Preparing for an IBM Renewal
IBM renewals are often rushed by design – IBM hopes customers will accept list prices or standard price increases without time to negotiate. Many procurement teams find themselves scrambling in the final weeks leading up to an IBM contract expiration.
The key to winning renewal negotiations is to start early, prepare internally, and control the timeline on your terms. By getting ahead of IBM’s playbook, you can avoid last-minute pressure and secure more favorable pricing and terms.
In this guide, we’ll explain IBM’s renewal process, provide a month-by-month negotiation timeline, and outline best practices for securing better terms.
You’ll learn how to leverage notice periods, develop an internal strategy, and effectively push back against price increases. Read our ultimate guide to IBM Renewal Negotiation: How to Fight Uplifts and Secure Better Renewal Terms.
With a proactive approach, you can turn a rushed renewal into a strategic opportunity. (Related: see our IBM Renewals & Price Uplift Protection pillar for broader strategies on limiting IBM price increases.)
1. Renewal Notice Period
IBM contracts usually require 90 days’ notice before the renewal date if you want to change terms, reduce licenses, or cancel support.
This notice period is a critical deadline. If you miss the notice window, the contract may auto-renew under the existing terms – often at higher list prices or with standard uplift fees applied. IBM counts on some customers overlooking this so that the renewal rolls over with price increases baked in.
Risk: Without giving proper notice, you could be locked into an auto-renewal at unfavorable rates. For example, support might renew at full list price or with a 7% “standard uplift” by default.
Once auto-renewed, your leverage drops because IBM knows you’re committed for another term.
Best Practice: Begin renewal preparations 6–9 months ahead of the expiration date. This early start allows you time to review your contract, assess your needs, and, if necessary, send a formal notice to IBM before the 90-day cutoff.
Even if you intend to renew, issuing a notice of non-renewal (and later rescinding it once new terms are negotiated) can prevent an automatic renewal on bad terms. Always control the option to walk away – it keeps IBM attentive to your demands.
Checklist:
- Renewal notice date identified – Mark the date that is 90 days before the contract end date. Calendar this critical deadline to ensure it isn’t missed.
- Review contract language for auto-renewal – Understand the fine print. Is there an auto-renewal clause or penalty if notice isn’t given? Know the rules so you can plan action.
- Renewal preparation calendar created – Build a timeline that works backward at least 6 months from expiry. Include internal prep, IBM engagement, and key decision points.
Avoid shelfware, IBM True-Down Rights: How to Reduce Licenses (and Costs) at Renewal.
2. Renewal Timeline – Month-by-Month Countdown
A successful IBM renewal negotiation follows a structured timeline. Below is a month-by-month countdown of action items leading up to your renewal date.
By breaking the process into phases, you can ensure nothing falls through the cracks and maintain leverage at each step.
6–9 Months Before Renewal: Internal Prep and Strategy
This phase focuses on internal assessment and planning, which should be completed well before IBM becomes officially involved in the renewal.
- Assess Current Usage: Conduct a thorough review of your IBM licenses and deployments to ensure optimal utilization. Gather usage data from tools like ILMT (IBM License Metric Tool) and inventory all entitlements. Are you using all the software you’re paying for? Identify any unused licenses (shelfware) or areas of non-compliance. Knowing your actual usage and compliance status arms you with facts (and avoids unpleasant surprises if IBM audits you during renewal).
- Budget Scenario Modeling: Work with finance to model your budget for the renewal. Calculate the cost if you simply renew at list price or with IBM’s standard uplift versus the cost if you negotiate a better deal. For example, if IBM’s maintenance renewal would be $1.2M at list but your target is $1.0M with discounts, document that. This helps set a negotiation goal and gain internal approval to push back. Also, show the comparison between renewal and new purchase – sometimes IBM offers better discounts for new licenses than for renewals, which you can leverage (see our discussion on IBM Renewal Discounts vs. New Purchase for benchmarks on this).
