Case Study: IBM Audit Defense for a German Automotive Company
Challenge
A leading German automotive manufacturer received an unexpected IBM audit with claims of non-compliance totaling €10 million. The audit findings pointed to licensing issues within their expansive IT infrastructure, including complex virtualized environments, cloud deployments, and vehicle design and testing development systems. With operations spread across multiple sites, the company’s decentralized license management practices led to alleged discrepancies in sub-capacity licensing and Processor Value Unit (PVU) metrics. Facing the risk of significant financial impact and operational disruption, the automotive company engaged Redress Compliance for expert audit defense.
The Process
- Audit Report Analysis: • Redress Compliance began by meticulously reviewing IBM’s audit findings, identifying overestimations and errors in license usage calculations. • Analyzed the company’s IBM agreements and entitlements to establish a baseline for legitimate software usage.
- Data Collection and Validation: • Collaborated with IT and engineering teams to gather accurate data on IBM software deployments across all environments. • Validated sub-capacity licensing calculations, focusing on server configurations, virtual machine metrics, and development tools. • Identified unused licenses and misconfigurations contributing to inflated audit claims.
- Negotiation Strategy: • Engaged directly with IBM auditors to present corrected usage data and challenge their findings. • Highlighted the automotive company’s ongoing compliance efforts and investment in IBM software, leveraging these points to negotiate favorable terms. • Addressed specific discrepancies in PVU calculations and virtualization policies that significantly reduced the scope of non-compliance.
- Compliance Optimization: • Reallocated licenses within the organization to close compliance gaps without additional purchases. • Proposed a long-term license management strategy to ensure compliance with IBM’s terms while supporting the company’s innovation-driven IT environment. • Recommended tools and processes to monitor real-time usage and avoid future audit risks.
Outcome
Through Redress Compliance’s intervention, the automotive company’s alleged non-compliance fees were reduced by 96%, from €10 million to just €400,000. The final settlement covered only the cost of additional licenses required for new deployments. IBM accepted the revised compliance report, avoiding disrupting the company’s operations or production schedules. The company also implemented improved license tracking and compliance monitoring processes, ensuring future audit readiness.
Quote from the IT Director:
“The IBM audit was a significant challenge, but Redress Compliance’s expertise turned the situation around completely. They saved us millions and provided a clear path to maintain compliance as our IT systems grow. Their support was instrumental.”
Key Results:
- Initial Audit Claim: €10 million.
- Final Settlement: €400,000 (96% reduction).
- Compliance Improvements: Centralized license management and real-time usage monitoring.
- Business Continuity: Avoided production delays and ensured IT system stability throughout the audit process.
This case showcases Redress Compliance’s ability to navigate the complexities of IBM licensing in highly technical industries, delivering exceptional outcomes for their clients.
