IBM User-Based Licensing – Enterprise IT Advisory
Executive Summary:
IBM User-Based Licensing ties software costs directly to the number of users who access a given IBM product.
For IT asset management (ITAM) professionals at global enterprises, understanding this model is critical to controlling spend and ensuring compliance.
By aligning license counts with actual users (instead of hardware capacity), organizations can achieve more predictable costs – but only if they manage user entitlements diligently and negotiate terms that fit their usage patterns.
Why User-Based Licensing Matters in IBM
IBM’s licensing options range from capacity-based metrics (like PVUs tied to processor cores) to user-based models.
IBM user-based licensing is important because it aligns software value with people using the software, rather than the servers it runs on.
In environments where the business value of IBM software correlates to individual access (for example, collaboration tools or analytics used by specific staff), a user-based model can be more intuitive and fair:
- Cost tied to actual users: You pay for the number of users who need the software, making budgeting straightforward as headcount or usage grows. This can prevent paying for unused server capacity in scenarios where user count is the true driver of value.
- When it’s beneficial: IBM user-based licensing works best when access needs vary by person. For instance, a business intelligence tool used by 50 analysts is sensibly licensed per user, whereas an integration server that handles workloads might be better on a CPU-based metric.
- Clarity and accountability: Each license is attributable to a specific user or concurrent usage slot. This clarity helps ITAM teams track who (or how many people) are consuming an entitlement, which aids in compliance tracking.
Insight: Enterprises with many occasional users may find user-based models (especially concurrent licensing) more cost-effective than licensing every potential user.
On the other hand, environments with a stable set of power users are well-suited to per-user licensing.
The key is to match IBM’s licensing metric to your organization’s usage pattern.
Key IBM User-Based License Types
IBM offers multiple user-based licensing metrics to fit different scenarios.
ITAM professionals should understand the nuances of each type, as choosing the right one can significantly impact cost and compliance:
- Authorized User (Named User): A license purchased for each unique individual who is given access to the software. Each Authorized User license is dedicated to one person and cannot be shared. Even if that user rarely uses the software, they still require their entitlement. Example: If 100 employees need access to an IBM tool like Cognos or Notes, you must have 100 authorized user licenses (one per person). This model guarantees that every licensed user can use the software at any time. However, you must track staff changes – when someone leaves or no longer needs access, reassign that license (permanently) to another user rather than buying new licenses unnecessarily.
- Concurrent User: Licensing based on the maximum number of users using the software simultaneously. You can create a pool of allowed concurrent uses, usually enforced by a license server or software counter. Example: If you have 500 total potential users of IBM SPSS, but at most 50 use it at the same time, you could buy 50 concurrent user licenses. This allows any 50 of the 500 to use the software concurrently. Concurrent licensing is effective when individuals use the software infrequently or in shifts, as it allows you to cover a large population with fewer licenses. Key considerations: Monitor peak usage to ensure your license count covers the busiest periods. Also, use IBM’s license manager tools (like ILMT, LUM or FlexLM, depending on the product) to enforce the concurrent limit and log usage for compliance.
- Floating User: Similar to concurrent licensing, a floating license is a shared pool that users draw from. The term “floating” implies a license is not fixed to a single user; instead, any user can temporarily consume a license when they run the software, and it returns to the pool when they log off. Some IBM Rational and engineering tools use floating licenses. This maximizes utilization in environments where users need the software at different times. However, like concurrent licenses, all active use at a given moment must stay within the purchased license count – and a license server is typically required to manage check-outs and ensure no more than the allowed number of users are active.
- User Value Unit (UVU): A more complex metric where users are weighted differently based on role or usage level. For example, an admin user might be counted as 1 UVU, whereas a read-only user is counted as 0.5 UVU. You calculate the total UVUs by summing up all user weights, and purchase that number of UVU entitlements. Example: IBM Rational DOORS might specify that a full-use license = 1 UVU and a read-only license = 0.5 UVU. If you have 50 full users and 200 read-only users, you need 501 + 2000.5 = 150 UVUs. UVU licensing lets you tailor costs to the intensity of each user’s usage. It’s flexible but adds complexity – you must correctly categorize users and keep track of different user types.