- Define Renewal Strategy: Decide on your overall approach early. Will this be a “flat” renewal (same products, ideally at or below current spend)? Do you need to true-down – i.e., reduce license counts or remove products you no longer need? (Negotiating IBM True-Down Rights is key if usage has declined.) Or do you plan to expand or upgrade, perhaps moving to a multi-year deal for better terms? If your environment is changing, consider competitive alternatives or cloud migrations as well. At 6–9 months out, nothing should be off the table. If you formulate a strategy now – whether it’s pursuing a Multi-Year Deal or preparing a backup vendor – you’ll be in a stronger position when talks with IBM begin.
How to get discounts on your IBM renewal, Renewal vs New Purchase: Getting Discounts on IBM License Renewals.
3–4 Months Before Renewal: Initial Vendor Engagement
Around the 3-4 month mark (approximately 90–120 days before expiry), it’s time to engage with IBM or your reseller and initiate the external process.
- Request a Renewal Quote Early: Don’t wait for IBM to send an auto-generated quote at the 90-day mark. Proactively reach out to your IBM account manager or partner ~4 months in advance. Signal that you’re preparing for renewal and request their initial quote now. This puts you in control of timing and shows IBM that you’re an informed customer.
- Push for a No-Uplift First Offer: When IBM provides the first renewal quote, push back immediately on any price increase. IBM often initially includes a maintenance uplift (commonly 5–10% over the previous year’s fees) or reverts discounts to the list price. Your stance should be that you expect no uplift – or even a price reduction – for loyal renewal business. If corporate budgets are tight, make that clear. By setting a low anchor (e.g., “we need a flat renewal with 0% increase”), you compel IBM to justify any higher rates, and you set expectations that you won’t accept a standard bump.
- Benchmark and Compare: Carefully analyze IBM’s quote against your own benchmarks and historical pricing. How does it compare to what you paid last year or to similar deals in your industry? Compare each line item to ensure previously discounted products aren’t now listed at full price. This is where your earlier budget modeling pays off – you can quickly see if IBM’s proposal overshoots your target. If you’ve done past deals with IBM, remind them of the discounts given and press to maintain or improve them. Document any discrepancies or large increases as talking points for negotiation. At this stage, it’s also wise to revisit our IBM Renewal Discounts vs. New Purchase analysis – if IBM’s renewal pricing is worse than a net-new purchase deal, call them out on it and ask for parity or better.
1–2 Months Before Renewal: Negotiation & Leverage
With roughly 30–60 days left, you should be deep into negotiations. If IBM’s offer isn’t yet where you need it to be, this is the period to escalate and leverage all options.
- Escalate Within IBM: Don’t hesitate to reach out to a higher-level sales representative if progress is slow. Involve IBM’s management and pricing approval committees if needed. Often, field reps have limited discount authority, but higher-ups (like a regional sales manager or a special pricing desk) can approve better terms when pressed. Make it clear that the current offer doesn’t meet your expectations and that you’re prepared to explore alternatives. Sometimes, simply cc’ing a procurement executive or an IBM executive in emails can get a stagnant negotiation moving.
- Bundle or Co-term for Advantage: Look for ways to increase your leverage by bundling other needs or aligning contracts to maximize your benefits. For instance, if you foresee new IBM purchases or upgrades, mention that you’re considering folding those into the renewal if the pricing is right. IBM will be more flexible if it sees an opportunity to sell additional products or services. Similarly, if you have other IBM agreements that end later, consider discussing a short extension or early renewal to co-term them all together. By syncing end dates, you create a larger deal for IBM to win (and they’ll fight harder to keep it). Co-termination also simplifies future renewals for you.
- Evaluate Alternatives (for Real): By 1–2 months out, you should have done at least preliminary research on third-party support or competitive products. If IBM remains inflexible on price, your best card to play is the possibility of walking away. Perhaps a third-party support provider could take over support for certain IBM software at a fraction of the cost – even if only for a subset of products, it’s a leverage. Or maybe you’re piloting a non-IBM solution (open-source or a SaaS alternative) that could replace an IBM product over time. Even if you don’t ultimately switch, showing IBM that you have viable options strengthens your negotiating position. Be prepared to share that you have cost comparisons in hand. The closer it gets to the deadline, the more IBM will worry about losing the business, which can translate into last-minute concessions.
