IBM Cost Optimization Seminar 4th November 2015

Sponsored by
IBM Cost Optimization Seminar
London, 4th November 2015

Sponsored by
Welcome & Open
Martin Thompson, ITAM Review

Sponsored by
Slides
http://www.slideshare.net/MartinThompson2/
presentations

Sponsored by
IBM Cost Optimization
Introduction
Martin Thompson, ITAM Review

News, Reviews and Resources for ITAM, SAM & Software
Licensing Professionals
Introduction
www.itassetmanagement.net

Agenda
•  Introductions
•  The Audit Landscape
•  An Introduction to the Campaign for Clear Licensing (CCL)
•  Research Summary on IBM
•  Three tips for IBM cost optimization

Audits are big business
•  Compliance teams
–  Organized, Experienced, Sales Driven
–  NOT about reducing compliance
–  Exploiting Greyness
–  Data to feed deals
•  Important Revenue Stream
–  50% UK Oracle DB Revenue
–  >25% SAP & IBM Revenue

Why CCL?
•  BSA, SIIA, FAST
•  Providing a voice for licensing buyers
•  Licensing is complicated:
1.  Absurd License metrics
2.  Dubious selling tactics
3.  Confusing terms that change too quickly

•  What will CCL do?
–  Code of conduct
–  Highlight bad practice
–  Lobby
–  Reward
•  Guiding Principles
–  Publisher Independent
–  Not for profit
–  Constructive and positive – Vendor Management
What is CCL?

Progress Report
•  To Date
–  Software Audit Code of Conduct (clearlicensing.org)
–  Oracle Research
–  IBM and SAP Research
–  Events in UK, France and USA
–  Dialogue with European Commission, Microsoft & Oracle
•  Coming Soon
–  Microsoft Research WIP
–  Q&A forum
–  Licensing program code of conduct
–  License program certification

IBM Research
IBM licensing and audit behaviour:
–  IBM customers struggle with inconsistencies across different terms and
conditions for different products.
–  IBM are very poor at communications, IBM’s audits typically know more about IBM
Licensing than IBM – and have no vested interest in educating the customer or the
market as a whole.
–  Many customers cited audit behaviour from KPMG as unprofessional or without
sufficient data quality or expertise.
–  Unlike Oracle, IBM allows sub-capacity of virtual infrastructure, but customers were
struggling to realize its real value.
–  Customers struggle with trying to unpick IBM bundling to ensure compliance

•  1. Reduce your license requirement
–  Fully exploit what you have
–  Train internal teams or hire external expertise
–  The process is not easy – but the returns are significant
•  2. Reduce future support costs
–  Cut out unnecessary costs whilst maintaining service
–  Expanding market to be actively explored
•  3. Buy smart
–  If shortfalls exist, buy them on the secondary market
–  Sell any surplus licenses on the secondary market

Next steps / collaboration
•  Your feedback?
•  How can CCL support you?
•  What do you need help with?

Sponsored by
Introduction to Origina
Tomas O’Leary

IBM Cost Optimization Seminar 4th November 2015

Software; it works . . . it’s relatively simple . . . !
so, why does it cost so much?!

Our traditional software acquisition process:!
ACQUIRE
SOFTWARE
LICENSES
INSTALL
SOFTWARE
PURCHASE
ANNUAL
SOFTWARE
MAINTENANCE
Licensed on a perpetual basis Usually with a 3rd party’s help So that you could get the “Fixes”

OVER CHARGING
•  IBM continues to charge full Passport Advantage Support and
Subscription
•  IBM charges an extra fee (extended support) for older software
versions
•  Forced upgrades
LOW VALUE SERVICE
•  IBM’s ‘one size ﬁts all’ S&S model inappropriate for their needs
•  They frequently have an unsatisfactory experience when calling for
support
One size ﬁts all . . . Not necessarily: !

Supported by a
Global delivery
team.
Using a
connected
ecosystem
of experts in
IBM’s
products.
Savings of up to
50% on  
IBM’s annual  
maintenance costs.
With legal  
and contractual
reassurance!
Paying only for the
service required.
We are an Independent Provider of IBM Software Maintenance.
Focused on our
customer’s needs
We support
800 IBM
software
products.
A bit about Origina:!

