You speak English?

Would you like to be taken to the English version of our site?

It seems that you speak German.

Would you like to be taken to the German language site?

You speak French?

Would you like to be taken to the French language site?

May 3, 2018
Tomás O'Leary
Tomás O'Leary
Tomás O'Leary

IBM entering into new licensing deals is nothing particularly new or out of the ordinary. However, their latest high profile agreement is slightly unusual.

Over the past 18 months, Indian firm HCL Technologies has spent nearly $1 billion – around 90% of their total investment - with IBM to license various software applications. What is different? The fact that HCL have been buying access to intellectual property for applications that are (in some cases) decades old. The most instantly recognisable IP acquisition being Lotus Notes – an application that many organisations are actively phasing out.

Other well-known (but ageing) packages that have been farmed out to third party developers include Informix, Tivoli and Workload Scheduler. These former “crown jewels” still have a loyal user base - but that number is shrinking. If HCL has licensed the wrong products they will struggle to recoup their $1.1 billion outlay.

A worrying trend for IBM customers

In the longer term, HCL’s success or failure is of little importance to IBM customers. More concerning is IBM’s attitude towards their own software division. Licensing IP to valuable platforms like Lotus Notes is not just a cash grab – IBM is accelerating their move away from software entirely.

Informix, Lotus Notes, Domino and Tivoli Workload Scheduler are among the products that IBM has outsourced. These new licensing deals strongly suggest that IBM is no longer interested in developing world-class software for their clients.

IBM’s not-so-secret plan

For customers, this move away from software may come as a surprise. But the reality is that IBM has been making veiled references to their changing business model for a while now.

The 2015 Annual Report defines a number of “strategic imperatives” that would receive full funding to help the company regain market share. Importantly, those business units which are not imperative will almost certainly see funding reduced as IBM looks for new spending cuts and efficiencies.

Software is not a strategic imperative.

Existing customers can expect a new hard sell

IBM customers will already be well used to the hard sales tactics adopted by account managers when it comes to renewing annual maintenance contracts. Dire threats about leaving systems “unprotected” are used to convince software asset managers to sign on the dotted line for another three to five years.

But if IBM is pulling out of the (still lucrative) software market, what can customers expect in future? Like the rest of the industry, IBM is hoping to cross-sell existing clients onto new Cloud-based platforms. The margins per licence may be lower, but the annual revenue from a recurring subscription is much easier to predict.

Time to reconsider your own IBM software strategy?

The challenge for many IBM users is that they are heavily invested in the IBM ecosystem. If IBM’s strategy is focused on scaling back development of traditional software platforms, are they forced to migrate to the Cloud? The fact that IBM themselves are clearly no longer committed to the products that power their clients’ business is a strategic concern.

This conundrum becomes even more complicated for businesses who are themselves in the process of retiring older applications. IBM will continue to provide support (within defined product lifespans), but as always, the terms are heavily weighted in favour of IBM. And if your business only needs interim support during a transition to a new platform, IBM will undoubtedly charge for a full year, significantly increasing project costs.

As IBM wash their hands of tried and tested applications like Lotus Notes, Tivoli and Informix, software support customers face an uncertain future. HCL may provide some add-on services for IBM customers, but they remain an unknown and untested option. Fortunately, there does exist a proven alternative for your IBM software maintenance requirements – Origina.

With many years experience of providing third party IBM software maintenance, Origina has amassed an impressive customer list. You can rely on us to provide top quality support no matter how IBM’s software strategy changes in future. To learn more, please get in touch.

Recent Posts

Forrester Research reveals how to save on IT budget in a recession
How can companies find savings during the recession? A new Forrester Research report reveals how to save on the IT budget.
The top 10 best tech podcasts to listen to in 2020
Want to know what the top tech podcasts to listen to are? We've gathered the top 10 best tech podcasts for 2020.
A peek behind the curtain at an IBM® software contract
IBM® software contracts lock businesses into long-term deals, but do they always have what's best in mind for the client?


Ihr guter Vorsatz fürs neue Jahr – Kosten senken
Verabschieden Sie sich von erzwungenen Upgrades und genießen Sie 2020, glücklich unterstützt von Ihrem Vorsatz fürs neue Jahr.
Können auch Sie bei Ihrem IT-Budget 60 % einsparen? Wir sagen es Ihnen!
Wenn Unternehmen zu Origina wechseln, reduzieren sie damit im Schnitt die aktuellen Kosten für Support und Wartung ihrer IBM-Software um 60 %. Wenn Sie wissen möchten, ob das auch bei Ihnen der Fall wäre, ist der erste Schritt zu einer Zusammenarbeit eine Machbarkeitsanalyse.
Neue Rollen, neue Aufgaben – das Profil des SAM ändert sich.
Innerhalb der IT-Abteilung wird der Bereich Software Asset Management gern mal links liegengelassen. Das heißt, der SAM erhält nicht immer die Anerkennung, Unterstützung oder Ressourcen, die er verdient (und dringend benötigt).


Votre résolution pour la nouvelle année: réduire les coûts
Dites adieu aux mises à niveau forcées et profitez de 2020 avec le soutien de votre résolution du Nouvel An promise.
Découvrez comment ÉCONOMISER 60 % sur votre budget informatique
Origina permet à ses clients d’ÉCONOMISER en moyenne 60% sur leurs coûts annuels de maintenance et de support des logiciels IBM. Pour savoir si votre entreprise a un intérêt à confier le support de ses logiciels IBM à Origina, la première étape est de réaliser une étude de faisabilité.
Comprendre l’évolution du rôle des SAM
Dans les services informatiques des entreprises, la gestion des actifs logiciels (Software Asset Management) passe facilement au second plan. Les responsables SAM bénéficient donc rarement de la reconnaissance, du soutien ou des ressources qu’ils méritent - et dont ils ont besoin.