Understand the misunderstandings related to IBM License Metric Tool
Organizations that have installed the IBM License Metric Tool (ILMT) often think they automatically are compliant. Until an audit letter appears on their desk or an IBM (Deloitte or KPMG) auditor is at their door.
How does this false sense of security arise and how can you avoid the enormous financial risks associated with it?
IBM offers customers the possibility to pay only for processors based on usage (sub-capacity), instead of paying for all the processors on the server (full-capacity). However, you should be able to show which processors you are using at any time. That’s why ILMT exists and its use is mandatory if you want to license sub-capacity. IBM requires to put in all your IBM products and have monthly reports in place, so that you can present them to IBM on request. And that’s where it goes wrong for many organizations.
Failure to comply with these requirements involves risks, as IBM has expanded its audit scope in the recent years. While they initially focused on the largest enterprises, the layer below - with roughly 2,000 to 10,000 employees - is today also under the magnifying glass. If there is an audit and you do not meet the conditions, you will need to license full capacity and pay the difference of the last two years. Depending on the size of the organization, this can be millions of euros.
Not on the radar
Although the terms are relatively clear and they are always contractually stipulated, there are many misunderstandings with IBM customers regarding ILMT, reports and obligations. This is largely due to the brief communication from IBM. Although IBM has all the conditions publicly available on its website, it is not communicated proactively. All this, while the process prior in buying and installing new software is often great. IBM consultants are customer-friendly, the installation is technically perfect and employees receive clear explanation on how to make best use of the software.
Generally, IBM consultants do not possess a detailed knowledge of license management.
You will be well helped in all areas – but you will not hear a word about licenses and contractual obligations. This, because IBM consultants, on the one hand, generally do not have a detailed knowledge of license management and ILMT. On the other hand, IBM sees it as the responsibility of the customer itself to comply with contractual agreements. And if licenses even came up, the IBM consultant often dismisses any worries from the customer, saying that only ILMT should be installed. The consequence is, oftentimes, that the customer wrongly has the impression that everything is under control, so the financial risks are not directly on the radar.
Additionally, the use of ILMT is a complex matter. Apart from ILMT not being the most user-friendly tool - you need specialist licensing knowledge to properly set up and maintain it. IBM has a price list consisting of 12.000 pages of products, so a mistake can be easily made. Moreover, you must always be able to provide all information of the last two years back to IBM (or Deloitte as an auditor). Installing the tool and start using it later is not an option, because you immediately become non-compliant.
The advice to all companies using IBM License Metric Tool: manage it seriously right from the start. This will keep you compliant and prevent fines. The continuous reports also provide you with a better understanding of how IBM software is used within your organization. That insight helps in optimizing costs and closing new contracts with IBM or other software vendors.
This article is also published in Dutch, on AG Connect.