Starting May 1st, the contractual requirement to provide an ELP annually
On Feb. 1st , 2023, IBM released the latest version of its Passport Advantage Agreement (IPAA) , the contract that governs most IBM volume license purchases. The agreement will be effective immediately for new customers and from the 1st of May on those with existing contracts. That's just three months after the initial announcement, the date beyond which it will be necessary to comply with the contractual obligations of the vendor.
There are three main changes to watch out for:
Let's start with the first point: clause 4.1 a of the Passport Agreement now reads:
Client will, for all Programs at all Sites and for all environments, create, retain, and each year provide to IBM upon request with 30 days' advance notice: i) a report of deployed Programs, in a format requested by IBM, using records, system tools output, and other system information; and ii) supporting documentation (collectively, Deployment Data).
What changes? Previously, it was sufficient to have a long-term view of IBM compliance (see v10 Passport Agreement of 2017, at 1.12: in the - sometimes remote - event of a vendor audit, it was enough to provide sufficient information to ensure compliance. Most of this controls applied to sub-capacity license compliance verification using the IBM License Metric Tool (ILMT), which must be installed and configured on your infrastructure and updated quarterly.
In the previous version of the Passport we read in fact:
Client agrees to create, retain, and provide to IBM and its auditors accurate written records, system tool outputs, and other system information sufficient to provide auditable verification that Client's use of all EPs is in compliance with this Agreement including the licensing and pricing qualification terms Z125-5831-10 11/2017 Page 5 of 21 referenced in this Agreement (Passport Advantage Terms). [...] Upon reasonable notice, IBM may verify Client's compliance with Passport Advantage Terms at all Sites and for all environments in which Client uses (for any purpose) EPs subject to Passport Advantage Terms.
With the new clause 4.1, there are two new features:
The change is a clampdown on compliance verification by IBM: an incentive on their part to "foster active license management" for dynamic IT Asset Management processes. The requirement to provide such information to ensure compliance verification was already there, but the real change is precisely that IBM reserves the right to request deployment data once a year , with 30 days' notice, and customers will have to provide this data in a format approved by IBM.
Similar to the SAP License Administration Workbench (LAW), now at the request of the vendor you will have to declare license consumption to IBM at least once a year. If this declaration reveals a shortfall, you will have to comply with the Excess Usage Resolution as specified in section 10.3 of the contract. In addition to the purchase of excess licenses, there is also the purchase of S&S services and support and additional charges.
IBM will notify Client in writing, if Client has used any EPs in excess of Client's Authorized Use or is otherwise not in compliance with the Agreement, the Client agrees to promptly pay the charges at then current prices that IBM specifies in an invoice for: i) any such excess use; ii) S&S and Selected Support for such excess use for the lesser of the duration of such excess use or two years; and iii) Z125-5831-11_ZZ_02-2023_en Page 8 of 21 any additional charges and other liabilities determined, including but not limited to taxes, duties, and regulatory fees.
The report in the format requested by IBM is not yet ready (IBM lets us know that it will be published by the end of the year), but it has already anticipated what information (see here) ) the compliance audit will focus on. In this regard, we have prepared an in-depth article to orient yourself in IBM's licensing.
IBM adds another note: for companies that have renewals synchronized with their anniversary date, the annual report should be created in time for the renewal order (typically 1-2 months before the S&S expires).
What is the main problem that emerges? Recognizing all of the various software headers, bundles, and their deployment details within a very large and varied product portfolio and reconciling them with usage rights, taking into account the sheer number and continually evolving IBM metrics, in a single report and in a fairly tight timeframe (there is a 30-day notice period) is not so simple.
IBM-provided tools such as the ILMT focus on measuring some metrics , not all, and furthermore, verification does not always extend to all environments.
At the moment the only thing that is certain is that in the case of non compliance the shortfall would severely penalize the budget and you need to have strong confidence in your compliance position. So now is a good time to take control of your environments and current license fees, so that you can estimate the cost of any noncompliance and adjust accordingly to remediate them before IBM audits.
This change affects ALL companies that use IBM software. What actions can be taken?
In this day and age, keeping your eyes peeled seems to be a must to be compliant: IBM has let it known that any changes to the Passport will now be notified with a notice on the IBM Terms web page (http://www.ibm.com/terms) instead of with e-mail notifications.
If one does not register on IBM Terms to receive direct notification of such changes, he or she risks always being late on any updates that affect him or her.
Now let's look at the Passport Advantage's new rule regarding sub-capacity licenses.
For EPs that no longer meet Sub-Capacity Licensing requirements for which Client would like to continue to license under Sub-Capacity Licensing terms, Client will submit a migration plan to meet the Sub-Capacity Licensing requirements for IBM's review and approval. During this migration, Client shall maintain the version of ILMT that supported the EP based on the Sub-Capacity Licensing requirements prior to becoming ineligible and continue to generate ILMT reports. With IBM's prior written consent, Client may manually manage and track such EPs in accordance with item d above.
In essence, environments that are no longer supported must migrate to ILMT to enable consumption measurement and such migration plan must be communicated to IBM.
Also:
For EPs under Sub-capacity Licensing or Container Licensing, for all Sites and environments, Client is required to run reports at least once per quarter and retain each report a minimum of 2 years and provide to IBM upon request. Manual reporting is not permitted for Container Products.
"Container products" (i.e., Containers) are often favored over VMs because of their lightness and therefore play a key role in the distribution application and infrastructure.Now manual reporting is no longer allowed; instead, one must use IBM License Service to run quarterly reports and maintain them for 2 years.
These are not particularly impactful changes, but you have to anticipate the effort and personnel needed to adapt, and the time is really tight.
The last noteworthy change relates to S&S services: if you intend to renew S&S services at a lower quantity of uses, you must provide IBM with verification at least 30 days in advance that shows that the requested uses are consistent with the requests... otherwise the customer must renew all expiring quantities (even if they don't actually need them afterwards!)
If Client requests to renew expiring S&S at a lesser quantity of IBM Program uses and installations than the expiring quantity, Client must provide system generated documentation that verifies current uses and installations of the IBM Program to IBM, as specified in the Agreement. If the documentation is not received by IBM at least 30 days prior to the S&S renewal date, Client must renew all expiring quantities.
The changes to the Passport Advantage have many irons in the fire. We will also discuss this in the webinar "How to Prepare for the IBM Compliance Clampdown" (in italian language only!) scheduled for May 18 at 2:30 pm.
At WEGG we are licensing experts (not just in the IBM landscape!) and during the webinar we will provide guidance and tools to:
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