Each of these licensing types falls under the umbrella of IBM user-based licensing, but they serve different needs. Authorized User is simple and ensures dedicated access; Concurrent/Floating provides flexibility and economy for large user pools; UVU offers granular fairness by matching cost to usage level.
Actionable Takeaway: Match the metric to your usage pattern. If only a subset of users is online concurrently, consider concurrent or floating licenses to reduce the quantity.
If every user requires constant access, authorized user licenses may be more suitable. For products with tiered usage roles, UVU can save money by not charging the full price for read-only or light users.
Always consult the specific product’s License Information document to see which metrics are available and how IBM defines each user type.
Cost Drivers and Budgeting Considerations
With user-based licensing, the primary cost driver is the number of users (or user capacity) you license.
However, enterprises should be aware of several factors that affect cost and budgeting under IBM user-based licensing:
- Total Users vs. Concurrent Users: Authorized user licensing costs scale linearly with headcount – every additional person who needs access will require budget for another license (plus annual support). In contrast, concurrent licensing costs scale with peak usage; you budget for the maximum simultaneous users. This means you must understand your usage patterns. Example: 200 authorized user licenses might cost more than 50 concurrent licenses if, for instance, only 25% of the users are active at any given time. However, if usage increases and more people start working concurrently, you may need to purchase additional concurrent licenses, which would narrow the cost advantage. Forecast your peak needs to avoid under-budgeting for concurrent entitlements.
- User Growth and True-Ups: Plan for how the user count may grow over the license term. IBM typically sells perpetual licenses with annual support, or term licenses/subscriptions that might be true-upped (adjusted) at renewal. If you anticipate adding users, negotiate pricing for additional users up front or ensure you have a budget to accommodate growth. Conversely, if consolidating or downsizing, consider negotiating flexibility to reduce counts at renewal (especially for subscriptions or Enterprise License Agreements). IBM user-based licenses in a subscription/ELA context may allow for annual adjustments, but only if specified in the contract. Budget tip: Try to align license quantities with actual use each year – avoid gross overbuying “just in case,” but also leave some buffer if adding users mid-term requires immediate compliance.
- Support & Maintenance Fees: IBM charges annual Support (S&S) on licenses (typically around 20% of license cost per year for perpetual licenses). These fees will increase your ongoing budget. For user licenses, as the user count grows, so does the total support cost. Keep an eye on IBM’s standard uplift (often ~5-7% per year) – without negotiation, support fees can compound quickly. Pro tip: Negotiate a cap on S&S increases (e.g., no more than 3% annually) to manage long-term costs effectively. Also, remove unused licenses from support when possible (for perpetual licenses, if you decommission a user or a product module, you might be able to drop those licenses from the support renewal at anniversary – ensure contract terms allow this).
- Volume Discounts: Under IBM’s Passport Advantage program, buying more at once can push you into higher discount tiers (Level A, B, C, D). Cost driver: The more licenses (or higher total purchase value) you commit to, the larger the discount percentage off the list price. Global enterprises should leverage their volume – for example, a bulk purchase of 1,000 user licenses may get a better per-user price than buying 200 at a time over five periods. Plan procurement to consolidate purchases and reach the next discount tier. Additionally, if you are negotiating a large deal, IBM may offer special pricing beyond standard tiers, especially if there’s competitive pressure. Always benchmark the quoted price per user against industry data or alternate solutions to ensure you’re getting a fair deal.
- Metric Conversions: Some IBM products allow choice of metrics (e.g., you can license IBM Db2 by PVU or by Authorized User). The cost implications can be significant. Example: Licensing Db2 by Authorized User might be more cost-effective if you have a few users on a large server, whereas PVU could be more cost-effective if you have many users on a small server. When budgeting, run the numbers for each available metric to ensure accuracy. IBM’s sales team can provide quotes for different metrics – use these to choose the most cost-effective option. However, note that switching metrics usually is only allowed at contract renewal or with IBM’s agreement (you can’t freely swap an authorized user license to a PVU mid-term without a deal adjustment).
