Client Profile
At a Glance
🚨 The Challenge
A major California government entity responsible for public services and infrastructure faced an IBM audit claiming $30 million in non-compliance fees. IT systems supported critical functions across the state.
- Citizen data management systems
- Public safety networks and emergency services
- Municipal services infrastructure
- Discrepancies in sub-capacity licensing cited by IBM
- Entitlement mismatches and usage metric disputes
- Tight budgetary constraints as a public entity
✅ The Outcome
Redress Compliance reduced the entity's financial liability by 97% — from $30 million to just $900,000.
- Final settlement of $900,000 (new deployments only)
- No penalties incurred — zero punitive charges
- $29.1 million in alleged non-compliance eliminated
- Uninterrupted delivery of all public services
- Centralised licence management implemented
- Automated real-time monitoring tools deployed
💰 Audit Claim Resolution
The final $900,000 settlement covered only the cost of additional licences required for specific new deployments — with no penalties or punitive charges. The remaining $29.1 million was eliminated through corrected sub-capacity calculations, entitlement revalidation, licence reallocation, and challenge of IBM's inflated usage metrics.
Our Process
Redress Compliance provided comprehensive audit defence, working closely with the entity's IT and procurement teams to dismantle IBM's $30 million claim while maintaining uninterrupted public service delivery throughout the process.
Audit Review & Strategy Development
Conducted an in-depth analysis of IBM's audit report, identifying errors in licence usage calculations and entitlement mapping. Examined historical agreements and deployment data to establish an accurate compliance baseline. Developed a targeted strategy to challenge IBM's claims on factual and contractual grounds.
Data Collection & Validation
Partnered with the government entity's IT and procurement teams to collect detailed usage data from servers, cloud platforms, and virtualised environments. Validated sub-capacity metrics, uncovering significant overestimations in IBM's findings. Identified underutilised licences and misconfigurations that could be optimised to address compliance gaps without additional purchases.
Negotiation with IBM
Presented a revised compliance report to IBM backed by accurate data and clear interpretation of licensing policies. Highlighted the government entity's critical role in providing public services and its significant investment in IBM technologies. Secured major concessions by challenging ambiguous claims and emphasising the need for budget-conscious solutions appropriate for a public sector organisation.
Optimisation & Governance
Reallocated unused licences to close compliance gaps without incurring additional costs. Designed a compliance framework with automated tracking tools to ensure real-time monitoring and long-term adherence to licensing terms. Delivered training for IT and procurement teams to enhance understanding of IBM licensing requirements and prevent future audit risks.
"The IBM audit posed a significant risk to our operations and budget, but Redress Compliance delivered extraordinary results. Their expertise saved us millions and left us with stronger compliance practices. Their guidance was invaluable to our organization."
Key Takeaways
Public sector organisations face unique challenges during IBM audits — tight budgetary constraints, public accountability requirements, and the critical need to maintain uninterrupted service delivery. IBM's audit methodology frequently produces inflated claims in government environments by overestimating sub-capacity licensing requirements and misapplying entitlement mappings across complex, multi-function IT estates. In this case, 97% of IBM's $30 million claim was eliminated once accurate deployment data was collected and correct licensing interpretations were applied. Government entities should not accept IBM audit findings at face value, and should engage independent licensing expertise early to protect both taxpayer funds and public service continuity.
Facing an IBM Audit?
Redress Compliance has defended hundreds of organisations against IBM licence audits — routinely reducing claims by 80–100%. Our independent advisory ensures you only pay for what you legitimately owe, with no vendor ties or conflicts of interest.
📖 Related Case Studies & Resources
- Case Study: IBM Audit Defense for an Australian Bank
- Case Study: IBM Audit Defense for a German Automotive Company
- Case Study: IBM Audit Defense for a Major US Airline
- Case Study: IBM Audit Defense for a US University
- IBM Licensing Case Studies: Eliminating Risk & Cutting Millions
- Enterprise Guide to IBM Licence Audits
- IBM PVU Licensing: A Practical Guide
- IBM ILMT: Sub-Capacity Licensing Advisory
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Learn more →Fredrik Filipsson
Fredrik Filipsson brings 20+ years of experience in enterprise software licensing, having worked directly for IBM, SAP, and Oracle before co-founding Redress Compliance. He has defended hundreds of organisations against IBM licence audits across government, banking, automotive, manufacturing, pharmaceutical, and technology sectors — routinely eliminating or dramatically reducing compliance claims. Redress Compliance maintains complete vendor independence — no commercial relationships or referral fees from any software vendor.