration tools, or multiple IBM monitoring tools (such as Tivoli vs. newer Cloud Pak-based monitors) in your environment. These overlaps often signal an opportunity to eliminate one.
Also, identify any IBM products that have been effectively replaced by non-IBM solutions in your organization – e.g., if you moved from IBM Db2 to open-source databases but still own Db2 licenses. Those Db2 licenses are pure shelfware if the databases have been migrated. By systematically scanning each category of IBM software and comparing what you have deployed versus what you have entitled, you can catalog all under-utilized licenses.
Recommendations for CIOs:
- Conduct an Enterprise-Wide IBM License Inventory: Create a centralized inventory of all IBM software owned and deployed across the organization. Include product names, versions, license counts, and where they are installed. Update this inventory regularly to reflect new purchases or decommissions.
- Leverage SAM Tools and ILMT for Discovery: Deploy IBM’s License Metric Tool (ILMT) and/or SAM tools to automatically discover IBM software and measure its usage. Schedule regular scans to ensure that no installations or VMs are missed, and promptly resolve any ILMT scanning errors for accurate data.
- Identify Under-Used Installations: Use the collected data to find licenses that are under-utilized or not used at all. For instance, look for IBM products installed but not launched in months, or user-based licenses (like Cognos users) far more than active users. These are prime shelfware candidates.
- Engage Application Stakeholders: Meet with business and IT owners of each IBM application to validate usage. Confirm if certain tools are still needed or if they can be retired. Often,
- User feedback will often surface, “we no longer use that system,” confirming shelfware status.
- Maintain Visibility Across Portfolios: Ensure you examine all IBM categories, such as analytics, middleware, databases, security, etc., for shelfware. High-cost areas, such as databases and integration middleware, are especially important to scrutinize, as even a few unused licenses can lead to significant savings.
Entitlement Reviews and Aligning Licenses with Usage
Perform a License Entitlement Audit: Knowing what is deployed is only half the story – CIOs must also understand what they are contractually entitled to use. An entitlement review involves reviewing IBM contracts, purchase records, and Proofs of Entitlement (PoE) documents to accurately itemize the exact number of licenses (or subscription units) your organization owns for each IBM product.
IBM’s Passport Advantage online portal can be a starting point to obtain entitlement reports. However, be cautious: historical entitlements may be spread across multiple sites or agreements (e.g., ELA, division-specific purchases).
Gather all relevant IBM license agreements, including any special terms (for example, some enterprise agreements allow swapping products or have unique bundle rights). Once you have a consolidated view of entitlements, reconcile it with the inventory of deployed software from the previous step.
This baseline reconciliation will reveal two critical insights: compliance gaps (where usage exceeds entitlements, which is a risk) and shelfware surpluses (where entitlements exceed usage, an optimization opportunity). For our purposes, the focus is on the latter – the licenses that have been bought and paid for but are not being utilized fully.
Figure: Simplified workflow for an entitlement vs. usage review. By comparing your entitlements (owned licenses) with actual deployment data, you can identify shelfware and take action, such as optimizing or retiring unused licenses.
Compare Usage Data to Entitlements:
Once you have matched deployments with entitlements, list each IBM product in your environment, along with two numbers: the number of licenses owned and the number of licenses actively in use. Any product with a significant surplus of owned licenses over actual usage is producing shelfware.
For example, if you have 100 IBM WebSphere licenses but only 40 servers running WebSphere in production, you’re maintaining 60 extra licenses – likely paying support on them – that might never be deployed. Dig deeper into each such case: Why does the surplus exist? It could be that projects were canceled (so licenses were never deployed), or usage was downsized due to cloud migration, or an ELA was over-provisioned for certain products. Understanding the cause will inform the next steps, whether to eliminate or repurpose those licenses.
During this analysis, also verify the license metrics – specifically, IBM licenses by various metrics, such as PVUs, RVUs, users, and install counts. Ensure that the metric in use aligns with the entitlements. For instance, you might own 50 user licenses for an IBM analytics tool but only have 20 named users configured; or you might have entitlements for 100 PVUs of WebSphere, but your ILMT report shows only 50 PVUs being used on current servers.