If the anniversary date of our IBM
Passport Advantage S&S
renewal is imminent or has just
passed can we still move our
contract?
Can we break out a subset of our
products to test your capability
prior to moving the full inventory?
IBM told me if I do break out a
subset of products I will end up
paying signiﬁcantly more money
on the renewals of any software
left behind. Is this correct?
Are the patches from IBM or are
they from Origina?
Where do I stand with IBM if I
useOrigina’sservice?
What happens where a patch or
ﬁx is not available and new code
must be written?
What happens to my IBM
Passport Advantage Online
access?
What if I establish that I need
access to a future version that is
not available today?
What if want to buy more
licenses?

Your personal contact:!
DUBLIN OFFICE
Unit 1, Block 2,
Bracken Business Park
Bracken Road,
Sandyford, Ireland
Phone: +353 1294 2300
Fax: +353 1294 2319
Email: info@origina.ie
LONDON OFFICE
9 Devonshire Square,
London,  
EC2M 4YF
Phone: +44 (0) 2033
183790
Fax: +44 (0) 2033 183791
Email: info@origina.co.uk

Sponsored by
Introduction to Softcorner
Habibou M’Baye

Be smart! We make it safe.
European trade community
for software
Summary
The digital transformation requires the CIO to prioritize
the allocation of resources of the company to innovate,
maximizing value creation and optimizing risk
management.
On these two points, a category of asset has been left
in large enterprises which is particularly interesting to
optimize interesting: software.
A recent event made this optimization even more
relevant, legalization by the European Union of the
resale of software licenses.
CIOs now have a new weapon in their struggle for cost
reduction:
SOFTWARE ASSET REMARKETING
Challenge
The 2nd hand market
Softcorner
01
02
03

for software
2nd HAND MARKET
Software Asset Remarketing:
An ongoing revolution
02

for software
BEFORE :
NOW :
JUILLET 2012
« The resale of
licenses is legal in
the European
Union retroactively
»
Now the software licenses can be bought and sold used
Software Asset Remarketing :
A revolution in the software governance
RUN UNINSTALBUY INSTAL
RUN UNINSTALBUY INSTAL
RESALE

for software
Elligible licenses for the second hand market : 5 criteria
Software can be sold on
the strict condition that the
first purchaser cease all
use and uninstall the
software.
Software must have been
originally acquired for an
indefinite period or for the
duration of copyright
Software must have been
o r i g i n a l l y a c q u i r e d
legitimately by its first
owner, with the permission
of the software vendor and
p a y m e n t o f t h e
downloaded copy
Software must have
b e e n o r i g i n a l l y
p u r c h a s e d i n t h e
European Union, and
sold within the European
Union
To split the software
bundles is allowed only
if it is technically possible
and compliant with the
vendor contract to
identify individual
licenses
01 02 03 04 05
ELIGIBLES
LICENSES
ELIGIBLES LICENSES
PERPETUAL LEGALLY
OWNED
BOUGHT IN
EUROPE
UNUSED
AND
UNINSTALLE
D
01 02 03 04
IDENTICAL
SOFTWARE
BUNDLE
05

for software
A several billions euros european market SCOPE
28EU countries + Switzerland
B €
POTENTIAL MARKET
12
3B €
On
premise
, 90.70%
Cloud,
9.30%
23%
Unused licenses
…

for software
To go further
White paper
SOFTWARE SECONDARY MARKET:
Risks and opportunities for big accounts
Written by SOFTCORNER in collaboration with CIGREF
(IT committee of big french companies : Club
Informatique des Grandes Entreprises Françaises) with
testimonies from Total, EDF, Carrefour, CNAMTS, this
study describes, in detail, everything you need to know
to understand the software governance issues and the
purchase and resale of software, optimization and
good governance for your business.

Free download
With contributions of

for software
SOFTCORNER
1ST European B2B marketplace
dedicated to second hand software
licenses
03

for software
Softcorner : The B2B Marketplace dedicated to Software Asset Remarketing
UNUSED LICENSE
OWNERS
LICENSE BUYERS
SECURITY
EXHAUSTIVITY
EXPERTISE
LEGALITY
CONFIDENTIALITY
COMMUNITY
Softcorner allows thousands of European companies to save or recover
millions of Euros on the 2nd market, legally and safely.

for software
What can we find on Softcorner ?
Database
Middleware
Data capture
User directory / security
SDK, quality
Design
Ressource management
Phone
Business inteligence
Search engine
Data layout
ERP
CRM
SCM
Server, virtualization, web
Reposotory, ECM
Backup and restore
N
N
-‐
x

