IBM announced the sale of a number of software products including BigFix & Lotus Notes to HCL in December. HCL are a large, global digital technology company headquartered in Noida, India. The list includes several products which have been developed by HCL since 2017 in an IP-sharing agreement. HCL will now assume full ownership of these products, including Software Subscription & Support (S&S) subscriptions. This presents a number of challenges for ITAM professionals.
The headline change here is the sale of IBM’s flagship collaboration products – Notes, Domino, and Connections. Whilst often unloved and seen as legacy products many enterprise customers will have significant investments in them. From an ITAM perspective this is important. Your entitlements will be transferred from IBM’s licensing programme, Passport Advantage (PA), to a new company. It is vital that you check what is being transferred accurately reflects your entitlement – particularly with so many of these applications being potentially legacy or long-term investments. If you haven’t done a recent entitlement check now is the time to do so. Whilst there is no guarantee of data accuracy in PA, it is relatively straightforward to get a full download of what IBM thinks you’re entitled to. You can do this yourself from within Passport Advantage without the intervention of a partner/reseller. Check your records and ensure any discrepancies are highlighted and resolved before the licenses transfer to HCL.
New Supplier Relationship
With the transfer to HCL comes the requirement to enter into a new supplier relationship. It is presumed that your annual maintenance contract for Software Subscription & Support (S&S) will be transferred to HCL when the deal completes in 2019. Use this opportunity to engage with HCL and potentially negotiate new contract terms. At the very least you will need to put HCL through your new supplier process and, depending on the importance of IBM software to your organisation, this may be a lengthy process.
What about BigFix?
The formation of the new supplier relationship is particularly important with regard to BigFix. This software is a required component for the current version of the IBM License Metric Tool (ILMT). In order to qualify for sub-capacity licensing, you must run the current version of ILMT and therefore you have no choice but to install BigFix. This has the potential to add complexity to licensing engagements with IBM, particularly because BigFix will be required to record usage for products not sold to HCL, such as Websphere. So, for a Websphere installation to qualify for sub-capacity licensing, you will need to run ILMT (which may still be an IBM-supported and licensed product) using software provided & maintained by a 3rd party (HCL & BigFix). Potentially, in the event of an audit, you now have a 4-party relationship to work with (your company, IBM, IBM’s auditor, and HCL). Quite a challenge to get an NDA signed for that!
However, it may be simpler in practice. IBM licensing expert Eric Chiu predicts IBM
“will still be able to assign the right to use ILMT (for free) to its customers via extending IP sharing arrangements or a new sub licensing agreement with HCL”
(ILMT is just a small part of what BigFix is used for). This means that for ILMT purposes your relationship remains the same. The key point remains however that the new arrangements for ILMT are potentially complex, and complexity leads to errors, which can be very costly when you’re relying on ILMT to benefit from sub-capacity licensing.
Your recommended actions are as follows:
Prior to sale completion:
- Confirm license entitlements and resolve discrepancies
- Commence supplier engagement activities with HCL
- Clarify arrangements with regard to ILMT/BigFix with IBM & HCL
- Verify that transferred license entitlements are accurate
- Ensure that supplier records are updated
- Update maintenance renewal schedule to reflect change of supplier
With the exception of the specific ILMT requirements this checklist is a good starting point for any transfer of license entitlement information. In recent years, for example, we’ve seen Veritas purchased by Symantec only to be spun off again in 2016. Similarly, Quest was purchased by Dell in 2012 and subsequently sold in 2016. It should be no surprise that both Quest & Veritas are particularly active in commencing software license audits at present. Vendor license records are often inaccurate and ownership changes only add an additional layer of risk. It remains to be seen whether HCL seek to protect their $1.8bn investment by stepping up audit activity on the acquired products.
IBM were contacted to contribute to this article but have not responded to date.