These mismatches quantify the shelfware. Also, identify any expired or out-of-support licenses lurking in your entitlements – sometimes organizations continue to use a product but stop paying for support, which is a compliance risk rather than shelfware. The goal of the entitlement review is to obtain a clean, up-to-date Effective License Position (ELP) for IBM software: a clear mapping of what you own, what you use, and the difference between the two.
Align Licensing to Actual Needs:
With the data in hand, the CIO can formulate a plan to realign entitlements with usage. In cases where usage is far below entitlements (true shelfware), you have options: terminate the excess licenses, reallocate them to areas of need, or trade them (more on trade-in programs later). If some shelfware corresponds to products you anticipate needing in the future, note that as well. You might “reserve” a portion for future projects, but still eliminate the truly excess items.
This process often uncovers quick wins. For example, one company’s entitlement audit revealed dozens of unused licenses for an IBM development tool across various departments. By centralizing these and eliminating duplicates, they immediately reduced ongoing costs.
In another real-world case, a 9-month review of IBM licenses across 30+ sites allowed a firm to confidently cancel an IBM support contract, saving $8 million over three years. Such outcomes show the value of rigorous entitlement and usage alignment. It’s prudent to perform this kind of internal audit before IBM initiates one, not only to avoid compliance issues, but to proactively find shelfware and budget savings.
Recommendations for CIOs:
- Establish a Baseline of Entitlements vs. Deployments: Conduct a thorough entitlement review by collecting all IBM licensing agreements, Purchase Orders, and Proofs of Entitlement. Match this against the inventory of installed software to create a clear license baseline (Effective License Position).
- Identify Shelfware in the Baseline: For each IBM product, compare licenses owned to licenses in use. Mark any surplus as shelfware. Prioritize the largest gaps – these represent immediate cost-saving opportunities (e.g. dozens of unused licenses of a costly middleware).
- Address Compliance and Surplus Separately: Ensure any compliance shortfalls (where usage exceeds entitlements) are rectified or tightly managed – this mitigates audit risk. For surplus licenses, develop a plan to eliminate or repurpose them so you’re not paying for idle capacity.
- Use Measurable Data in Decision-Making: Leverage concrete data from ILMT and usage logs to support your findings. For instance, if ILMT shows an average of 50 PVUs used out of 200 PVUs purchased for WebSphere, use that data to justify reducing licenses. Data-driven insights will also strengthen your case in any negotiations with IBM or internal stakeholders.
- Engage Independent License Experts (If Needed): If your team lacks bandwidth or expertise, consider hiring an independent IBM licensing assessment firm, such as Redress Compliance. These experts can validate entitlements, monitor usage with tools, perform gap analysis, and recommend optimizations. An external review can uncover hidden shelfware and ensure you haven’t missed any opportunities.
Optimizing or Terminating Support Renewals for Unused Software
Scrutinize IBM Support & Subscription (S&S) Renewals:
IBM’s annual support (S&S) fees typically cost around 20% of the license price each year, which is significant. If you’re paying S&S for licenses that are not being used (shelfware), that’s pure waste.
Vendors like IBM often rely on customer inertia – many organizations blindly renew maintenance on all licenses, even shelfware, due to fear of losing support or facing reinstatement penalties. CIOs must break this cycle by challenging each line item in the renewal. Before the renewal quote is due, perform an internal usage audit (as described above) to identify which products (and how many licenses) are truly needed going forward.
It is far easier to remove or reduce licenses before you pay the renewal than after. IBM’s renewal quotes may bundle multiple products together; insist on a breakdown and focus on those that qualify as shelfware. Do not be deterred by scare tactics – IBM might warn that if you drop support now, reinstating it later could be very expensive.
While reinstatement fees (often 50% or more of back support costs) are real, the key question is: will you need those licenses again? For shelfware that is truly no longer needed, paying for support “just in case” is usually more costly than any future reinstatement. In essence, don’t pay 100% every year for a 5% chance of usage later. Instead, free up that budget now.
