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Another year of IBM: Predictions and how to build your IBM management plan


Part 2: Predictions and how to build your IBM management plan

Livingstone Group recently joined the ITAM Review for the Online Summit: Software Vendor Insights 2022 to discuss year end results from some of the key vendors and what to expect from them in 2022. We focused on the trends seen from IBM in 2021 and how that will impact audits, product focus areas, licensing and more.

Knowing where IBM is coming from, and going to, will help you – and other internal stakeholders such as procurement and finance – to best understand any risks and successfully manage your relationship with IBM for another year.

You can view the full session here, and read Part 1 on 2021 trends here. In Part 2, we’ll take a look at 2022 IBM predictions, what they mean for your IBM estate going forward, and how your organization can respond.


Predictions for 2022 and beyond

Undoubtedly, audits will continue to make an appearance throughout 2022, with sub-capacity non-compliance remaining an issue, though hopefully diminishing. However, compliance issues for container licensing will likely increase as containerization grows in popularity, and similar problems seen with sub-capacity will likely crop up as the new management tool for containerization gets rolled out. There will be a learning curve here, and many companies will need help getting the tooling and reporting right.

In addition, we can expect more organizations to opt for “baseline reviews” scheduled at an agreed time with IBM during the contract period. While companies will have to pay for these audits, it means they do have control over the timing and are able to prepare and mitigate risks and non-compliance beforehand. IBM will also continue to push IASP for enterprise organizations to meet their internal targets to drive compliance activity more towards this program (see Part 1 of this series for more information on IASP).

In terms of product, Cloud Paks will continue to be pushed and the focus on AI, hybrid cloud and security will continue. In addition, it is likely that Red Hat and IBM will contract together, something that will be driven equally by customers and IBM. While we can see some significant benefits to Cloud Paks, the extra layer of complexity mapping the products purchased to the products used will challenge sourcing and procurement organizations. The keys to making a success of a Cloud Pak purchase are understanding the composition of those Cloud Paks and having effective communication between sourcing, technical owners, and SAM teams. The wrong choices can lead to *extra costs and shelfware; the right choices can help drive value, efficiency and technological modernization.

Finally, focused acquisitions and divestitures will continue to be made, driving IBM’s key innovation areas of AI, hybrid cloud and security.

*Read Nial Eddery's "Datastage in Cloud Paks - did you pay 17% more than you could have?" article on LinkedIn


What to consider

Taking into account the changes made by IBM over the past year (see Part 1), and the predictions going forward, now is the time to take a look at your current and future IBM plans and see whether they are aligned with IBM’s strategy. If so, you could find yourself with a significant amount of leverage.

Indeed, by taking into consideration how IBM is operating, and looking at its goals and strategies, you can work to build an IBM estate that delivers on performance as well as cost.

For example, with IBM’s investment into containerization, hybrid cloud, AI and security, it is now the prime time to be having discussions with the vendor in these areas. Hybrid cloud in particular should be a key part of any contract discussions, since research shows that 80% of enterprises have a hybrid cloud strategy and are using an average of 2.6 public and 2.7 private clouds. There really is no time like the present to make the move to cloud.


Build your IBM management Plan

With that in mind, it’s key that you asses your IBM strategy and see what you need to do to drive your vision forward – this means building an effective IBM Management Plan. This starts with having a solid understanding of your current IBM estate, contract and business plans, followed by feeding in your future roadmaps, and finally taking IBM’s current and future plans into consideration to see how they match your requirements.

A key part of having an effective management plan is also having a clear understanding of your IBM spend and its impact and value, particularly when it comes to renewal. Is it strategic or operational? Is it tactical spend that becomes strategic? Do you need all the products you have deployed or can you reduce the number of licenses for some product? Could you move to third-party support? Are you able to focus spend on IBM’s ‘hot products’ and secure a better deal for your requirements? These are all key questions to consider when it comes to successfully managing IBM.


