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Assess risk, forecast for IBM software licensing agreement success


Contract risk assessment and inspection

Risk assessment and inspection is all about knowing what licenses you have and what you want to pay for your licenses going forward. It is also, Cho said, about identifying the contractual levers when removing or adding products. It is, therefore, enormously important to know your deal inside and out when entering IBM ELA negotiations.

That’s not an easy task. IBM contracts are chock-full of acronyms, and they often include a multitude of amendments, special terms addendums, cloud services agreements, IBM Passport Advantage programs, zIPLA (Systems International Program License Agreement) documents and so on, he noted.

“The most common thing we hear from clients is, ‘I don’t know what is being paid for what. I also don’t know what any of these acronyms mean. I have no understanding of what an ACP is. I don’t know what a CVA is. I don’t know what an STR is, or an STA is, or an ESSO or an SSSO is,'” Cho said. “Peeling back the layers of complexity that IBM adds on purpose is a big deal.”

Note: For clarification purposes, these acronyms, in order, refer to Accelerated Computing Platform, Cognitive Value Assessment, Synchronous Transmit-Receive, Static Timing Analysis, Enterprise Single Sign-on and Services Special Option.

Bottom-line deals that intentionally obscure component pricing are especially frustrating, he added. They tend to make it difficult to know how to allocate the software and services the client has paid for — something accounting rules are often pretty strict about, Cho explained.

Furthermore, IBM loves proprietary metrics. Cho cited the example of how a lot of mainframe software vendors peg licenses to million instructions per second (MIPs) while IBM uses millions of service units (MSUs) and Value Unit Editions (VUEs), “which are, A, incomprehensible acronyms that are not accessible and, B, proprietary and deviate from MIPs, which is the standard mainframe metric.”

Eugene ChoEugene Cho

Another thing, according to Cho, is his clients often don’t realize they have committed to fairly strict and time sensitive software asset management exercises. This causes them to not have certain reports required “This is what IBM likes to do,” Cho said. “They like to ‘Trojan Horse’ clauses in [to contracts] that they know they can leverage at the renewal table if they are not getting the deal they want.”

Risk assessment and inspection help you understand what you have already committed to — and gotten out of — your current IBM software licensing agreement. Next, you need to determine what you want to commit to for the future at your pending IBM ELA renewal negotiations.


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