A Beginner’s Guide to Sub-Capacity Licensing with IBM

04/17/2025|

IBM software licensing is known for being complex—but mastering the fundamentals can go a long way in avoiding compliance issues and controlling costs. One of the most critical concepts to understand is Sub-Capacity Licensing.

If you’re new to IBM licensing, this post will walk you through what Sub-Capacity means, why it exists, and what you need to do to take advantage of it—without falling out of compliance.

What Is Sub-Capacity Licensing?

In simple terms, Sub-Capacity Licensing allows you to license only the portion of a server’s processing power (CPU cores) that an IBM product actually uses—instead of the entire server.

This is especially important in virtualized environments, where many workloads share physical hardware. Rather than licensing the full server capacity, you can license just the “sub-capacity” your IBM software is entitled to run on.

Without sub-capacity licensing, IBM assumes you owe licenses for the entire server—no matter how little of it your product uses.

 

When Does Sub-Capacity Apply?

Sub-Capacity licensing is typically applicable when:

  • You’re using PVU-based products (Processor Value Unit)
  • Your IBM software is installed in a virtualized environment (e.g., VMware, Hyper-V, etc.)
  • You want to avoid licensing the full physical capacity of the server

It’s common in environments where virtualization is heavily used for scalability and efficiency.

PVU Refresher: What Are Processor Value Units?

PVUs are a measure IBM uses to calculate the licensing requirement based on:

  • Number of processor cores
  • Processor type
  • Value per core (from IBM’s PVU table)

Example: A 4-core server with a PVU rating of 100 per core = 400 PVUs required.

How to Qualify for Sub-Capacity Licensing

IBM doesn’t just let you opt into Sub-Capacity—you have to meet specific conditions. Here’s what you need to do:

  1. Deploy the IBM License Metric Tool (ILMT)

ILMT is mandatory in most cases for sub-capacity eligibility. It tracks where and how IBM products are deployed and how many PVUs are in use.

  1. Install ILMT Within 90 Days

IBM gives you a 90-day window from first product deployment to get ILMT up and running. Missing this window can mean forfeiting your right to sub-capacity.

  1. Maintain Quarterly ILMT Reports

You must generate and retain quarterly reports that show usage over time. These reports are IBM’s accepted audit evidence.

  1. Update the Software Catalog and PVU Table Regularly

Keep ILMT’s product catalog and processor value table up to date, or it may not report usage correctly.

  1. Ensure Accurate Coverage

Make sure ILMT covers all virtual hosts, not just a portion of your environment. Partial tracking = partial compliance.

When Sub-Capacity Doesn’t Apply

There are a few situations where you’re not eligible for sub-capacity:

  • You’re not using ILMT or it’s not properly configured
  • The IBM product isn’t eligible for PVU licensing
  • You’re running in certain public cloud environments not yet approved by IBM
  • You’ve failed to retain your ILMT reports
  • Your company qualifies as “small” (under 1,000 employees and devices) and you didn’t install ILMT (note: this exemption is rare and must be justified)

Why Sub-Capacity Licensing Matters

Sub-capacity licensing can significantly reduce your license requirements – especially in virtualized or hybrid cloud environments.

Example:

  • Full Capacity: A 32-core server = 3,200 PVUs (assuming 100 PVU/core)
  • Sub-Capacity: If your IBM software only uses 4 cores = 400 PVUs

That’s an 87.5% reduction in licensing cost—as long as you’re compliant with sub-capacity terms.

Real-World Implications

In IBM audits, the #1 issue that leads to unexpected costs is a failure to meet sub-capacity requirements. Even if you’ve only used 4 cores, IBM can bill you for all 32 if:

  • ILMT wasn’t installed
  • Reports are missing
  • The environment wasn’t fully covered

Sub-capacity is a privilege—one that comes with responsibility.

Final Thoughts

IBM Sub-Capacity Licensing is one of the most powerful cost-saving mechanisms available to clients—but it’s also one of the most misunderstood. If you’re not proactively managing ILMT and your virtualized environments, you could be leaving yourself exposed to large audit risks.

At Softcense, we help organizations assess, configure, and maintain their sub-capacity compliance posture—ensuring you’re both optimized and protected.

Need help getting ILMT configured or reviewing your PVU exposure? Let Softcense’s IBM licensing experts guide the way.