Use Hard Data to Decide What to Cut or Keep:
When approaching renewals, categorize your IBM products into tiers: Must-Haves (critical software you use heavily – renew these, possibly even securing multi-year discounts), Optional (used sparingly or could be replaced – scrutinize these closely), and Retire (not used at all – strong candidates for dropping from support). For each product in the Optional or Retire category, quantify how many licenses are underutilized.
For example, if you have 500 IBM Security licenses but only 100 active users, you might choose to renew support for just 150 (to allow some growth) and drop the other 350. Begin these discussions internally early, as you may need to get approvals to let certain licenses lapse. Build a business case: show the support cost savings versus the low utilization. Often, the savings are compelling – for example, dropping maintenance on a $500,000 unused IBM software license saves around $100,000 per year.
As noted by a Redress Compliance guide, “why pay 20% of license cost each year on something you barely use?”. If a particular software’s future is uncertain (maybe it’s needed in 2 years for a project but not now), you have a few options other than full renewal: one is to suspend or “park” licenses – negotiate with IBM to temporarily not pay S&S on those licenses until they’re needed (IBM may or may not allow this, but it’s worth asking).
Another approach is a partial renewal: renew a smaller number of licenses that cover current usage and drop the rest. IBM historically hasn’t allowed partial drops mid-contract without penalty, but at natural renewal points (especially under Passport Advantage’s terms), you can reduce quantities in the future. Ensure that you give IBM notice if required by contract for non-renewal of specific licenses.
Consider Third-Party Support or Alternate Coverage:
An increasingly common, yet aggressive, tactic is moving support for legacy IBM software to third-party providers. Companies like Origina claim to support many IBM products at roughly 50% of IBM’s cost. Third-party support typically covers bug fixes and helpdesk for current versions but cannot provide new IBM versions.
If you have IBM shelfware that you still use sparingly but can’t justify full IBM support, third-party maintenance can be a way to save money while keeping the software running. Even if you don’t intend to go with a third-party, obtaining a quote can provide leverage. For instance, if IBM proposes a 7% increase in support fees this year, showing that a third-party would do it for half the price is a powerful negotiation chip.
Some CIOs have successfully used this to pressure IBM into offering discounts or, at least, to selectively drop certain products from IBM’s support. Be cautious: dropping IBM S&S means losing upgrade rights to new versions and potentially requiring an expensive reinstatement if you decide to return later.
Thus, third-party support makes the most sense for stable, mature software that you don’t plan to upgrade (or that IBM has placed in extended support). Examples might be older versions of WebSphere, Notes/Domino, or Tivoli products that fulfill their role without needing the latest features.
Negotiate Renewal Terms in Your Favor:
Engage IBM in renewal discussions with a strategic mindset. If you’re making a large renewal payment, ask for concessions, such as price protections (capping annual S&S increase to 3% or CPI)and flexibility to terminate unused licenses at renewal or transfer those fees to other IBM products.
In enterprise agreements, try to include the right to drop or swap entitlements at defined intervals – even if IBM resists, it signals that you won’t pay for unused resources indefinitely. Leverage any upcoming new IBM purchases as well: for example, “We’ll renew these three products if you agree to cancel support on these two shelfware products without penalty.”
IBM sales teams may accommodate such requests if it means securing new revenue. Always align with your procurement and legal teams to ensure that any changes are properly documented, so you aren’t billed for something you intended to drop.
Recommendations for CIOs:
- Audit Usage Before Renewal Time: Proactively review IBM license usage 3-6 months ahead of support renewal dates. Identify which products (and how many licenses) can be reduced or eliminated from the renewal. This preparation allows informed negotiations rather than rushed last-minute decisions.
- Cancel Support for True Shelfware: Do not renew maintenance on licenses that your analysis shows are not in use. Communicate to IBM which licenses you are dropping. Accept the trade-off that if you ever need them again, you might pay a reinstatement fee – but in many cases, the cumulative savings outweigh that risk.
- Negotiate Flexible Renewal Terms: When renewing, seek terms that allow adjustment. For example, negotiate the right to reduce license counts at the next renewal if usage drops, or to apply unused support value toward other IBM products (“substitution” rights). Ensure any multi-year deals have caps on support fee increases to prevent creeping costs.