Final Month: Closing and Contractual Safeguards
In the final few weeks before the renewal date, aim to close the negotiation on your terms – but also prepare a fallback plan in case you need to walk away or extend.
- Secure the Best Final Offer: If negotiations have progressed well, this is when you lock in the pricing and key terms. Try to finalize everything at least a week or two before the actual expiration to avoid any lapse in support. If IBM knows you have a hard cutoff, they may drag their feet; instead, communicate that you need internal approval, etc., so you want a final quote well in advance. At this stage, leverage any remaining pressure points – for example, remind IBM that quarter-end or year-end is approaching (IBM’s fiscal year aligns with calendar year, ending in December) and that you’re willing to sign by then if your requirements are met. This can incentivize IBM to sweeten the deal in the final stretch.
- Have a Fallback (No-Deal) Plan: While you aim to sign a good renewal, be ready for Plan B. If IBM’s terms are unacceptable by the last week, you might choose to let support lapse temporarily or drop certain licenses. Ensure your tech teams are aware of the short-term impact, if any (e.g., no support tickets for a month) – sometimes this is tolerable and can be used to demonstrate to IBM that you’re serious. Another fallback could be negotiating a short-term extension (e.g., a 3-month renewal) to buy more time, preferably at the same rates, while continuing discussions or transitioning. IBM would rather take a short extension than lose you entirely, and this can prevent a bad long-term deal.
- Finalize Contract Protections: When you reach an agreement, ensure that the contract paperwork accurately reflects all negotiated protections and concessions – not just the price. Don’t assume IBM will automatically include these; you must insist on the exact wording. Key items to secure:
- Uplift Caps: If you couldn’t get a 0% increase, ensure any future annual uplift is capped at a low rate (for example, CPI or 3% maximum). Never use vague “standard IBM uplift” language; instead, specify a specific number. This protects you from unexpected price increases in multi-year deals and is a core principle of IBM Renewals & Price Uplift Protection.
- True-Down Rights: If you negotiated the ability to reduce licenses or spend in the future, put those true-down rights in writing. This may allow for a reduction of a certain percentage of licenses at the next renewal without penalty, or a flexible reduction if usage decreases. It ensures you’re not overpaying for shelfware in the long run.
- Auto-Renewal Clauses: Push to remove or modify any auto-renewal terms. Ideally, the renewal will not auto-trigger without a fresh quote and your approval. If an auto-renewal must remain, ensure it’s at the negotiated price (or with a minimal cap on increases), not the list prices. Having control over the renewal decision each term keeps IBM accountable to re-earn your business.
- Documentation of Discounts/Entitlements: Double-check that the final order documents include every discount, credit, or special entitlement promised. For instance, if IBM agreed to a bundling discount or threw in extra licenses, those should be clearly stated. Also, verify support periods and quantities. It’s easier to fix errors now than after signing.
By the end of the final month, you want either a signed, favorable renewal contract or a deliberate decision to delay/exit – but no accidental renewals or surprises. Celebrate your win, but also take note of the lessons learned for the next cycle.
3. Internal Preparation Steps
A significant part of renewal success happens inside your organization before you ever negotiate with IBM. Preparing your data, team, and strategy internally will make your external negotiations much more effective.
Here are the key internal preparation steps to take:
- Usage Data & Entitlements: Gather all relevant data on what IBM software and services you have, and how they’re being used. Inventory your entitlements (what you’re licensed for) versus actual deployment (what’s installed/in use). This includes checking PVU counts, user counts, or other metrics against what you purchased. Use IBM’s tools, such as ILMT, to verify sub-capacity usage if applicable. The goal is to validate accurate usage and entitlement data. This serves two purposes: uncovering any licenses you pay for but don’t need (potential cuts), and ensuring you’re not unintentionally out of compliance (which IBM could exploit).