-40% -80%
… from any software vendors
… any version…
… at very low prices !
On-premise licenses of any cathegory…

for software
How does it work?
Find a product
in the catalog.
Interact about the product and
negotiate the price via the platform
Buy licenses on SOFTCORNER
Post a free request
on the platform
OR

Sell licenses on SOFTCORNER
Find a
corresponding
request ion the
platform
Reference your
products for
free on the
platform
OR

Contractualize and set safely
whatever the amount due to the
Softcorner
escrow solution

for software
Robust transaction governance
A property transfer process which guarantees the EUCJ judgement compliance :
Existing law imposes eligibility criteria for
the resale of software licenses.
For each transaction, SOFTCORNER
checks:
•  The perpetual nature of the licenses;
•  The continuity and traceability of the
chain of law,
•  The seller company EU belonging.
A license is a right of use with conditions
(metric / restrictions) defined by the
associated contractual documents
(EULA, addendum, ...).
For each transaction, the seller must
provide the purchaser with a copy of
the contract documents characterizing
the licenses.
Software vendors are only able to issue
licenses on their intellectual property.
To ensure the license compliance,
continuity and traceability of the chain
law is needed.
For each transaction, SOFTCORNER
provides to the buyer the following for
each of the previous owners:
•  Proof of purchase
•  Destruction letter
ELIGIBILITY CHECKED DOCUMENT FULLFILMENT TRACEABILITY
ESTABLISHED
Following an acquisition of licenses on the Softcorner marketplace, your company can
demonstrate its status as a lawful acquirer, for example in case of the software vendor compliance
audit.

for software
Robust transaction governance
Trade with confidence
Only companies with a status of
Verified Trader can initiate transaction
SOFTCORNER.
The purpose of the audit is to assure
members that they transact with
legitimate business representatives.
Audits are conducted by SOFTCORNER
or one of our independent partners.
The SOFTCORNER transaction process
eliminates any risk or abuse that may
arise from malicious members.
The Buyer shall deposit the money in an
escrow account opened in his name
by SOFTCORNER, with our financial
partner.
As soon as the transfer of ownership is
finalized, the Seller is paid and
SOFTCORNER receives his commission.
To secure the transaction, the case is
fully supervised by SOFTCORNER.
It is based on a single contract of sale
validated by each member.
As soon as the Seller and Buyer agree
on the product, quantity and price,
SOFTCORNER initiates the settlement
procedure, during which takes place
the transfer of ownership.
VERIFIED MEMBERS SECURED PAIEMENTS CONTRACT FRAMEWORK
SOFTCORNER on the interests of all parties are preserved.
Sellers and Buyers make profits and savings safely.
It’s a win- win relationship for all parties !

for software
SOFTCORNER
www.softcorner.eu
44 rue Cauchy
94110 Arcueil
France
+33 (0) 9 80 80 85 82
contact@sotcorner.eu

Sponsored by
Introduction to Fisher IT Asset Consulting
Eric Chiu

§  Ex-licence audit manager at Deloitte, 200+ enterprise audits for IBM
§  Now leads FIAC, and is the Centre of Excellence on IBM matters
Eric Chiu
§  Part of HW Fisher, an 80-year old, top 30 accountancy in London.
§  Over 20 years experience in licence audit and advisory.
§  IBM Audit Defence, Internal Baseline and IBM LMO (License
Management Options) amongst most popular services FIAC offers.
Fisher IT Asset Consulting
Hwfisher.co.uk/fiac | licensing@hwfisher.co.uk | @auditdefence

How IBM licences its software
Now you see why Discovery is nothing
IBM has 143 active licence metrics (charge metrics) as of March 2015.
By including legacy metrics the figure goes beyond 200.
Processor based

• Processor –> Core –> Processor Value Unit

User based
• Role based user: admin / advance / basic / limited use
• Tier based user -> Authorised User Value Unit (AUVU), EUVU
Concurrency based
• Concurrent users / sessions
Capacity based
• Terabytes
Device rating based
• Resource value unit

Top 6 Compliance Risks
What gets you in trouble
6)
Virtualisation
5) User role
& access
definition
4) Server role
definition
3)
Multiplexin
g
2)
Application
specific
restrictions
§  “These are our Test/Dev
servers…”
§  “These servers are ran by our
service provider(s)…”
§  “I know how to count PVUs
so why ILMT”
§  “Computer says…”
Winner
The ‘But’

