Contents
Key takeawaysHow the PVU metric worksSub capacity rulesILMT and auditsWhat we have seenPVU to VPC transitionAnswering IBMCutting cost at renewalWhat to do nextFAQProcessor Value Units price most IBM software by the core, scaled by chip type and server model. Your sub capacity savings depend on ILMT reports filed on time for every server in scope.
- Count by core. PVUs are the core count multiplied by IBM's rating for that processor, and most cores rate 70 to 100.
- Sub capacity is conditional. Licensing only allocated virtual cores often saves 40 to 70 percent, but only on eligible hypervisors with ILMT running.
- ILMT is the evidence. IBM requires ILMT within 90 days of the first sub capacity deployment, quarterly reports and two years of retention.
- Gaps become full capacity. A server that stops reporting is counted at every core in its cluster, often several times the true figure.
- Negotiate quantity. Per PVU rates rarely move, so savings come from shelfware, retired deployments and correct sub capacity counts.
- Convert to VPC selectively. Price PVU against VPC for each product and convert at renewal, not as a blanket decision.
How does the IBM PVU metric work?
A Processor Value Unit is IBM's per core unit of processor capacity. IBM gives every processor core a PVU rating based on the chip family and server model, and you license that rating multiplied by the cores available to the software. Most cores rate 70 to 100 PVUs.
The ratings are published in the PVU table in the IBM Passport Advantage documentation, and we keep a working copy in our 2026 PVU table guide. IBM's own example is a two socket Intel Xeon server with 6 cores per socket: 12 cores at 70 PVUs each, or 840 PVUs.
PVU ratings by processor family
- Intel Xeon and AMD EPYC. Typically 70 PVUs per core, which covers most modern x86 servers with up to two sockets. Intel Xeon cores on four socket servers rate 100, and on servers with more than four sockets they rate 120.
- IBM POWER. The rating follows the server model and socket count. Enterprise POWER10 servers rate 100 to 120 PVUs per core (the E1050 at 100, the E1080 at 120), while scale out models such as the S1022 and S1024 rate 70.
- IBM Z and LinuxONE. z/OS software is priced in MSUs under separate mainframe terms, not PVUs. IBM software on Linux running on IFL engines does use PVUs: 120 per engine on the larger models such as the z16 A01, and 100 on smaller ones such as the z16 A02.
Hardware refreshes change the rating. Moving a product from two socket to four socket Xeon servers raises every core from 70 to 100 PVUs, so check the table before infrastructure teams order new hosts. Our guides to POWER and AIX licensing and the MSU calculator cover the other two platforms.
Which cores count toward the PVU total?
Choosing the cores is where most customers make their first error. You license the cores where the software can run, which is not always where it runs today.
On a physical server that means every activated core. On a virtualized cluster it means every core in the cluster unless you qualify for sub capacity licensing, which is why ILMT decides so much of the bill.
When do IBM sub capacity rules cut the PVU count?
Sub capacity licensing allows you to license the virtual cores allocated to IBM software instead of every core in the host or cluster. On virtualized infrastructure the saving is often 40 to 70 percent. It holds only while you meet the conditions in IBM's sub capacity terms.
Miss a condition and IBM reverts the affected product to full capacity. You then owe licenses for every core on every host the virtual machine could have run on, which is where the largest audit claims come from.
What does IBM require to qualify for sub capacity?
- Eligible virtualization. The hypervisor must be on IBM's eligible virtualization technology list. VMware vSphere, Microsoft Hyper-V and IBM PowerVM are on it. A technology missing from the list is licensed at full capacity.
- ILMT within 90 days. IBM requires the License Metric Tool to be running within 90 days of your first sub capacity deployment, discovering every server in scope.
- Reports every quarter, kept for two years. Quarterly is the longest interval IBM allows. Monthly is ILMT's default reporting period and the safer habit.
- A current version of ILMT. The terms require you to install ILMT updates promptly after IBM releases them.
- No small company exception. Customers with fewer than 1,000 employees and contractors, and less than 1,000 PVUs of total server capacity, used to be allowed manual tracking. IBM stopped accepting new exceptions on May 1, 2023, and manual reporting ended on January 1, 2024.
