IBM Software Audits Involve Complex Licensing Rules

Business owners and managers whose companies have been targeted by IBM for a compliance audit often express surprise at the complex method IBM uses to determine the licensing requirements for many of its server software products, such as WebSphere and Tivoli. Many software vendors employ server software licensing frameworks that would be familiar to most anyone with experience purchasing software licenses: for every installation of a software product on a computer, the owner of that computer must purchase a corresponding license allowing use on that machine. There are some common variations on that general theme used by some publishers – notably, Microsoft – involving connections to server software by other computers on the network. With Microsoft SQL Server, for example, the computer owner must purchase either an appropriate number of client access licenses (CALs) for each user or device accessing the server software or else a “processor” license for each physical processor in a given computer, allowing use by an unlimited number of remote users or devices. (Processor licenses are typically significantly more expensive that CAL-based software licenses, but they may represent a good value for servers with a high number of remote connections.)

IBM previously employed a processor-based licensing formula for its server products, but in 2006 it moved to a licensing model using what it calls “processor value units” (PVUs). Under this model, each server processor is assigned a per-core PVU number that depends on the manufacturer and specifications for that processor. (IBM maintains a chart of per-core PVU numbers here.) That PVU number then is multiplied by the number of physical processor cores embodied in the processor to determine the processor value for the physical processor. For servers with multiple processors, that processor value then is multiplied by the number of processors to determine the server value. It is this final PVU number that reflects the licensing required for each computer, as follows:

Server Description: Dual processor, quad-core Dell PowerEdge SC1435
Server value = 50 PVUs/core x 4 cores/processor x 2 processors = 400 PVUs

IBM terms the formula described above “capacity licensing.” For machines employing virtualization technologies, under which a virtual server hosted on a physical machine may utilize less than all of the physical machines resources, IBM allows its customers to apply “sub-capacity” licensing rules to reduce the number of PVUs required for compliance. However, the sub-capacity rules entail a number of significant requirements, including agreement with the terms of a Sub-Capacity Licensing Attachment and use of IBM’s License Metric Tool, which generates software deployment reports that must be maintained for at least two years and provided to IBM in the event of an audit.

IBM software licensing involves a significant financial cost, and IBM’s products typically function in business-critical capacities in a company’s network. Companies that find themselves engaged in IBM audits are well advised to discuss their IBM licensing status with knowledgeable outside counsel before disclosing any information to IBM or making any changes to their IBM software deployments.