IBM FlexPoint: A Flexible License Model

Notable flexibility by the FlexPoint based licensing of IBM, which makes it possible to adjust licensing to altering needs. The article by dr. Dániel Rogányi (IPR-Insights) was published in

The quality of enterprise software-asset management does not only depend on successful audits or on infrastructure optimization, or on the most favorable bargain. Not being over-licensed, which means to minimize the purchased but unused licenses, – is just as important since the license and support fees of software “in stock” has to be also paid. This means throwing good money after bad. The ITIL maturity model of software-asset management evaluates these factors on higher maturity levels: on the proactive and effective levels of SAM.

Difficulties of Inflexible Licensing Models

The setness of volume licensing models does not allow changing the licensing conditions according to current needs and usage. Cloud-based solutions such as SaaS (Software as a Service) enables flexibility in theory because, with the reduction of usage, there is a chance to terminate the subscription for the unpaid period, or to convert it into credits. It is another issue that, large enterprise environments are not purely cloud-based i.e. on-premise and hybrid cloud solutions are more spread. This makes licensing rather more complicated instead of bringing simplicity into the picture.

There are a few vendors like Adobe or Autodesk, which offer their licenses solely as cloud-based subscriptions. On the level of the particular products, there are counterexamples, such as Microsoft Office 365, but especially on the server-side, traditional perpetual license plus maintenance model still dominates. The latter provides perpetual usage rights for a particular edition and version of the software. Annual maintenance is available for 20-25 % of the license fee, which provides technical support and usage right for the new versions released within the maintenance period. In theory, it depends on the licensee if it buys support for an existing license, but most of the vendors (such as IBM or Oracle) do not allow the partial renewal of maintenance- for understandable reasons. The “all or nothing” rule means that licensees have to purchase maintenance for all of their licenses, not just for the ones, which are in current use.

The inflexibility of the usual models is cracked by some special licenses like IBM’s trade-up, or Microsoft step-up licenses, these options are available for reduced prices and grant edition upgrades (eg. from IBM DB2 Workgroup to DB2 Enterprise), with an appx. 40%-60% discount. For a limited group of large enterprises, it is possible to purchase special volume licenses, these mix-match options allow to convert unused licenses for needed ones for a fix predetermined price.

Flexible solutions for changing needs

Notable flexibility by the FlexPoint based licensing of IBM enables clients to adjust their licenses to actual needs. With FlexPoint, licensees can purchase a “multi-product package” containing different products with cohesive functionality that means not the individual products but the packages need to be licensed. This is not the “Egg of Columbus” e.g. in case of Microsoft Office license, one does not acquire the licenses for Word, Excel, etc. components but gets access to all of the office applications in the package.

FlexPoint means more than that because it includes a broader product range. For example, the IBM Data Science and Business Analytics Platform 1.3 version contains all Cognos Analytics (previously known as Cognos BI), Planning Analytics (previously known as Cognos TM1), Cognos Controller, ILOG and SPSS products and all editions of related server and client software applications. If we buy these products one by one, we should buy the server and client components separately (except for Cognos BI products). Client-side products should be licensed by named user while the servers are licensed by their capacity, namely on a Processor Value Unit (PVU) basis. This makes it even more complicated is the fact that the named user licenses of Cognos solutions are typically role-specific licenses, which means that these have to be purchased according to user’s role and access type.

Because of the complexity of licensing, there might be a lot of considerable dimensions when license needs are changing. To stay with an easy example if there is a Cognos BI environment with a few users, it is better to choose the named user-based licensing, while with the growth of users, it is better to switch to the PVU based licensing. In this situation, the named user-based licenses became unnecessary.

In case of the FlexPoint based solution package, the license agreement determines the unit number equaling a FlexPoint. In case of Cognos Analytics User license for example 1 PVU = 2123 FlexPoints, 1 named user = 1661 FlexPoints. Therefore, FlexPoint is a determined value, based on which licenses with different metrics can be converted into each other. The Licensee has to pay attention “only” to one factor: usage should not exceed the aggregate FlexPoint value at a given point in time.

Remaining Conventional Obligations

Licensing T&Cs and reporting obligations have to be applied for all components in the package just as if it were purchased as standalone products. Named user licenses can only be finally reassigned to another user. In case of licensing originally PVU based licenses – for virtual capacity-, the usage of the IBM License Metric Tool (ILMT) is obligatory.

Nevertheless, the FlexPoint package enables the cost-effective coordination of the purchased licenses and the current needs. Edition upgrades become easier and cheaper and opportunities for trying other products from the package are also given. It is also good news that the FlexPoint based usage is automatically converted and reported in ILMT 9.2.13 and higher versions.