- Budget Modeling & Scenario Planning: Prepare clear budget scenarios to support your negotiation strategy. For example, model Scenario A: renewing everything as-is at IBM’s list prices (high cost), vs. Scenario B: negotiating a 0% uplift or X% discount (target cost), vs. Scenario C: removing certain products or rightsizing licenses (lower cost). Present these to your finance stakeholders as soon as possible. This not only sets internal expectations (so everyone understands why you’re pushing back on IBM) but also arms you with concrete numbers when justifying your asks to IBM. Demonstrating an understanding of the financial implications of various outcomes makes you a stronger negotiator.
- Risk Assessment (Compliance & Audit): Evaluate your compliance status and any audit risk before you’re at the table with IBM. Review past IBM audits and any compliance issues. If you find that you’re currently over-deployed (using more licenses than entitled) on any product, address it proactively. The worst scenario is IBM discovering a compliance gap during renewal negotiations, as they can use that to pressure you into purchasing additional licenses or accepting higher costs. If needed, take it down or purchase a small fix now rather than letting it become a big sticking point. Additionally, factor in IBM’s notorious audit strategy – they often use software audits as a form of leverage. Being clean and prepared neutralizes that threat.
- Negotiation Team Alignment: Assemble your internal negotiation team early and get everyone on the same page. This should include procurement (for negotiation tactics and commercial terms), IT or software asset managers (for usage data and technical needs), finance (for budget and approvals), and legal (for contract terms). Align on your objectives and walk-away points. For example, ensure IT isn’t separately telling the IBM representative, “We really need this product,” while procurement is trying to play hardball – mixed messages undermine your stance. A united front with clear goals will keep IBM from using divide-and-conquer tactics. Hold internal checkpoint meetings as the timeline progresses, so that everyone is aware of the plan and their role.
Internal Prep Checklist:
- Usage and entitlement data validated – All license counts and deployments are verified against entitlements; compliance status is confirmed.
- Renewal scenario models have been created, and the budget impact of various negotiation outcomes (list price vs. target discount vs. removal of XYZ) has been documented and approved internally.
- Compliance risks assessed – Any potential compliance issues are identified and addressed; the audit history is reviewed, and mitigation measures are in place.
- Internal team aligned on strategy – Procurement, IT, finance, and legal agree on goals (e.g., max X% increase, must-have terms like true-down, etc.) and communicate with one voice to IBM.
4. IBM Engagement & Negotiation Strategy
When it’s time to actually engage IBM for your renewal, how you handle the communication and negotiation is critical.
Remember, IBM’s sales teams are highly trained negotiators with one goal: to maximize revenue while giving just enough concession to keep your business. Your goal as a customer is to minimize cost and risk while maintaining the necessary software.
Here’s how to approach the negotiation strategically:
Setting the Tone for the Quote:
When requesting a renewal quote, be explicit about your expectations upfront. For instance, you might tell IBM, “We are looking for a renewal with no price increase and ideally some reduction due to our long partnership”. By doing so, you frame the discussion around no uplift or minimal uplift right away. Also, indicate you expect renewal discounts in line with what large enterprises typically receive – IBM won’t volunteer a discount for a renewal unless you signal that you know it’s done in the market. If you have insight into benchmark pricing (from past deals or advisors), mention that you’ll be evaluating their quote against industry standards. This informs IBM that it cannot easily get away with an inflated offer.
When reviewing IBM’s proposal, insist on clarity. If any part of the quote is unclear – for example, if they have bundled a product or if a line item has increased in price – ask for detailed breakdowns.
Sometimes IBM will present a complex quote, hoping you overlook the fine print. Don’t hesitate to ask, “Can you explain why this cost increased?” or “Provide the unit pricing and any applied discounts for each component.” Have IBM do the math and justify.
Key Terms to Insist On:
As you negotiate, there are a few specific terms and conditions you should strive to include in the renewal deal:
- No Uplift (or Capped Uplift): We’ve mentioned it before, but it bears repeating – try to lock in flat pricing year-over-year. If IBM claims they absolutely must add an increase due to inflation or corporate policy, push for a very low cap (e.g,. “we won’t do this deal unless the annual uplift is capped at 3% or CPI, whichever is lower”). The difference between a 3% cap and a 7% standard uplift over a few years is huge. This is a cornerstone of any price uplift protection strategy.