How much does the licensing basis change the count?
| Scenario | Licensed cores | Relative PVU cost |
|---|---|---|
| Sub capacity, ILMT current | Virtual cores allocated | Baseline |
| Sub capacity, ILMT lapsed | All cluster cores | 8 to 15x |
| Full capacity, no virtualization | All physical cores | 4 to 8x |
| Capped partition, ILMT current | Capped vCPU | Baseline or lower |
A worked example on a VMware cluster
Say you run an IBM middleware product in two virtual machines of 8 vCPUs each. They sit on a four host VMware cluster, and each host is a two socket Intel Xeon server with 16 cores per socket. The cluster therefore has 128 cores, each rated at 70 PVUs.
| Basis | Cores counted | PVUs required |
|---|---|---|
| Sub capacity, ILMT reporting | 16 vCPUs | 16 x 70 = 1,120 |
| Full capacity, ILMT lapsed | 128 physical cores | 128 x 70 = 8,960 (8 times the sub capacity figure) |
| Difference | 112 cores | 7,840 extra PVUs |
The 8,960 figure is where an auditor starts if ILMT stopped reporting on those hosts. The claim would cover 7,840 extra PVUs plus back support, for a product that never ran on more than 16 vCPUs.
What does ILMT require, and how do IBM audits use it?
The IBM License Metric Tool is the evidence that earns sub capacity pricing. Without current ILMT data, IBM's default audit position is full capacity. The tool and its obligations are set out in the ILMT product documentation, and our ILMT sub capacity guide covers setup.
An IBM audit almost always opens with a request for ILMT data, usually the audit snapshot export. The auditor compares discovered deployment against your Passport Advantage entitlements. Gaps in coverage drive more findings than real overuse. Our guide to the IBM audit process walks through each stage.
How to check your own ILMT position
- Coverage. Compare the ILMT computer list with your CMDB and vCenter inventory. Every server that runs IBM software should appear with a recent scan date and no failed agent.
- VM manager connections. ILMT needs working connections to vCenter or Hyper-V to see host capacity. An expired service account leaves capacity data incomplete for every virtual machine on those hosts, and an auditor reads that as a gap.
- Software bundling. ILMT discovers components, and you confirm which licensed product each belongs to. Unconfirmed bundling can charge a shared component to the wrong, more expensive product.
- Report archive. Confirm a report exists for every quarter of the last two years, stored somewhere other than the ILMT server.
- Reconciliation. Match each product's PVU peak against entitlement in Passport Advantage Online before every renewal.
Where most exposure hides
Most exposure builds up after ILMT goes live. A new cluster is added without a VM manager connection, a virtual machine template is cloned without the agent, or a scan schedule is disabled during a migration and never restored. Our audit defense kits list the checks we run, and the audit defense service covers the response once a notice arrives.
What have we seen in recent IBM PVU reviews?
Between 2024 and 2025 our IBM team reviewed roughly 30 to 45 Passport Advantage customers. The same three failure points came up in most of them, and each carried a measurable cost.
- Lapsed reporting. ILMT was deployed, but reporting had lapsed on 20 to 35 percent of in scope servers, reopening full capacity exposure on each of them.
- Shelfware. Between 15 and 30 percent of the PVU entitlement was paid for at renewal and never deployed.
- Full capacity fallback. Where it applied, the disputed claim ran 8 to 15 times the true sub capacity number on the affected products.
One audit shows how much of that exposure can be reversed. It opened with an ILMT data request. We ran a pre audit health check, fixed three agent gaps and reconciled entitlement to deployment, and the full capacity exposure fell from twelve million to under two million before settlement. Our case studies describe other IBM outcomes.
The exposure is rarely a license you forgot to buy. It is usually an agent that stopped reporting on a host that kept running the product.
Why we advise against a blanket VPC conversion
A common reseller recommendation is to convert everything to VPC and let ILMT run itself. We disagree with both parts. In the accounts we reviewed, ILMT coverage gaps had reopened full capacity exposure on a fifth to a third of servers while everyone assumed the tool was fine.