- Leverage Third-Party Support Options: If IBM’s renewal quote is exorbitant for certain legacy products, obtain quotes from third-party support providers. Use this as leverage with IBM: “Match this price or we’ll switch.” Where it makes sense, move non-critical systems to third-party support at lower cost, especially if the software version is stable and you don’t need IBM’s upgrades.
- Document Everything: Keep thorough records of the licenses you choose not to renew, along with formal confirmation from IBM. This avoids confusion later (for example, being billed accidentally). Also, track the savings achieved by trimming shelfware – demonstrating, for example, a six-figure annual cost reduction helps reinforce the value of active license management internally.
Leveraging IBM License Conversion and Trade-In Programs
Modernize to Eliminate Shelfware:
IBM, like many vendors, offers programs to help customers modernize their licenses, often turning older, unused licenses into newer solutions. A prime example is IBM Cloud Paks, which are containerized software bundles that include many IBM products under a unified license model.
IBM Cloud Paks enable clients to move away from legacy licensing metrics, such as PVUs or component-based licenses, to a more flexible Virtual Processor Core (VPC) metric and offer mix-and-match capabilities on demand.
From a shelfware reduction perspective, Cloud Paks can be a boon: they often let you consolidate multiple older product entitlements into a single pool that can be used for whichever tools you need. For instance, suppose you have some legacy IBM middleware licenses that are barely used, and you have newer integration needs.
Rather than buying new licenses while old ones languish, IBM might allow you to “trade up” those unused licenses into a Cloud Pak that covers both old and new functionality. A real-world case, described by SoftwareOne, illustrates this: a financial institution had IBM Business Automation Workflow licenses they planned to retire (which would become shelfware), but needed FileNet licenses going forward. IBM’s Cloud Pak for Automation enabled the customer to upgrade their Business Automation entitlements into Cloud Pak entitlements, which include FileNet.
This way, they avoided buying new FileNet licenses and prevented the old Workflow licenses from turning into shelfware – effectively repurposing their investment into what the business needed. CIOs should look for such win-win conversion opportunities.
Explore Trade-In and Upgrade Programs:
IBM’s licensing has formal provisions for migrations, sometimes referred to as entitlement conversion or license trade-up. Under these programs, you might exchange an entitlement for one product for credits or entitlements toward a newer product. For example, IBM has offered trade-ups from older Cognos or TM1 licenses to the modern Planning Analytics subscription, as well as from WebSphere Application Server to the newer Cloud Pak for Integration licensing.
IBM typically provides conversion ratio tables (e.g., one old license = X new license credits). Engaging IBM or an IBM business partner to calculate a conversion can reveal that, say, those 50 unused licenses of Product A could be converted into 10 licenses of Product B that you plan to use.
This can significantly reduce waste – it’s essentially “recycling” shelfware into productive software. Keep in mind that conversions often require an additional purchase or a shift to a new licensing model (such as cloud subscriptions), but IBM may offer promotional pricing to ease the transition.
Align Conversions with Roadmap:
License conversion opportunities are most valuable when they align with your technology roadmap. If you plan to modernize applications or move workloads to the cloud or containers, then converting old licenses to Cloud Paks or cloud credits accomplishes two goals at once. You reduce shelfware and advance the strategic initiative.
IBM often positions Cloud Paks as a way to future-proof investments – for example, converting to a Cloud Pak gives you the option to deploy in containers or on Red Hat OpenShift in the future. Even if you don’t use that capability on day one, it ensures that those licenses won’t become obsolete shelfware, because you can redeploy them in modern environments when you’re ready.
Negotiate Credit for Unused Software:
In situations where you have significant shelfware that you simply want to get rid of, consider negotiating a credit or buy-back as part of new deals. While IBM will not usually refund licenses, they might provide an extra discount or credit on new purchases if you agree to terminate some existing licenses. Industry analysts have noted three common approaches to deal with shelfware in vendor negotiations: return, park, or trade.