- Renewal Discount vs. New Purchase: If historically you got, say, 20% discount on licenses when initially purchased, argue that renewing that software should at least maintain that discount or better. From your perspective, a renewal is effectively a large purchase – you could threaten to not renew and buy a competitor’s product instead. IBM may counter that renewals typically don’t get big discounts because it’s “just support” – counter that by pointing out the cost of switching and that you expect a loyalty reward, not a loyalty tax. The ultimate goal is to achieve a price that’s competitive with a new sale.
- Entitlement Clarity and Rightsizing: Make sure the renewal quote only includes what you actually need going forward. If you identified some licenses to drop or reduce, insist that IBM quote the renewal on the reduced quantities. Don’t let them upsell you “just in case” licenses unless it’s part of an intentional strategy. Additionally, negotiate the right to adjust entitlements (true-down or swap products) mid-term if possible. Clear true-down options protect you if your usage declines. IBM may not volunteer this, but ask: “If our user count drops next year, can we reduce our support spend accordingly?” Even obtaining a clause that allows for the partial termination of support for a subset of licenses can be valuable.
Negotiation Tactics:
- Never Accept the First Offer: IBM’s first quote is almost always their dream scenario (high prices, high uplift, few concessions). Treat it as a starting point even if it looks “not too bad,” always counter. Vendors expect savvy customers to negotiate. By pushing back at least once or twice, you can often save additional percentage points or get better terms. There is virtually no downside in asking for a better deal – the worst they can say is no, and often they’ll come back with something improved to close the deal.
- Use Leverage from Alternatives: As discussed in the timeline, let IBM know (subtly or overtly) that you have other options. Without explicitly threatening, you can say things like, “We’re evaluating our IBM renewal strategy alongside other IT initiatives to ensure we get the best value for the business.” IBM reps are smart – they’ll read between the lines that you might consider other solutions or delaying the renewal. If you have quotes from competitors or third-party support ready, you can even bring those up in late-stage talks: “We have a proposal that could replace half of this at 30% lower cost… I need you to match that kind of economics if you want us to stay on IBM.”
- Escalate When Needed: If you hit a wall – e.g., the representative says, “This is the best I can do,” and it’s not acceptable – don’t be afraid to go above them. Ask politely if IBM’s deal desk or executives can approve a higher discount or special term. Sometimes, involving your own executives in calling their counterparts at IBM can help secure a concession. IBM, like many large vendors, has tiers of approval for discounts: the bigger the concession, the higher up it needs to be signed off. Demonstrate your willingness to engage at higher levels. It signals that you won’t just roll over and also that the deal is important enough to you (and thus to IBM) to warrant special attention. Often, the mere act of escalating will get you a fresh set of eyes on the deal and possibly a better outcome.
Throughout the negotiation, maintain a professional but firm tone. Be skeptical of sales claims (e.g. “this is the absolute lowest price” or “another customer just paid this rate”) – these are tactics. An expert negotiator remains cordial but continuously presses for more value, all the way until the ink is dry.
5. Escalation & Alternatives
Even with a solid strategy, you might encounter resistance from IBM’s side.
This is where having escalation paths and alternative plans can pay off. Essentially, you want to avoid ever feeling “stuck” with a bad deal – there should always be another avenue to explore.
Escalation within IBM:
As mentioned, involve IBM’s higher-ups when necessary. This could involve asking your account manager to arrange a call with an IBM regional sales director or a member of their pricing committee. Come to that discussion prepared with your justification for a better deal, such as usage reductions, budget limits, or competitive offers. The tone can be collaborative – “We really want to continue our partnership with IBM, but we need your help to address these cost concerns”. Higher-level IBM representatives have more flexibility and a broader perspective, and they won’t want to lose a significant customer over a few percentage points. Often, a concession that was “impossible” in early talks becomes possible once the right person is involved.
It can also help to time your escalation for maximum effect.
For instance, if it’s approaching the end of IBM’s fiscal quarter or fiscal year, use that in your favor. IBM’s management is under pressure to hit sales targets by quarter-end (and especially year-end in December).