Blanket conversion also locked in cost on stable workloads that would have been cheaper on PVU for one more cycle. Check ILMT coverage first, then model conversion product by product, and treat neither step as a default.
How should you handle the PVU to VPC transition?
Treat conversion as a negotiation item and decide it product by product at renewal. IBM has been moving much of its catalog from PVU to Virtual Processor Core, visible across the IBM software catalog, and we expect the shift to run through 2027 for most Software Group products.
A VPC is one vCPU assigned to a virtual machine, or one physical core on a server that is not virtualized. There is no chip rating, and the count across virtual machines is capped at the host's physical cores. That makes VPC simpler to manage on virtualized infrastructure.
Conversion decision points
- Price both metrics. Compare PVU and VPC cost for each product using your measured vCPU counts, not IBM's sizing estimate.
- Time it to renewal. Convert when it resets a better support baseline, with the credit stated in writing.
- Watch Cloud Paks. Bundled VPC entitlements can hide what each component consumes. Our Cloud Pak VPC overview covers how bundled entitlements are counted.
- Confirm the tooling. VPC products on virtual machines are still measured by ILMT. Container deployments on Kubernetes or OpenShift must report through IBM License Service, under the same 90 day, quarterly and two year rules.
Conversion is not automatic, and any credit IBM offers for the PVUs you give up is negotiable. Our PVU to VPC transition guide sets out the conversion in more detail.
Red Hat and OpenShift overlap
Stacked IBM and Red Hat OpenShift deployments track separate metrics. OpenShift is a Red Hat subscription counted by cores, while the IBM software on top follows its own VPC terms. Pull both reports every month and reconcile each at renewal so neither falls back to a default position. Our IBM and Red Hat audit guide covers the overlap.
What will IBM's account team say, and how should you answer?
Expect IBM to press on four points: ILMT gaps, fixed PVU rates, conversion credits and the cost of reinstating support. These are the lines we hear most often in renewals and audit settlements, with the reply we recommend.
- "Your ILMT data has gaps, so full capacity applies." Ask for the specific servers, products and quarters in question. Supply your retained reports for everything else, and use vCenter or Hyper-V allocation history to show the real vCPU count during the gap.
- "PVU rates are set globally, so there is no room on price." Accept that unit rates rarely move and negotiate quantity instead: shelfware dropped from support, retired deployments and the conversion baseline.
- "Convert to VPC or a Cloud Pak now and we will credit your PVUs." Ask for the credit value, the support price after conversion and the uplift at the following renewal, per product and in writing.
- "If you drop support on those parts, reinstating it later costs more." That is accurate, because IBM charges a premium to reinstate lapsed support. Drop only entitlement with no deployment and no planned use.
- A cure period for ILMT gaps. A written window to produce missing reports and deployment evidence before full capacity applies turns a lapse into an administrative fix.
- Audit notice and scope limits. Named products, the current term and a notice period keep an audit from widening. See our note on audit clause redlines.
- A renewal uplift cap. A ceiling on annual support increases protects the savings you negotiate. See uplift cap language.
- Conversion protection. When PVUs convert to VPC, the support basis and any credit should carry into later renewals.
How do you cut PVU cost at an IBM renewal?
You reduce the quantity you pay support on. Per PVU rates are set centrally, so the savings come from applying sub capacity everywhere you qualify, retiring deployments, dropping shelfware from support and using non production parts where a product offers them.
IBM's Passport Advantage terms require support on every installed use of a program. You can only drop support on entitlement that is not deployed, which is why an accurate ILMT peak comes before any reduction request.
A shelfware example
Say you hold 10,000 PVUs of an IBM database product under support, and ILMT shows a peak of 7,500 deployed over the last four quarters. The other 2,500 PVUs, a quarter of the entitlement, renew every year for software you do not run.
Dropping those 2,500 PVUs from the renewal cuts that product's support line by 25 percent from the next anniversary. The licenses stay yours. If you later deploy them, you pay reinstatement, so keep a margin for planned growth. Our shelfware reduction guide and cost optimization service cover the wider review.