Returning unused licenses means the vendor cancels them and reduces your support costs accordingly; you lose the rights to them. “Parking” means the vendor lets you hold licenses without paying support until you need them again (rare, but some have achieved it). “Apply credit” means the vendor gives you a credit value for shelfware licenses that you can apply toward new software , essentially trading them in.
With IBM, a trade-in credit might come into play if, for example, you’re adopting a new IBM Cloud service: you could say, “We have $X of unused licenses, we’d like to terminate those and use that spend towards this new solution.” IBM sales reps have some flexibility, especially if it means shifting you to strategic offerings, such as cloud or AI. By raising the issue of shelfware in negotiations, you signal that you expect value for every dollar, either in useful software or not at all.
Recommendations for CIOs:
- Evaluate Cloud Pak Conversions: Review IBM Cloud Pak offerings to see if they can absorb your legacy products. Converting to a Cloud Pak can let you use your existing entitlements for the functionality your business needs, preventing those licenses from going idle. Analyze IBM’s conversion ratios and ensure the math makes sense for you.
- Map Shelfware to Current Needs: For each chunk of shelfware identified, ask if there is an IBM alternative or newer product that fulfills a current need. If so, consider approaching IBM about trade-in programs. For example, unused BPM licenses could potentially be converted into a Cloud Pak that your developers can use for new projects.
- Incorporate Shelfware Trade-In in Deal Negotiations: When making a significant IBM purchase or renewal, bundle the discussion of shelfware. E.g., “We will commit to this new multi-year deal, if we can terminate these legacy licenses without penalty or with a credit applied.” This frames it as a win-win: IBM gets a new sale, and you clean up unused licenses.
- Validate Cost-Benefit: Before converting licenses or trading in, compare the cost of conversion (if any) versus the status quo. Ensure that the move indeed reduces your total cost of ownership. The aim is to stop paying for what you don’t use, so any conversion should either lower costs or at least increase the utility of the spend (more value for the same cost).
Reducing IBM License Sprawl and Contract Consolidation
Rationalize and Consolidate the IBM Footprint:
Large organizations often suffer from license sprawl – IBM software deployed in an uncoordinated fashion, spread across multiple contracts and purchasing units. This can lead to duplicate software fulfilling the same function and a maze of support agreements renewing at different times.
CIOs should spearhead a portfolio rationalization: assess which IBM products are truly needed and eliminate redundant or outdated ones. If two departments use different IBM tools for similar purposes (such as two monitoring tools or two analytics platforms), evaluate whether one can be phased out.
The goal is to streamline to a set of IBM products that maximally cover business needs with minimal overlap. This reduces the overall number of licenses and contracts you have to manage. It’s not uncommon to discover, for example, that an organization has both IBM Business Intelligence and another IBM-acquired analytics tool running concurrently due to historical silos – an opportunity to standardize on one and drop the other’s cost.
Additionally, check for products that IBM has divested or deprecated. IBM has sold off certain software, such as Notes/Domino, to HCL and introduced new replacements for others. If you’re still hanging on to a soon-to-be-obsolete IBM product, it might be better to move off it on your own
Consolidate Contracts, But on Your Terms:
Bringing all IBM licensing under one master or a few coordinated agreements can yield cost benefits and administrative simplicity. IBM’s Enterprise License Agreement (ELA) or Enterprise Subscription Agreement is one vehicle: a multi-year, enterprise-wide contract covering many products. An ELA can indeed simplify procurement (with one negotiation and one renewal date) and potentially save money through volume discounts.
However, as Gartner and others warn, an ELA is a double-edged sword if not managed carefully. Vendors often bundle some shelfware into ELAs under the guise of a “good deal.” As a CIO, insist that any consolidation excludes products you don’t plan to use. Negotiate the scope of the ELA to cover your known needs and avoid a grab-bag of extra software “just because it’s discounted.” Otherwise, you risk paying a fixed fee for a bunch of shelfware.