Let them know that “we’re ready to sign, but only if we can resolve these final issues, and we’ll need approval internally by [a week before quarter-end]”. This puts the spotlight on the IBM side to deliver a solution quickly, or risk missing their number.
Companies like IBM often become much more flexible in the final days of a quarter when every deal counts.
Exploring Alternatives: In parallel, continue to explore alternative options until the deal is signed. Alternatives can include:
- Third-Party Support: As touched on earlier, third-party maintenance providers can support certain IBM software (especially older versions) at significantly lower cost. The downside is you won’t get new IBM upgrades, but if that’s not a priority, it’s a viable short-term option. Even mentioning that you have a quote from a third-party support firm can make IBM more inclined to drop its price to keep you on official support.
- Product Replacements or SaaS Migrations: If you have time and resources, evaluating competitor products or cloud services that could replace an IBM product gives you a long-term Plan B. IBM software often has strong entrenched positions, but there are always alternatives. For example, if you’re renewing IBM DB2 databases, you might assess PostgreSQL or cloud database services; if it’s IBM Cognos analytics, you might look at Power BI or Tableau. IBM obviously wants to avoid churn, so showing that you’re considering a move can lead them to offer short-term discounts or migration incentives to keep you on board.
- Delay and Consolidate: Another alternative strategy, if negotiations are not yielding results, is simply delaying the commitment. Perhaps you opt for a month-to-month support arrangement (if possible) or sign a very short extension while finalizing a better deal or receiving a competing bid. This is risky if not managed carefully (you don’t want to be unsupported), but it’s an alternative to capitulating. During a delay, you can also consolidate what you really need – perhaps you decide not to renew support on a non-critical component to save costs, focusing resources on the must-haves.
Leverage Timing: To reiterate the timing aspect, quarter-ends (March, June, September, and especially December for IBM) are magic words in negotiation. If your renewal happens to coincide with one, use it.
If not, and if your timeline is somewhat flexible, you might intentionally align a purchase or renewal to quarter-end. IBM sellers will often provide extra incentives (like an additional discount or a bonus product) if it means booking the deal in the current quarter.
This is not an “alternative” to renewing, but a tactic to extract a last bit of value. Conversely, try to avoid signing a deal outside of any urgency period on IBM’s side. If your renewal is in, say, mid-Q2, you might accelerate or decelerate your process to land at the end of Q2 when they’re more eager.
In summary, never let IBM feel like they are your only option. Even if IBM is truly the best fit for your needs, they should always have in the back of their mind that you’re prepared to find other solutions. That mentality keeps the negotiation dynamic and more balanced.
6. Best Practices for IBM Renewals
To wrap up, here’s a concise list of best practices to remember as you prepare for and negotiate an IBM renewal.
These are the core principles that an experienced procurement professional will always keep in mind:
- Start the process early – don’t wait for IBM’s timeline. Rushing plays into IBM’s hands, so begin preparations 6 to 12 months in advance.
- Never accept the first quote. It’s almost always inflated. Treat initial offers as a baseline to improve upon, not the final word.
- Control the renewal timing. Align and co-term contracts where possible to create a larger negotiation event, and use quarter-end deadlines to your advantage. Don’t let IBM isolate each renewal on its schedule.
- Push for price protections. Always negotiate caps on annual uplifts and seek renewal discounts, not increases. There should be no “loyalty tax” for sticking with IBM.
- Consider third-party support or alternatives. If IBM’s offer isn’t palatable, credible alternatives (external support, different products, cloud options) give you leverage and a fallback plan.
- Document everything and stay organized. Track your entitlements, usage, and IBM communications. Well-documented data and decisions strengthen your negotiation position and help you avoid mistakes.
Following these best practices will help ensure you’re not leaving money on the table or exposing your organization to unwanted surprises in an IBM renewal.
7. FAQs
Q: IBM sent a renewal quote after the contract expired – can I still negotiate?