How the work changes with size and platform
- A few IBM products on one cluster. One ILMT server, one VM manager connection and a quarterly report filed with procurement. The main risk is that no one owns the tool once the person who installed it leaves.
- Hundreds of hosts across data centers and cloud. Several VM managers, bundling for dozens of products, and public cloud workloads under IBM's Eligible Public Cloud BYOSL policy, which has its own counting rules. The risk here is drift between configuration reviews.
- Heavy POWER or IBM Z use. Partition capping on PowerVM and IFL counts on Linux on Z decide most of the bill, so review partition settings with the same care as ILMT.
| Time before renewal | What to do | Why it matters |
|---|---|---|
| 12 months | Check ILMT coverage against inventory, repair VM manager connections, confirm bundling | Gives you four clean quarterly reports before the quote arrives |
| 6 months | Reconcile each product's PVU peak against entitlement, list shelfware, price PVU against VPC | Identifies reduction and conversion candidates while there is time to test them |
| 3 months | Request the renewal quote and send IBM your reduction list and conversion terms | Changes to parts are easier before the quote is finalized |
| 1 month | Check the final quote line by line, confirm credits and uplift in writing, archive the reports | Catches parts carried forward without discussion |
What to do next
- This quarter. Confirm ILMT is deployed and reporting on every in scope server, including hosts added since the last review.
- Next. Pull the latest ILMT report and reconcile discovered PVUs against your Passport Advantage entitlement.
- Exposure. Flag any product running at full capacity and quantify the gap in PVUs.
- Shelfware. Identify undeployed PVUs and put them on the reduction list for the next renewal.
- Conversion. Price PVU against VPC for each product before agreeing to convert.
- Evidence. Build a clean baseline and keep two years of reports before any audit notice arrives.
- Get help. If you want an independent review, our IBM advisory practice and licensing consultants work for buyers only. The Renewal Program, Benchmark Program and Vendor Shield cover ongoing vendor negotiation, our white papers go further on IBM, and you can contact us directly.
Want a second opinion on your IBM position? Our IBM licensing consultants are ex IBM insiders who now work only for buyers.
Frequently asked questions
Does every IBM product use PVUs?
No. Some IBM products use named user, authorized user, RVU or per server metrics, and newer ones use VPC. The PVU model covers most IBM Software Group products that run on processors, so confirm the metric on each part number in Passport Advantage before you count anything.
What happens if ILMT reports lapse for a quarter?
IBM's default audit position becomes full capacity for the lapsed period, on every product those servers ran. Recovery means redeploying ILMT and producing retroactive reports, which IBM auditors sometimes accept and sometimes do not. Hypervisor allocation history for the same period is the best supporting evidence you can add.
Should we convert all PVU products to VPC?
Not automatically. Most enterprises convert at the next renewal cycle because VPC is easier to track on virtual machines. Pick the conversions that lower total cost of ownership; products on stable hosts can cost less on PVU for one more cycle.
Can we negotiate PVU rate reductions?
Rarely. IBM sets PVU rates centrally. The room to negotiate is the quantity: applying sub capacity, reducing deployments and dropping shelfware. A VPC conversion can also reset the pricing baseline, which is a reason to time it to a renewal.
What if we run mixed PVU and VPC products?
Most enterprises will during the transition years, and the two metrics are tracked separately. ILMT covers PVU products and VPC products on virtual machines, while containerized VPC products report through IBM License Service. Produce both sets of reports monthly and reconcile them against entitlement at renewal time.
How far back can an IBM audit look?
Audit clauses typically allow a look back across the current term and sometimes prior terms. In practice the limit is your records, and two years of retained ILMT reports is what supports your sub capacity claim for that period.
Does ILMT cover Red Hat OpenShift?
Not for licensing. OpenShift uses its own core based subscription metric, separate from Passport Advantage products. ILMT may discover OpenShift, but the subscription is counted independently, and enterprises running both reconcile each metric on its own schedule.
When is the best time to fix PVU exposure?
Before an audit notice and before a renewal quote. A clean baseline built without an audit clock running costs less to produce and holds up better. Most of our engagements deliver the first 10 to 20 percent of savings inside three months.