Has Your IBM Enterprise License Agreement (ELA) Lost Value?

By Rich Staas

Director of Client Services, NPI

March 27, 2018

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Has your IBM Enterprise License Agreement lost value? Are you still paying maintenance on licenses you don’t need or use? These are two questions IBM customers need to ask.

Maintenance is valuable recurring revenue, especially for legacy vendors like IBM, and they work very hard to preserve the run rate with each customer. One tactic common among vendors has been the continual changing of licensing models. Added complexity means confused customers and that almost always leads to overspending. Another tactic is providing little to no transparency into how pricing is derived. IBM is no exception to this – especially when it comes to license swaps.

The ability to swap licenses within an Enterprise License Agreement can be very valuable to customers. Customers’ priorities and needs change and having this ability should help to minimize or eliminate paying maintenance for shelf-ware. But is that always the case?

IBM does not like to provide transparency into the value of licenses within amendments for the swap. This can create an imbalance and cause customers to overpay for the new licenses. IBM will get creative in distributing the costs among the new Bill of Materials in order to maintain the total maintenance revenues.

Inspect Maintenance Spend Before Your Next IBM Enterprise License Agreement Renewal

NPI has worked with our customers on evaluating their Enterprise License Agreement amendments and have uncovered many cases of significant “lost value” during license swaps. Some have lost over 70% of their license value during these type of transactions, but continue to pay the same maintenance costs.

Determining whether you have lost value, and then regaining the value by either adding more licenses or getting IBM to adjust the pricing to the appropriate level during an ELA renewal is not a simple task. The vendor’s sales teams are well trained to push back aggressively. In response, persistence and the presentation of potential technology replacement alternatives are key to right-sizing an ELA renewal – as is a deep understanding of which point-in-time market-pricing and negotiation levers to use with IBM. NPI’s IBM licensing experts help clients tackle these challenges successfully and bring the cost/value equation back into alignment.