Top 10 IBM License Optimization Tips for IBM SAM
IBM software licensing is notoriously complex, and costs can escalate if you don’t actively manage and optimize your usage. Effective Software Asset Management (SAM) is crucial for eliminating “shelfware” (unused licenses), controlling renewal costs, and enhancing your negotiation leverage with IBM.
This guide presents the top 10 IBM license optimization tips to help CIOs, procurement leaders, and ITAM/SAM managers cut costs and minimize audit risks.
For an overview, read our guide to IBM Software Asset Management Strategies.
1. Maintain a Central Entitlement Repository
Collect all IBM entitlements (contracts, license keys, proof-of-entitlement certificates, etc.) in a single repository.
This centralized “source of truth” provides complete visibility into what you own, making it easier to identify overlapping or unused licenses. It also means you have all the documentation ready and organized for any IBM audit.
2. Use ILMT and SCRT Effectively
Use IBM’s official license tracking tools: ILMT for sub-capacity (PVU) licensing in virtualized environments, and SCRT for sub-capacity usage on IBM mainframes (z/OS).
Run these tools and produce their reports regularly (e.g., quarterly), and keep the reports archived. Using ILMT and SCRT properly ensures you only pay for the capacity you actually use. It also provides solid evidence of compliance in the event of an IBM audit.
3. Review Dev/Test and DR Rights
IBM often requires full licenses, even for development, testing, and disaster recovery (DR) systems, unless you negotiate otherwise. Review your IBM agreements: if special terms do not cover non-production environments, push for reduced-cost dev/test licenses or DR standby rights. Carving out these exceptions ensures you’re not paying full price for systems that aren’t actively used in production.
4. Right-Size Virtual Environments
In virtualized or cloud environments, avoid over-allocating CPU resources to IBM software. IBM licensing is tied to core counts, so if you assign more vCPUs or container capacity than needed, you’ll end up paying for idle capacity. Regularly monitor and right-size IBM workloads to match actual usage. This prevents overspending on licenses for unused computing power.
5. Eliminate Shelfware in Bundled Deals
Bundled deals, such as IBM Cloud Paks or ELAs, often include licenses that your organization never deploys – i.e., shelfware. Those unused entitlements are wasted spending. Track which parts of the bundle you aren’t using and quantify their cost. At renewal time, use that data to negotiate a swap or reduction in licenses: push to drop the shelfware or replace it with products you actually need.
6. Negotiate Renewal Uplift Caps
IBM often adds a 5–7% price uplift to software renewals each year by default, but you should treat that as negotiable. Push to cap any annual increase at a lower rate – tie it to inflation or set a maximum of 3%. This prevents unchecked cost creep over time and locks in long-term savings.
7. Leverage BYOL Portability
If you plan to move IBM software to the cloud, negotiate Bring Your Own License (BYOL) rights upfront. IBM’s standard terms won’t automatically let you apply existing on-premises licenses to cloud platforms. Without an explicit BYOL clause, you could end up paying twice for the same software.
8. Benchmark IBM Pricing Regularly
Regularly compare IBM’s pricing and terms with those of the broader market. Use your SAM data to see if IBM’s quote aligns with what other organizations pay. If IBM’s renewal proposal seems high, use those benchmarks to challenge it. Knowing the market gives you leverage to push for better pricing and terms.
9. Conduct Quarterly Internal Audits
Conduct an internal IBM license audit at least every quarter. In these self-audits, you reconcile what’s deployed in your environment against your entitlements. If you discover any over-deployed or unlicensed software, you can rectify the issue (by uninstalling or purchasing additional licenses) before IBM identifies it. Regular self-audits are like preventative maintenance – they reduce the risk of surprises in an IBM audit.
10. Align SAM with Negotiation Strategy
Align your SAM data with your IBM negotiation strategy. Procurement should leverage SAM insights to drive IBM contract discussions. If SAM reveals that certain licenses are underutilized, you could consider removing them from the renewal or demand better pricing. If there are any compliance gaps, fix them proactively so IBM can’t use them against you. By injecting SAM intelligence into every renewal, you avoid paying for waste and have the data to insist on fair terms.
Quick Optimization Summary
| Tip | Primary Benefit | Key Action |
|---|---|---|
| Central Repository | Stronger audit defense | Consolidate contracts |
| ILMT/SCRT Reporting | Avoid full-capacity billing | Validate quarterly |
| Renewal Uplift Caps | Lower long-term costs | Cap ≤3% annually |
| Shelfware Elimination | Reduce wasted spend | Swap/true-down rights |
Checklist – IBM Optimization Readiness
☐ Entitlements centralized
☐ ILMT/SCRT reports validated
☐ DR/test rights negotiated
☐ Shelfware identified
☐ Uplift caps secured
☐ BYOL rights confirmed
☐ Quarterly reviews completed
Read Choosing a SAM Provider for IBM Licensing: What CIOs and Procurement Leaders Must Know.
FAQs
Q: What’s IBM’s #1 cost trap?
A: Shelfware in bundled deals (like IBM Cloud Paks or ELAs) – paying for licenses that aren’t used – is IBM’s number one cost trap.
Q: Can ILMT alone optimize costs?
A: No. ILMT is a compliance tool for tracking usage, not a cost optimizer. It keeps you compliant with IBM’s rules, but you still need other measures to actually reduce license costs.
Q: Are renewal uplifts negotiable?
A: Yes. IBM typically aims for a 5–7% annual increase on renewals, but you can negotiate it down. Try to cap yearly increases at about 3% or tie them to inflation for better long-term cost control.
Q: Is BYOL automatic with IBM?
A: No. IBM’s bring-your-own-license (BYOL) policy isn’t automatic – it must be explicitly negotiated. Without a contract clause letting you use existing licenses in the cloud, you could end up paying twice for the same software.
Q: How often should I audit my IBM licenses?
A: At least quarterly. Performing an internal IBM license audit every three months helps you catch any compliance issues or unused licenses early, well before IBM’s own auditors might step in.
Read about our IBM Licensing Assessment Service.