Below is a summary of key cost drivers for IBM user-based licensing and how they impact your budget:
| Cost Driver | Impact on User-Based Licensing Costs |
|---|---|
| Number of Users Licensed | Directly proportional to cost in authorized user models. More named users = more licenses needed. In concurrent models, cost is tied to peak concurrent users. |
| Usage Pattern (Concurrent vs. Dedicated) | Concurrency can lower costs if not all users work at once. However, if peak usage rises, you must budget for additional concurrent licenses. Evaluate if a concurrent model truly fits your organization’s work patterns. |
| User Roles and UVUs | In UVU metrics, mix of user types affects cost. Many read-only or light users can reduce total UVUs (and cost) compared to every user counted as full. It’s cost-efficient to categorize users properly (e.g., don’t pay full price for users who only need limited access). |
| Support/Maintenance Fees | Added yearly cost (~20% of license price per user). Over years this can equal or exceed the original license cost. Budget for annual increases and negotiate caps to prevent fee creep. |
| Purchase Volume & Timing | Large, upfront purchases can secure higher discounts. Conversely, buying licenses ad-hoc in small batches can lead to paying higher unit prices. Align large procurements with new projects or renewals to maximize discount leverage. |
Takeaway: Managing IBM user license costs isn’t just about counting users – it requires understanding how those users use the software and structuring the deal accordingly.
Always model different scenarios (e.g, 1000 authorized users vs 200 concurrent) and factor in both one-time and recurring support costs.
This helps avoid surprises and ensures you allocate budget to the areas of highest business value.
Managing Compliance and Avoiding Pitfalls
One of the biggest challenges with IBM user-based licensing is staying compliant with the terms while avoiding overspending.
Because licenses are tied to people, the compliance focus shifts to tracking those people (and how they use the software).
Here are common pitfalls and how to avoid them:
- User Count Mismanagement: A frequent compliance issue is miscounting users – either missing some users who should be licensed (resulting in under-licensing and audit risk) or failing to remove users who no longer need access (resulting in over-licensing and wasted spend). Example: If your IBM Cognos system has 150 active users but your records only show 120, you’d be 30 licenses short if audited. Conversely, you might have 10 users who left the company, still assigned licenses. Mitigation: Implement a robust process to track active users of each IBM application. Coordinate with HR or IT to get notifications when employees join, leave, or change roles so that you can update license assignments promptly. Periodically reconcile user lists from the software (or LDAP directory) against your entitlements.
- Sharing of Credentials: It may be tempting for departments to have users share login credentials to stay within license limits; however, this practice violates IBM’s terms for authorized user licensing. Each Authorized User license must be unique to an individual – no generic or shared accounts are allowed to avoid licensing. Pitfall: IBM audits can uncover shared account usage via logins or usage logs, and they will count each actual user as needing a license. Solution: Enforce named user accounts only. Educate users that sharing accounts poses a compliance risk to the company. If a team truly has a rotating need, consider switching to a concurrent user model rather than using one account for multiple people.
- Inadequate License Controls: For concurrent or floating licenses, not utilizing a license manager tool poses a significant risk. Without controls, you might exceed your purchased concurrent user count without realizing it (for example, software that doesn’t hard-stop at the limit). Mitigation: Always deploy the appropriate license enforcement mechanism (IBM License Use Manager, floating license server, or third-party SAM tool) configured with your entitlements. This not only prevents unintentional over-use but also maintains logs you can show an auditor to prove compliance with concurrent limits. Regularly review these logs to understand peak usage and make adjustments as needed.
- Ignoring UVU Classification: When using UVU licensing, every user must be classified correctly (e.g., determining who is a “Power User” versus “Read-only”). A pitfall is defaulting everyone to the highest category or misclassifying roles, which either drives up costs or leaves you under-licensed for certain roles. Mitigation: Work with business owners to identify user roles and map them to IBM’s UVU definitions. Maintain documentation of how you counted UVUs. If roles change (e.g., a read-only user is given edit permissions), update your counts and procure additional UVUs if necessary before an audit finds the discrepancy.
