IBM Grants Amnesty On Software Maintenance After License Charges
April 20, 2020 Timothy Prickett Morgan
Ask and ye shall receive. Last week, we were asking for Big Blue to wake up and provide a stimulus package for its Power Systems business in general and its IBM i business in particular. And one of the things we asked for – an amnesty canceling so-called after license charges for Software Maintenance for IBM i and AIX platforms was actually quietly announced to business partners – unexpectedly at that – on April 13, the same day our essay ran and three days after we wrote it.
We think this is a coincidence, not causation. And it’s a good start. And now we need IBM to also cancel after license charges on IBM i licenses themselves and for Big Blue to work with third party application software providers to get their own after license charges removed. Only this way can we remove at least some of the barriers to moving customers on vintage systems and application software to shiny new releases and making the IBM i base that much more resilient.
As far as we know, there is no announcement letter to customers describing the amnesty on after license changes for Software Maintenance (often abbreviated to SWMA and pronounced “swamma”) on all Power Systems and Storage Systems hardware. The SWMA waiver was put together by the IBM Systems group and the IBM Technology Support Services (TSS) organizations. TSS is not part of IBM Systems group, but part of the Global Services behemoth, and there is a brochure for SWMA here that explains what it is and what IBM does. (A funny aside: Even though this document is dated November 2019, the document says it is offering tech support on “System i” and “System p” operating systems rather than saying “IBM i” and “AIX.”) And just for your reference, here is a link to all of the hardware and software support services that IBM offers, including not just SWMA and hardware break/fix support, but also proactive support and other value-added support.
Because there is no customer letter, where is what TSS and IBM Systems group let business partners know about the after license waiver for SWMA in a letter sent to partners registered with IBM’s PartnerWorld organization:
TSS US … Announcing the 2020 Software Maintenance (SWMA) Amnesty Program
ALF waiver is approved through August 31, 2020
TSS and IBM Systems are partnering to waive the After License Fee (ALF) for all Power and Storage Software Maintenance (SWMA) products.
When SWMA has lapsed, a customer must normally pay a reinstatement fee, known as an After License Fee (ALF), in addition to SWMA to obtain license upgrades and support. This program is designed to encourage clients to reinstate lapsed IBM SWMA, removing ALF as a potential inhibitor and helping clients to protect their IT investment and maximize system availability.
This program is rarely offered and is a substantial savings for clients, who may unknowingly be exposed with lapsed SWMA coverage, or who find the ALF re-establishment fees to be prohibitive. Note that ALF is in addition to SWMA, and can be up to 2X the annual reference price for a given SWMA service.
- Generate additional revenue in lapsed SWMA opportunity by getting clients current with SWS without ALF fees.
- Encourage Clients to also purchase Premium services, hardware services and MVS services.
- Available from April 1, 2020 through August 31, 2020.
- Broadly applies for any SWMA product in ISAT / CHIS, regardless of HWMA status.
- Does not include HWMA Refee waiver. Gemstone 2020 is still available for Refee waiver or Refee discount (BAU) for eligible machines.
Offer details / Process to execute
- 100% ALF waiver for SWMA services applicable to IBM Power and IBM Storage.
- Speed to market
For the duration of this program, Business Partners may simply omit ALF on ISAT proposals created. No special bid request is required.
- Valid between April 1, 2020 through August 31, 2020.
- For ISAT proposal cover letter purposes, proposal expiration date must not exceed August 31, 2020.
- Executed contract must be submitted to IBM for registration on or before August 31, 2020.
- Where the effective service(s) start date is on or before August 31, 2020.
Program limitations / Good things to know
- This offer is only valid for IBM Power or Storage software maintenance contracts which expired prior to 3/31/2020.
- SWMA lapses in coverage less than 90 days do not qualify.
- Available for SWMA ALF Fees associated with IBM Power and IBM Storage Systems
- BP Education Call to be scheduled
ALF Fees associated with the following services as listed are not eligible for this promotional offer: Products excluded: ProtecTIER Enterprise Edition, ProtecTIER Application Edition and ProtecTIER Entry Edition.
Call To Action
Utilize OI tools, marketing resources and your IBM, and client relationships to identify and engage with clients. Encourage bringing back every client with Premium services included in your quote.
This seems pretty clear. So how much money is the after license waiver worth for IBM i? I put together this table with the final SWMA price increase for IBM i by software tier:
|IBM i License||$2,995||$14,995||$44,000||$59,000|
|SWMA After License||$3,200||$10,000||$12,800||$19,600|
|Percent Of License||107%||67%||29%||33%|
These are per-core SWMA fees, obviously, and while it is not a huge amount of money compared to the actual software license except for the P05 and P10 software tiers. It irks me that this is not more fair, but you have to pick your battles. Moreover, the after license waiver is coming right after a price increase for IBM i SWMA, which we detailed here. So IBM is giving, but it is also taking it back over the next couple of years through slightly elevated SWMA charges.
While this is a good start, IBM has to do more to protect its own future business as well as the businesses of its Power Systems customers. As I pointed out two weeks ago, capital is extremely scarce and companies are going to want to conserve whatever they have now and whatever they can generate in the coming months. Credit is going to tighten for everyone just because of the sheer uncertainty of cash flow in the economies of the world at the moment. And as I said before, but it bears repeating now, it seems obvious that if IBM and its hardware reseller and software partners want to do deals, they are going to have to structure them so that Big Blue is basically the bank and shift to cloud-like daily, weekly, or monthly pricing for systems, systems software, and application software to lower the barrier to moving from customers. Roll up all the hardware, software, and support into monthly bill customers can stomach, and then roll in application migration and upgrade services with the third party application provides and bill this all monthly as well. Big Blue is big enough and rich enough to take this hit for IBM i customers and then IBM and its partners get that annuity-like revenue stream coming in for a decade to cover it and future upgrades.
Just move to cloud pricing entirely, and make this easy and immediately affordable. Make it so the chief financial officer or business owner doesn’t even have to think twice about getting modern.
As I said before, there are other things IBM can do. Now is probably a good time to cut costs on processor, memory, disk, and flash capacity. Maybe a 25 percent COVID-19 price break will be enough to help customers build up their existing systems, expanding them so they can run more partitions and do more useful stuff. The IT department has to figure out how to support employees remotely and make sure applications can extend out over the Web, and they are going to need beefier systems to do that in a lot of cases. So help.