IBMs' Passport Advantage Changes Are More Than Just Altruism

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Quoting a desire to ensure continued customer satisfaction, Cicala & Associates believe IBM's recent changes to the Passport Advantage Licence is more to do with revenue maximization.

Quoting a desire to ensure their customers continued satisfaction by avoiding unintentional lapses in Software Maintenance coverage, IBM has announced changes to the terms of the Passport Advantage license. Whereas previously software maintenance was renewed by the customer when they accept the renewal notice, now the software maintenance will be automatically renewed unless the customer declines the renewal notice. Whilst this will save some organizations from inadvertently lapsing Cicala believes that this change has more to do with revenue maximization than it does with customer satisfaction.

“IBM's software maintenance renewal rate is about 84% and following this change, we expect to see it exceed 100% in the next 5 years and continue growing” said Pat Cicala, CEO of Cicala and Associates. “The vast majority of non-renewals occur in the reseller channel, where a lack of reseller focus results in some customers not getting renewal notices, or renewal notices sent to the wrong person in the organization. For organizations that want to avoid the punitive reinstatement costs, this change makes sense. However for those organizations that do not want to, or need to renew, the presumption will be that they do and they will be invoiced unless they object.”

The presumption of renewal is a subtle change, which when combined with the introduction of Fixed Term Licensing, announced at the same time, dramatically tips the balance in the suppliers favor. ”Most organizations do not have mature Software Asset Management processes which can handle and manage this change“ said Ms Cicala. “Many organizations are unable to fully reconcile supplier invoices and these types of changes are exactly what we expect to see when suppliers are trying to boost the bottom line.”

Recommendations “Users need to understand that just as it is in the suppliers interest to invest the time and effort to issue the renewal notices, so it is their own interest to invest in policies and procedures that check these notices against what is being used and what can be reassigned“ said Ms Cicala “One thing is for sure - software licensing is going to get more a lot complex”.

About Cicala and Associates

Cicala and Associates, LLC are the leading independent IT Asset Management Strategies and Services organization. Dedicated to assisting IT procurement and asset management professionals simplifying their sourcing strategies and aggressively managing their IT assets, Cicala and Associates work from offices across the USA and Europe with organizations at all levels of maturity, providing tactical assistance and strategic guidance to achieve their objectives. Cicala services include CicalaOnline.com, a rategy, tactics and guidance program; and Cicala Consulting that provides customized engagements to help organizations manage their IT investments throughout the life cycle. For more information, visit http://www.cicalaonline.com.

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Roy Millet