- Contract Ambiguity on User Metrics: Sometimes, agreements fail to specify details such as how to handle users in test environments or disaster recovery. Additionally, if you wish to have the option to switch from an authorized user to a concurrent metric (or vice versa) at renewal, this should be specified in writing. Mitigation: Clarify these in contract negotiations. For example, if you have an Enterprise License Agreement, negotiate the right to convert some licenses to a different metric if it better suits your usage later, or the right to drop unused licenses. Also, clarify how external users or contractors are counted under your user licenses to avoid surprises (IBM might require anyone who accesses, even non-employees, to be licensed).
The following table outlines a few key IBM user-based licensing pitfalls and how to avoid them:
| Pitfall | How to Avoid or Mitigate |
|---|---|
| Not removing inactive users – Paying S&S for users who left or no longer use the software. | Establish a quarterly audit of user lists. Remove or reassign licenses for departed employees and those who haven’t used the software in a while. This re-harvesting prevents waste and frees up licenses for others. |
| Exceeding concurrent limits – More users simultaneously using the software than you have licenses for. | Use license management software to enforce limits. Monitor usage reports for peak concurrency. If you approach the limit regularly, either acquire more licenses or manage usage (e.g., limit sessions or schedule use) to stay compliant. |
| Assuming one license covers multiple people – e.g. team shares one login. | Enforce individual logins for all software access. Communicate that each Authorized User license is tied to one person. If cost is a concern for a large team, explore if a concurrent license model is available rather than breaking the rules. |
| Undefined user metrics in contracts – e.g. unclear how contractors or read-only users count. | During negotiations, ask IBM to document all user definitions in the contract or License Information document. For example, ensure it states how external users are counted, or whether an idle account still counts as a user. Clarity here prevents disputes later. |
| Last-minute true-ups or audit surprises – Scrambling when IBM audits or at renewal due to lack of internal tracking. | Proactively audit internally. At least annually, have an internal review where you count current users vs. licenses. This way, you find and resolve discrepancies on your own terms (and pricing) rather than during an official audit. |
Staying on top of these areas will significantly reduce compliance risk and unnecessary spending.
IBM licensing audits are a “when, not if” scenario for many large customers – showing that having meticulous user records and adhering to terms will make any audit process smoother.
Optimizing License Usage and Flexibility
To maximize the value of IBM user-based licensing, enterprises should continually seek ways to optimize license utilization.
Optimization in this context means ensuring you have the right number of licenses (and the right type) to meet business needs without excess.
Some expert strategies to consider:
- Right-Size the Entitlements: Align your license counts with actual usage. If you find you’ve purchased far more authorized user licenses than are being actively used, you might be able to drop some during the next renewal or S&S cycle (no sense paying maintenance on shelfware). Conversely, if users frequently hit the limit on concurrent licenses and are denied access, it may be time to increase entitlements or shift heavy users to dedicated licenses. Regularly review usage metrics and adjust. A one-time optimization effort before renewal can yield significant savings. For example, one global company found that 15% of their authorized users had not logged in for over six months, leading them to redeploy those licenses elsewhere instead of purchasing additional ones.
- Select the Optimal License Metric per Product: Reevaluate the licensing model for each IBM product periodically. IBM occasionally introduces new licensing options, or you may have the flexibility to switch at renewal. Suppose you initially licensed an analytics platform with 500 authorized users. Still, you discover only 100 use it actively and never all at once – switching to 100 concurrent users at renewal could cut costs dramatically. On the other hand, if a concurrent license pool is causing contention among power users (those waiting for a free license), moving those heavy users to named licenses could improve productivity at a minimal incremental cost. Tip: Model “what-if” scenarios (IBM and partners can help with data) to see if a different model would reduce the cost per active user.