Planning your IBM renewal

At Livingstone, we follow a two-phase approach when it comes to planning an IBM renewal.

In Phase 1, foundation analysis is key. This means assessing your contract, sub-capacity licensing, license position, cloud inventory as well as mainframe current workload and capacity. It’s also essential to analyze your future state, including renewals, support, growth on existing products and capacity, new demand and workloads, hardware upgrades, One-time Charge software and any plans for Cloud Paks and Tailored Fit Pricing.

Phase 2 is about creating an optimal ELA solution. This entails analyzing your current contractual and commercial state as well as looking to the future and carrying our contractual and commercial benchmarking, contract assessments, agreement and billing structure, contractual concessions, financial modelling and – critical – planning your negotiation strategy

By analyzing your current state and thoroughly understanding your requirements, you’ll be well-placed to plan your future strategy and roadmaps, as well as gain control over your contract, compliance and consumption. In addition, if you know IBM’s strategy, you can plan your contracts going forward with all the information to successfully negotiate a deal that best suits your requirements, now and in the future. Indeed, by knowing your current contract structure and how it can be evolved to better suit your organization’s need, as well as being aware of IBM’s key points of focus, you’ll be better placed to negotiate discounts and drive more value from your deployments.


Third-party options

There are a number of IBM third-party support options available out there, and if you’re coming up to renewal for your IBM contract, it’s never a bad idea to see whether a third-party can offer support that better fits your requirements and at a better price point.

There are fully outsourced managed services – the likes of Celerity and Kyndryl – that will take on managing your entire IBM estate and licensing; third-party maintenance providers like Origina that cover a wide stack of products; and finally third-party Value Added Resellers, many of whom offer their functionality at a competitive price point.


How Livingstone can help

At Livingstone, we know that getting a handle on your IBM estate can be an overwhelming prospect. But our experience and expertise also tell us that there is a real opportunity to make substantial savings with IBM if your estate is managed correctly. With a detailed understanding of your deployments and entitlements as well as with smart allocation and management of your software, you can see a substantial reduction in costs and exposure to risk.

At Livingstone, our IBM experts can help with:

  • IBM contract optimization – Our contract and negotiation expertise can help you to track contract value and usage to align with roadmaps and business plans to ensure you have an optimized IBM contract.
  • Annual Effective License Position – We can worth with you to provide an annual ELP aligned with renewal and also identify non-compliance and cost reduction opportunities.
  • Audit Defense – We will support in audit management, data collection and ensure the best possible result.
  • Sub-Capacity Reports – This is a must have, and our experts can help with the quarterly analysis of ILMT reports to ensure that sub-capacity license requirements have been met.
  • ILMT Tool Management – Another essential. We can support monthly ILMT technical review and quarterly patching to ensure validity.
  • Red Hat Contract Management – Our IBM team can provide ELP and contract view to Red Hat to ensure alignment with your overall IBM vision. If you’re moving into the Cloud Paks arena, we can ensure you have a combined view with Red Had since Cloud Paks include rights to some Red Hat software.


To read more on key IBM considerations to keep in mind and see how we helped three clients make the most of their IBM investments,

To find out more about how Livingstone can help, visit our dedicated IBM page or click on the contact us tab on the right hand side of this page.

Livingstone Group | Video | IBM Management Plan

On-Demand Video - Building your IBM Vendor Investment Management Plan



Niall Eddery – IBM Practice lead and Senior Audit Specialist

Niall has worked in the IT industry since 1996, and in software asset management since 2004. His experience has taken him on both sides of the audit fence, having audited for KPMG , managed IT assets, contracts and vendors for Barclays, EY and Macquarie Bank at a global level before joining Livingstone as a consultant in 2013.

Niall has been a senior consultant at Livingstone for over 9 years, and is currently the head of our IBM practice, helping our customers with contract negotiation, audits and other licensing support.  He has been involved in contract compliance for software licensing, royalty, service level agreements and channel compliance in the UK, Australia, Europe and Asia Pacific.

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