Contract & Licence Structure
Passport Advantage
Agreement
Passport Advantage Express
Legacy Agreements
EnterpriseSoftware&
ServicesOffering
Agreement(ESSO)
Contract Structure Licence Structure
Base Licence
with 12
months S&S
S&S Renewals
S&S Renewals
S&S Renewals
S&S Renewals
!
§  Base vs S&S count
§  Metric conversions
§  Trade-ups
§  Re-instatements
§  Legacy licences

Measuring Usage
Top Down
Bottom up
then
What
we
have
bought
?
PVU
Non
-
PVU
ILMT Deployment & Validation
Bundling, coverage & accuracy
Additional Information
Required
Design Data
Collection
Methodology
to measure usage
according to charge
metrics
Manual
Calculation
ILMT
Update
& Sign-
off
Effective
Usage
i.e.
Licence
Required

Sub-Capacity & ILMT
What’s the PVU requirement for WAS?
Q1 Q2 Q3
400 PVU
800 PVU
200 PVU
Q4
Time
LPAR
decom
0 PVU
IBM Software: WebSphere Application Server
Deployment: 1 x VM, on a 1,000 PVU Physical Host

A Quick Summary
§  IBM has a huge software portfolio and highly complex licensing
metrics, causing challenges in effective licence management
§  Understand your ownership of IBM licences should always be your
first step, and it can be harder than it looks
§  When measuring IBM licence requirement, you need to cover both
PVU based software via ILMT, and Non-PVU based software
manually.
§  It is important to know ILMT's limits and understand how it integrates
with other SAM solutions.
§  If you get things right, a lot of money can be saved!

Our Contacts
Eric Chiu
Fisher IT Asset Consulting
Director
Tel: +44 (0) 202 7554 3014
Mob: +44 (0) 7540 123 970
E-mail: echiu@hwfisher.co.uk
Stuart Burns
Fisher Forensic
Partner
Tel: + 44 (0)20 7380 4964
Mob: +44 (0)7798 532 789
E-mail: sburns@hwfisher.co.uk
Rafi Saville
Fisher Forensic
Partner
Tel: +44 (0)20 7874 7967
Mob: +44 (0)7968 162 651
E-mail: rsaville@hwfisher.co.uk
WWW www.hwfisher.co.uk/fiac
E auditdefence@hwfisher.co.uk

Sponsored by
Case Study
Eric Chiu

•  Large UK Manufacturing Site
•  Optimisation plan in advance of negotiation with IBM
•  At risk of audit
•  IBM Software Portfolio:
•  4 Main Products – Domino, Cognos, TSM and WAS ND
•  1 PA Agreement(2014), no ESSO / NGSA
•  1 Annual order of maintenance covering all products
•  Pricing Level (RSVP): Band H

Part
#
Product
Metric

OWNED &
SUPPORT
ED
Annual

support
fees
General
Context

D55MRLL
Domino
Utility Server
PVU 2 600 £ 94k
Used to support a
number of legacy but
critical applications
D17BALL
Cognos
BI
Analytics
Admin
Authorized
User
5 £ 11.4k
Compliance risk:
Unsure how user access
levels are linked to
licensing roles. Cognos
architect has left.
D175DLL Expl. 40 £ 15k
D17BGLL User 175 £ 35.7k
D56FELL TSM PVU 44 880 £ 463k
Recently replaced by
Symantec solution
D55WJLL
WAS
Network
Deployment
PVU 8 800 £ 234k
Compliance risk:
Virtualised but does not
track CPU changes
£ 854k

57

+- OPTIMIZATION
2
3
1
2nd MARKET OPTIMISATION
REQUIREMENT RATIONALIZATION
AS-IS LICENCE REQUIREMENT ASSESSMENT

O
è
COMPLIANT/
NO
SURPLUS

Part
#
Product

OWNE
D
DEPLOY
ED
OWED IBM
WASTED
D55MRLL
Domino
Utility Server
2 600 1 200
D17BALL
Cognos
BI
Analytics
Admin 5 210
D175DLL Expl. 40 0
D17BGLL User 175 0
D56FELL TSM 44 880 0
D55WJLL
WAS
Network
Deployment
8 800 28 000
44 800
PVU
175
User
205
users
19 200
PVU
1 400
PVU
!
OWNED VS AS-IS
DEPLOYMENT
GLOBAL INVENTORY