- Leverage IBM Bundles and ELAs Carefully: IBM often pitches Enterprise License Agreements (ELAs) or bundles, such as IBM Cloud Paks or license bundles covering multiple products. These can provide flexibility – for instance, an ELA might allow you unlimited usage of certain software for a fixed fee, or a Cloud Pak might let you interchange entitlements among different containerized software via a metric like VPCs. While not purely “user-based,” these agreements impact user licensing because they might cover user needs in aggregate. Optimization angle: If you have an ELA that covers user-based licenses, manage it by tracking the actual uptake of each product. During renewal, you have data to potentially remove products that you didn’t use (to avoid paying support). If considering a new bundle, only include software you realistically plan to use, and ensure the pricing is better than licensing each piece separately. Bundles can hide unused licenses (shelfware) – avoid the trap of “we have unlimited X, so we won’t worry,” because you are still paying for it in the ELA fee.
- Automate and Integrate License Management: Integrate your user license tracking with onboarding/offboarding processes. For example, when IT creates a new employee account, have a step to evaluate if that user needs access to any IBM software (and assign a license if so). When someone leaves, automatically flag their IBM software accounts for deactivation and reclaim that license entitlement. Automation ensures that optimization occurs as part of business-as-usual, not just in response to audits. Additionally, invest in Software Asset Management (SAM) tools that can report on IBM user license usage. Some SAM tools can scan applications to list named users or query IBM license servers for usage stats, making it easier to spot under- or over-utilization.
- Stay Informed about Licensing Changes: IBM occasionally updates product license models (for example, shifting a product from user-based to capacity-based in a new version, or vice versa). ITAM teams should stay informed via IBM announcements or partner advisories. A licensing change might present an opportunity to optimize. E.g., if IBM offers a new “per user” subscription for a cloud service replacing an older PVU on-prem license, analyze if the new model lowers your TCO. Engage with IBM when changes occur; they may offer transition promotions or migration paths that can help save costs if you opt in early.
Example of Optimization:
A multinational enterprise had thousands of users of IBM Notes email. Over time, many mailboxes belonged to former employees or service accounts that were no longer in use. The ITAM team ran a usage report and identified that 20% of the licenses could be retired.
They negotiated with IBM to reduce their support renewal accordingly, saving hundreds of thousands of dollars. In parallel, they noticed their IBM Rational tool users were split between a small core of daily users and a larger pool of occasional users.
By converting occasional users to a concurrent license model and retaining the core as authorized users, they reduced license counts while ensuring everyone still had access when needed.
The lesson: IBM user-based licensing is not a “set and forget” asset. Continuously aligning license allocation with actual usage and business needs will maximize ROI and minimize waste.
Negotiation Strategies and Best Practices
Negotiating IBM licenses can be complex, but when it comes to user-based licensing, having a clear strategy and data to support it will significantly improve your outcomes.
Here are the best practices for negotiating user-based license agreements with IBM:
- Consolidate Needs for Volume Discounts: As mentioned, IBM’s pricing under Passport Advantage is based on volume tiers. Before entering negotiations, aggregate your organization’s demand for IBM licenses (across departments or regions) rather than doing many small deals. Presenting a single large purchase of user licenses not only qualifies for a better discount tier, but it also gives you leverage to ask for additional discounts beyond tier pricing. IBM reps expect larger enterprises to negotiate aggressively; citing your total user count and perhaps competitive alternatives can help secure a lower price per user.
- Negotiate Future Flexibility: User counts often fluctuate. Try to include terms in the contract for flexibility. For instance, negotiate reduction rights or the ability to drop a percentage of licenses at each renewal if they’re not needed (particularly important in multi-year subscriptions or ELAs). If you anticipate moving from one metric to another (say, from authorized user licenses to an IBM SaaS offering charged per user per month), negotiate conversion rights or credits for your existing licenses. IBM might, for example, allow a credit of unused term licenses toward a different product if this is agreed upon in advance. Make sure any such promises are documented in the contract.