A: Yes. Even if IBM delivers a quote after the official end date or you miss the renewal date, you can and should still negotiate. IBM would prefer to keep you as a customer rather than lose you, so they often allow “retroactive” renewals or grace periods. However, your leverage may be reduced after expiry (since technically, support has lapsed). In this situation, engage with IBM quickly, express your intent to renew on fair terms, and negotiate just as hard. Often, IBM will still make concessions to secure your renewal rather than risk you walking away. Just be cautious: if support lapses, ensure any new agreement covers continuity of support without gaps or penalties.
Q: Should I involve an external IBM licensing expert or consultant for my renewal?
A: It depends on your team’s experience and the complexity of your IBM environment. If this is a large Enterprise License Agreement (ELA) or you lack internal expertise in IBM’s labyrinthine licensing rules, bringing in a third-party advisor can be valuable. An IBM licensing expert (like a former IBM negotiator or a specialized consulting firm) can provide benchmark data on discounts, highlight contract pitfalls, and even handle some of the negotiation on your behalf. They bring a skeptical eye to IBM’s proposals and know tactics to counter vendor pressure. The cost of an advisor can often be justified by the savings and protections they help obtain. That said, for smaller renewals, you might not need external help if your procurement team is experienced with IBM deals. In either case, make sure your team (internal or external) is aligned and sharing information to present a unified front.
Q: How early should we start renewal talks with IBM?
A: Engage with IBM earlier than you might think is necessary. As a rule of thumb, at least 6 months before renewal for most contracts – and up to 12+ months in advance for very large or complex agreements. Starting talks early doesn’t mean you have to show all your cards or finalize things then, but it opens a dialogue. Early engagement allows you to understand IBM’s position (including any planned changes or price increases) and to communicate your expectations to them. It also gives you time to involve higher management if needed and to iterate through multiple rounds of negotiation. If you wait until the last 1-2 months, you’ll be under pressure, and IBM knows it. Starting early puts the pressure on them instead to deliver a palatable offer in time.
Q: Can I negotiate true-down rights at renewal if I didn’t have them before?
A: Absolutely, and renewal is often the best (and sometimes only) time to negotiate true-down rights. True-down rights give you the flexibility to reduce your license count or support volume in the future without penalty – essential if you expect your usage might decrease or if you’re in a downsizing phase. If your current IBM contract doesn’t allow reductions (many standard IBM deals are “use it or lose it” with no reductions), make it a point in renewal negotiations. You can request contract language that allows you, for example, to drop a certain percentage of licenses at the next renewal or adjust support fees downward if usage decreases. IBM may resist because it limits their revenue, but they have granted true-down provisions especially for customers willing to do multi-year commitments or who have variable needs. Emphasize that flexibility is a must-have for you to sign a renewed deal. Even if you don’t end up reducing later, having that right is valuable insurance.
Q: Will IBM remove auto-renewal clauses if I push back?
A: Often, yes – IBM can be willing to remove or modify auto-renewal clauses if a customer requests it during a negotiation. Auto-renewals primarily benefit the vendor (they guarantee continuous revenue and can catch customers off-guard). Suppose you explicitly request to opt out of auto-renewal. In that case, IBM may counter with an alternative (for instance, a manual renewal process or at least a requirement to send a quote and obtain your approval each term). In many cases, IBM has agreed to either remove the clause or add language that any auto-renewal will honor the last agreed discount and uplift cap. It’s important to address this during the negotiation of the renewal contract; once you sign, that auto-renewal clause will govern the next cycle. Most procurement experts will insist on removing or softening it, and IBM sales teams generally won’t die on the hill of keeping an auto-renewal if it means closing the renewal deal. Just ensure it’s clearly reflected in the final contract amendment.
Final Takeaway: An IBM renewal doesn’t have to be a rushed, one-sided affair.
By preparing well in advance, leveraging your notice period, and following a structured timeline of internal and external actions, you can approach the renewal strategically rather than reactively.
Stay skeptical of IBM’s initial offers, use data to support your requests, and don’t hesitate to press for better terms and protections. With the right preparation and mindset, you can turn an upcoming IBM renewal into an opportunity to optimize costs and strengthen your contract – instead of swallowing a hefty price uplift.
Remember, it’s your timeline and your business needs that should drive the renewal, not IBM’s. Good luck with your negotiations!
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