One CIO shared that an IBM ELA with a 50% discount sounded great until she realized half the included products were non-essential, leading to years of maintenance on unused software. To combat this, negotiate clauses that allow you to remove or swap out unused components in an ELA at certain checkpoints. Also, if you consolidate, ensure co-termination of support – all key licenses renewing on the same date – so you can review everything holistically and not miss chances to cut shelfware.
Centralized License Management Governance:
Organizationally, manage IBM licenses in a centralized or at least coordinated manner. If each department negotiates with IBM separately, you’ll likely end up with overlapping entitlements and less bargaining power. Establish an internal IBM license governance committee or asset management function that oversees all IBM software requests.
This team can enforce standards: e.g., if someone wants to buy a new IBM analytics tool, the team checks if an existing entitlement can be repurposed instead. Governance can also track usage enterprise-wide and reallocate licenses where needed (a form of internal recycling).
By treating IBM licenses as a shared asset pool rather than isolated per-project purchases, you reduce the chance of shelfware accumulating unnoticed in one corner while another group needs licenses. Regular internal audits (at least annually) should be institutionalized to keep the IBM environment optimized. SAM tools can assist by providing reports on license usage across all units – a centralized dashboard can spotlight low-utilization deployments for review.
Leverage IBM Volume Discounts, But Avoid Overbuying:
As you consolidate, you’ll likely reach higher discount tiers in IBM’s Passport Advantage program or qualify for enterprise pricing. IBM’s standard volume discounts can be as high as 20% at the highest tier, and deeper discounts (50% or more) are often offered in large deals.
Use this to your advantage, but remain cautious: don’t let the allure of a bulk discount prompt you to buy more licenses than you need. It’s better to pay for 100 licenses at 50% off that you will use, than 200 licenses at 70% off when half will sit unused – shelfware at 70% off is still waste.
In negotiations, be upfront that you aim to eliminate shelfware. IBM might propose a big bundle; respond with a request to itemize and justify each component, and remove those that aren’t tied to a concrete usage plan.
By controlling the narrative – “we only invest in what we use” – you set the tone that shelfware will not be tolerated. Also, consider multi-year consolidated agreements to lock in savings only if they include flexibility. For instance, a 3-year deal should allow you some room to reduce licenses if you divest a business unit or if a product truly isn’t needed mid-term. Build those provisions in writing.
Figure: Illustration of the software license lifecycle – from acquiring entitlements to deployment, monitoring usage, and eventually renewing or retiring licenses. Effective IBM license management treats it as a continuous cycle, ensuring that at renewal time, you retire or repurpose what is not needed, rather than letting shelfware persist.
Recommendations for CIOs:
- Rationalize the IBM Portfolio: Perform a functional overlap analysis of IBM tools in your organization. If multiple products address the same need, choose one as the standard and plan to phase out the others. This reduces duplicate spend. Likewise, identify any legacy IBM software that is no longer aligned with your IT strategy and formulate a retirement plan for it.
- Consolidate Contracts Deliberately: Aim to consolidate disparate IBM contracts into a unified agreement or a few coordinated agreements to increase bargaining power and simplify renewals. However, be selective – don’t bundle software you have no intention of using. Negotiate the removal of “nice-to-have” extras from any enterprise deal. The consolidated contract should reflect your actual needs, not the vendor’s full catalog.
- Ensure Flexibility in Enterprise Agreements: When entering an ELA or similar, include terms that protect you: the ability to remove or swap unused licenses at renewal, caps on support escalations, and clarity on how divestitures or mergers affect license counts. This prevents being locked into paying for shelfware over the long term.
- Centralized IBM License Oversight: Establish a centralized Software Asset Management (SAM) function or a steering committee for managing IBM licensing. This team should approve new IBM software acquisitions (to prevent unnecessary buys), track usage across the enterprise, and lead annual internal license audits. A single source of truth for IBM licenses will catch sprawl and shelfware much faster.
- Coordinate Renewal Timing: Try to align major IBM license renewals to occur around the same time. Co-termination allows you to evaluate the total IBM spend in one cycle and redistribute or cut licenses holistically. It also gives you a bigger negotiation event where you can trade one thing for another. Staggered, isolated renewals can lead to auto-renewing shelfware because they often go unnoticed.