- Cap and Control Ongoing Costs: We touched on support fee caps in the cost section – reinforce that in negotiation. If you’re locking in a deal for hundreds or thousands of users, insist on a cap for maintenance increases or subscription renewal rates. Additionally, if the deal spans multiple years, consider requesting a price-hold for additional licenses – e.g., “any additional authorized user licenses in the next 12 months will be at the same per-unit price.” This way, if your user base grows unexpectedly, you won’t pay a higher rate later. IBM is often amenable to this if you make it part of the initial deal (sometimes with a limit, such as up to 20% more licenses at the same price).
- Beware of Bundled “Deals”: IBM may propose bundling user licenses with other software or offer an Enterprise License Agreement that covers a broad range of products. While this can simplify procurement, scrutinize the deal for any user-based licensing gotchas. For example, an ELA might give you unlimited user licenses for certain products – but if you’re not going to deploy all those products to lots of users, you might be paying for entitlements that deliver no value. Best practice: Only agree to bundles that reflect your actual deployment plans. And negotiate the right to eliminate unused portions at renewal. If IBM includes 1000 licenses of Product X in the bundle “at no extra cost,” clarify that you can drop support on Product X later if you never deploy it, so you’re not paying maintenance on it year after year.
- Leverage Competitive Alternatives: If applicable, utilize the presence of competitors to strengthen your position. For example, if you’re negotiating IBM analytics or collaboration software licensed per user, mention other solutions (Microsoft, Oracle, SaaS alternatives) that you are considering. IBM will often respond with improved pricing or terms to prevent a replacement. Having internal analyses, such as “cost per user per month” for IBM versus an alternative, can be powerful in discussions. It signals to IBM that you have done your homework. Even if switching isn’t imminent, this technique often prompts IBM to sharpen its pencil on user license pricing or include extras (such as training credits or additional test environment licenses).
- Engage IBM Early with Data: Don’t wait until the week your agreement expires to start negotiations. Begin the conversation early (3-6 months in advance for big contracts). Provide IBM with data on your current usage and licenses – for example, “We have 800 licenses, but only 600 active users; we want to renew support on 600 and drop 200, and potentially add 100 for a new project if the price is right.” By clearly stating what you need (and what you don’t), you set the agenda. Early engagement also gives time to escalate negotiations if needed or to evaluate alternatives if IBM’s offer isn’t satisfactory.
- Document Special Terms: If you negotiate any non-standard concessions (e.g., the ability to temporarily exceed concurrent usage for a project, or a special discount for a certain quantity), ensure these are written into the agreement or an addendum. Verbal assurances from sales reps are not enough. For example, if an IBM rep says “we won’t count service accounts as users,” ask for that in writing. This protects you later and also helps new team members understand the rights your company has.
In summary, treat IBM license negotiations as a strategic initiative. Know your usage data, decide your must-haves (price per user, flexibility, etc.), and don’t be afraid to push back on terms that don’t align with your interests.
IBM is a large vendor, but with the right approach, enterprises can negotiate more favorable user-based licensing terms that save money and reduce risk.
Remember that renewal time is your biggest leverage point. Once you’ve committed, changes are harder to make, so invest the effort upfront each cycle to secure the best possible deal for your organization.
Recommendations
- Track Actual Usage Continuously: Implement a system or process to continuously monitor the number of active users for each IBM application. This ensures you always know your license utilization and can address issues before they become compliance problems or budget busters.
- Reclaim and Reassign Licenses Proactively: Don’t let paid-for licenses sit idle. When an employee leaves or a project ends, promptly reassign that IBM user-based licensing entitlement to someone else who needs it, or retire it at the next renewal to save on support costs. Regular “true-up” meetings can identify these opportunities internally.
- Choose the Right License Model: Match the licensing metric to your usage pattern. If a product offers both authorized user and concurrent licensing, analyze which model yields a lower cost for your usage profile. Periodically re-evaluate this as usage can change over time, and don’t hesitate to switch models at renewal if it will be advantageous.