Products WASTED
NORMAL IBM’s INVOICE
OWED
IBM
A
Licence
cost
A-er

IBM
Audit

B
Normal
licence

cost

Y1

Renewal

Y2

Renewal

Domino
Utility Server
- 1 400 - - £ 94.3k £ 94.3k
Cognos
BI
Analytics
Admin -205 - £ 3.3M £ 2.3M £ 11.4k £ 478.6k
Expl. - - - - £ 15.0k £ 15.0k
User
- 175 - - £ 35.7k -
TSM - 44 880 - - £ 463.2k -
WAS
Network
Deployment
-19200 - £ 3.6M £ 2.6M £ 234.3k £ 745.6k
£ 6.9M £ 4.9M £ 0.85M £ 1.3M
!
IBM INVOICES

Product
OWNED
DEPLOY
ED
NEEDE
D
MISSING SURPLUS
Domino
Utility Server
2 600 1 200 800
Cognos
BI
Analytics
Admin 5 201 10
Expl. 40 0 0
User 175 0 200
TSM 44 880 0 0
WAS
Network
Deployment
8 800 28 000 20000
44 800
PVU
1 800
PVU
1 600
PVU
5
users
205
users
19 200
PVU
40
Users
175
users
11 200
PVU
25
Users
OWNED VS NEEDED
O
è
COMPLIANT/
NO
SURPLUS

REQUIREMENT
RATIONALIZATION

Product

OPTIMIZED IBM INVOICE
NEED
ED
MISSIN
G
WASTE
D
C
Licences
cost

Y1

Renewal

Y2

Renewal

Domino
Utility Server
800 - 1 800 - £ 65k £ 65k
Cognos
BI
Analytics
Admin 10 -5 - £ 57k £ 11k £ 23k
Expl. 0 - 40 - - -
User
200 -25 - £ 25 k £ 36k £ 41k
TSM 0 - 44 880 - £ 463k £0
WAS
Network
Deployment
20000 -11 200 - £ 1.49M £ 533k £ 533k
£ 1.57M £ 1.12M £ 0.66M
~

OPTIMIZE IBM INVOICE

Product

D - 2nd MARKET OPTIMIZATION
NEED
ED
MISSIN
G
SURPL
US 2nd
hand
cost
Selling
income
yearly support
Domino
Utility Server
800 - 1 800 - £ 45.4k £ 11.4k
Cognos
BI
Analytics
Admin 10 -5 - £ 10.3k - -
Expl. 0 - 40 - £ 13.4k £ 20.4k
User
200 -25 - £ 4.5k - -
TSM 0 - 44 880 - £ 384.5k £ 266.3k
WAS
Network
Deployment
20000 -11 200 - £ 258k - £ 14.5k
£ 272.9k (-83%) £ 443.3k £ 312.6k (-50%)
£
2nd MARKET OPTIMIZATION

£7,710,033

£4,043,151

£2,680,396

£585,527

£142,243

A
B
C
D
Net

2nd
market

op;miza;on

£
2.5M

2nd
market

op;miza;on

£
2.1M

SAM

Op;miza;on

£
5.0M

SAM

Ra;onaliza;on

£
1.36M

Risk

elimina;on

£
3.7M

Y1 IMPACT

£3,940,263

£5,238,310

£6,536,357

£7,834,404

£9,132,451

£2,680,396

£3,341,890

£4,003,384

£4,664,878

£5,326,372

£585,527

£898,134

£1,210,741

£1,523,348

£1,835,955

£0

£1,000,000

£2,000,000

£3,000,000

£4,000,000

£5,000,000

£6,000,000

£7,000,000

£8,000,000

£9,000,000

£10,000,000

Y1
Y2
Y3
Y4
Y5

Regular
IBM
invoice
Post
SAM
ra;onaliza;on
IBM
invoice
Post
SAM
ra;onaliza;on
2nd
market
invoice

5 YEARS TCO
IMPACT

•  Perform an ‘Internal Audit’ of your IBM licence
portfolio to quantify your risk, saving and
income opportunity
•  Apply SAM rationalisation to optimise your
licence position and minimise risk
•  Use third-party support and used software as
powerful tools to realise saving and income
opportunities identified.
TAKE ACTION
TODAY

Panel Session and Q & A
Sponsored by

Thank You
Please join us for refreshments
Sponsored by

IBM Cost Optimization Seminar 4th November 2015

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