Engagement Snapshot
The Challenge
A leading multinational corporation operating across the Middle East faced an unexpected IBM software audit. The company's complex IT infrastructure spanned multiple countries and environments — including on-premise data centres, cloud deployments, and hybrid setups — creating significant complexity for licence compliance.
IBM's audit findings claimed non-compliance fees exceeding $12 million, driven primarily by discrepancies in sub-capacity licensing and processor value unit (PVU) calculations across virtualised environments. With limited in-house expertise in IBM licensing, the company turned to Redress Compliance for assistance navigating the audit process and mitigating financial risk.
PVU and sub-capacity licensing are among the most technically complex areas in IBM licensing. In virtualised and hybrid environments, even minor configuration differences — hypervisor settings, core allocations, ILMT deployment gaps — can create dramatic discrepancies between what IBM claims and what's actually required. Without specialist analysis, organisations typically lack the technical depth to challenge IBM's calculations.
The Process
Comprehensive Audit Review
Redress Compliance began by analysing IBM's audit report in detail to identify inaccuracies and inconsistencies in the findings. We conducted an independent internal audit of the company's software usage, focusing on key areas:
- Virtualised environments and hypervisor configurations
- Cloud deployments and their licence implications
- Hardware configurations and processor capacity
- Sub-capacity eligibility and ILMT compliance
Data Collection and Validation
Collaborated with regional IT teams across multiple countries to gather accurate usage data from servers and software deployment tools. Key activities included:
- Validated sub-capacity usage data against IBM's reported figures
- Identified overestimated PVU consumption in IBM's audit calculations
- Ensured proper entitlement mapping to licences
- Uncovered several unused or misallocated licences that could be reallocated
Negotiation Strategy
Leveraged technical insights to counter IBM's claims through strategic negotiation:
- Presented detailed evidence of compliant usage backed by validated data
- Demonstrated the company's commitment to compliance through proactive remediation efforts
- Negotiated directly with IBM's audit team to resolve disputes regarding sub-capacity licensing metrics and assumptions
- Challenged IBM's methodology on PVU calculations for virtualised workloads
Optimisation and Remediation Plan
Beyond the audit settlement, delivered a forward-looking strategy to prevent future exposure:
- Proposed a licensing optimisation strategy to reallocate underutilised licences
- Recommended specific governance practices to monitor and manage IBM software usage
- Implemented monitoring tools for sub-capacity licensing and ongoing PVU tracking
- Established centralised software licence management and governance policies
The Outcome
| Metric | Detail |
|---|---|
| Initial IBM Audit Claim | $12,000,000 |
| Final Negotiated Settlement | $360,000 (97% reduction) |
| Primary Savings Driver | Corrected PVU calculations and validated sub-capacity licensing across virtualised environments |
| Compliance Improvements | Established centralised software licence management and governance policies across all regions |
| Future Risk Mitigation | Implemented ILMT monitoring tools for sub-capacity licensing and ongoing PVU tracking |
Redress Compliance's expertise resulted in a dramatic reduction of the company's financial exposure. The $12 million claim was reduced by 97%, with a final settlement of just $360,000 covering only the cost of additional licences required to ensure full compliance. The company also implemented improved processes for managing software entitlements, significantly reducing the risk of future audit findings.
"The IBM audit was a wake-up call for us, but Redress Compliance's guidance made all the difference. They turned a potentially catastrophic situation into a manageable outcome. Their deep understanding of IBM licensing rules saved us millions and strengthened our compliance processes."CIO — Multinational Corporation, Middle East
IBM audit claims are not final. In complex virtualised and hybrid environments, IBM's automated PVU calculations frequently overestimate licence requirements. Expert analysis of sub-capacity configurations, ILMT data, and entitlement mapping typically reveals significant discrepancies that can be challenged with proper evidence — often reducing exposure by 70–97%.
How Redress Compliance Can Help
As a fully independent advisory firm with former IBM insiders on staff, Redress Compliance provides objective IBM audit defence, licence optimisation, and negotiation support — with no commercial relationship with IBM.
Licensing Assessment
Full compliance review
Audit Defence
Expert audit protection
ELA Renewal
Enterprise agreement advisory
Negotiations
Better deals and terms
Facing an IBM Audit?
Redress Compliance provides expert IBM audit defence — staffed by former IBM insiders who know exactly how IBM audits work from the inside. We've helped enterprises reduce audit claims by 70–97% across complex global environments.
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Fredrik Filipsson
Fredrik Filipsson brings over 20 years of experience in enterprise software licensing, having worked directly for IBM, SAP, and Oracle before co-founding Redress Compliance. Over the past 11 years as an independent advisor, he has helped more than 500 enterprise clients — including numerous Fortune 500 companies — optimise costs, avoid compliance risks, and secure favourable terms with major software vendors.