- Use Tools for Compliance: Utilize IBM’s License Metric Tool (ILMT) and/or other software asset management tools configured for IBM licenses. While ILMT is mandatory for sub-capacity (PVU) tracking, it can also help with user license tracking if configured correctly. For user-based licenses, consider tools or scripts that can pull user counts from the software or identity management systems to compare against entitlements.
- Negotiate Support Caps and Rightsizing: When renewing contracts, negotiate caps on support fee increases and seek permission to reduce license counts if usage drops. For instance, secure an agreement that you can remove 10% of licenses from support each year with no penalty if they’re truly not needed. This kind of term can save money in the long run by preventing lock-in of obsolete entitlements.
- Document Everything: Keep a centralized repository of IBM licensing documents – contracts, Proofs of Entitlement, and correspondence. In particular, maintain a clear record of the number of user licenses you own for each product, as well as any special terms. If an audit or dispute arises, having documentation readily available is invaluable.
- Train Stakeholders on License Rules: Ensure that IT admins and business units understand the basics of IBM user-based licensing. For example, an administrator setting up a new IBM tool should be aware of whether adding a user requires purchasing a license. Avoid situations where a lack of awareness leads to unintentional compliance issues (e.g., a team granting access to 5 extra people without realizing licenses are required).
- Engage Experts for Complex Deals: For large enterprise agreements or if you feel your IBM rep isn’t offering a fair deal, consider bringing in a licensing consultant or legal advisor who specializes in IBM contracts. They can often identify negotiation angles or loopholes (like an unclear user definition) that you might miss, and they can bolster your position in discussions with IBM.
- Plan for Audits and Future Needs: Assume an IBM audit will occur eventually and prepare accordingly – this means maintaining meticulous user records and possibly conducting internal audits annually. Simultaneously, forecast your future user needs for critical IBM systems so you can negotiate today with those in mind (e.g., if you know a new department will onboard 200 new users next year, negotiate pricing for them now).
- Stay Current on IBM Licensing Changes: Subscribe to IBM’s announcements or ITAM forums for any licensing policy changes. IBM may modify how certain user licenses operate (for example, transitioning a product from user-based to capacity-based in new versions or adjusting UVU ratios). Being aware early allows you to adapt your strategy and possibly grandfather in more favorable old terms if a change would negatively impact you.
Checklist: 5 Actions to Take
- Inventory Your User-Based Licenses: List all IBM software in your environment that utilizes user-based licensing (e.g., authorized, concurrent, floating, UVU). For each, document how many licenses you have and who/what is counted (e.g., 300 Authorized Users for IBM Cognos, 50 Concurrent Users for IBM SPSS). This is your baseline.
- Validate Current Usage: For each identified software, gather current usage data – how many actual users are active? What is the peak concurrent usage? And are there any unlicensed users with access? Use logs, IBM tools, or ask application owners. Compare these numbers to your entitlements. This will highlight any immediate compliance gaps or excess.
- Reconcile and Clean Up: Take corrective action based on the usage audit. Remove access from users who shouldn’t have it or acquire additional licenses if you find you’re under-licensed. If you discovered dormant licenses (e.g., users who haven’t logged in for months), flag those for re-harvest. Update your user lists and ensure they are accurate going forward.
- Optimize License Allocation: Identify opportunities to optimize – for example, could switching some users to a concurrent pool reduce costs? Are there UVU classifications you’re not using that could apply (like a read-only user type)? Develop a plan (perhaps for the next renewal) to implement these optimizations. It might involve internal changes (setting up a license server for concurrency) or contract changes. Secure management buy-in by showing the potential savings or risk reduction.
- Engage with IBM or Your Reseller Using Data: Armed with your cleaned-up data and optimization plan, initiate a dialogue with IBM or your licensing partner. If a renewal is approaching, clearly communicate your expected needs (e.g., “We plan to renew 250 authorized user licenses instead of 300 due to cleanup, and we want to add a concurrent license component for 50 occasional users”). Begin negotiations on pricing and terms for this adjusted footprint well in advance. By taking the initiative, you set the stage for a smoother renewal or true-up process that aligns with your actual needs and avoids last-minute surprises.
Following this checklist will put you on the front foot in managing IBM user licenses. It ensures transparency between what you have and what you need, and it creates a routine to keep license usage optimized and compliant year after year.
FAQ
Q1: What is IBM User-Based Licensing in simple terms?
A: It means your IBM software licenses are tied to people using the software, rather than the hardware. In practice, you purchase the right for a certain number of “users” to access the software. Those users could be specific named individuals (Authorized Users) or just a maximum count at any given time (Concurrent/Floating Users). The cost and compliance are measured by user counts, rather than, for example, CPU cores or server installations. This model aligns well when the value of the software is directly proportional to the number of people using it.
Q2: How do Authorized User licenses differ from Concurrent User licenses?
A: An Authorized User license is assigned to one specific person; that person can use the software as much as needed, even on multiple devices, but the license can’t be shared with anyone else. If 100 people need access, you need 100 authorized user licenses (regardless of how often each uses it). A Concurrent User license, on the other hand, is not tied to an individual. Instead, it allows up to X users to use the software simultaneously. If you have a 50 Concurrent User license, any 50 people out of (for example) a larger pool of 200 could use the system simultaneously, but the 51st person trying to log in would be blocked. Concurrent licenses are essentially a shared pool that enables rotational use, whereas authorized licenses establish a one-to-one relationship with each user.
Q3: What’s the best way to stay compliant with IBM’s user-based licensing?
A: The best approach is two-fold: processes and tools. On the process side, maintain an up-to-date roster of who is authorized to use each IBM software (for authorized user models) and keep it in sync with reality (add new hires who need the software, remove those who depart or no longer require access). For concurrent models, monitor usage logs to ensure you’re within the purchased limits. On the tools side, use IBM’s License Metric Tool or other asset management systems to automate as much tracking as possible. Regular internal audits are also important – for instance, verify the number of users versus licenses every quarter. If you find discrepancies (more usage than licenses, or vice versa), address them immediately by purchasing additional licenses or reallocating unused ones. Being proactive is key, since IBM audits can happen periodically; you want your records to match what IBM would find.
Q4: How can we optimize costs under IBM user-based licensing?
A: Start by analyzing usage patterns. If you have many infrequent users, a concurrent license approach (if available for that product) could cover them with fewer licenses, lowering costs. If you have different types of users, consider UVU licensing to take advantage of lower costs for users with lower usage. Always remove or repurpose licenses that aren’t being used – this avoids paying maintenance on them. Negotiation is another lever: when renewing, use your usage data to possibly reduce the number of licenses (buy only what you need) and negotiate better discounts based on volume. Additionally, watch for IBM offering alternative licensing models, such as SaaS subscriptions. Sometimes, moving to a subscription per user per month can be cost-effective compared to on-premises licenses and support, especially if your user count can fluctuate downwards. In summary, align licenses to actual use, pick the most economical model, and continuously right-size your license holdings.
Q5: Can we adjust our user licenses if our organization changes (e.g., increases or decreases users)?
A: Generally, yes, but it depends on the agreement and timing. If you own perpetual licenses, you can usually add more at any time by purchasing additional licenses (and then paying the ongoing support on them). However, you typically cannot “return” perpetual licenses for a refund if your user count decreases – you just might choose not to renew support on some of them if they’re truly shelfware. In subscription models or term licenses, you often can adjust quantities at the end of the term (true-up or true-down) for the next period. It’s important to negotiate this flexibility when you sign the contract. During the term, decreasing counts is not usually allowed (you’ve committed for that term), but increasing usually is (you buy more as needed). One strategy for growing organizations is to negotiate a pre-agreed-upon price for additional users, ensuring you know the cost if you need to scale up. For reductions, try to align contract end dates with your planning cycle so you can reduce licenses at renewal if needed. Always review your contract or ask IBM representatives about the specifics, as some agreements (such as ELAs) may have more explicit terms allowing annual adjustments up or down within certain limits.
