IBM / ibm licensing

IBM Audit Negotiations: Tactics for Successful Outcomes

To negotiate with IBM in an audit:

  • Be Prepared: Gather all relevant documentation and understand your current software usage.
  • Understand IBM’s Terms: Familiarize yourself with IBM’s licensing agreements and conditions.
  • Seek Expert Advice: Consult with IBM licensing specialists for strategic insights.
  • Negotiate Timing and Scope: Work with IBM to define the audit’s scope and timeline.
  • Leverage Fiscal Year-End: Utilize IBM’s fiscal calendar for potential negotiation advantages.

IBM Audit Negotiations

IBM Audit Negotiations

IBM audit settlements can be overwhelming, especially when non-compliance findings result in financial penalties.

However, you can negotiate better terms and reduce the financial impact with the right approach.

Below are practical strategies to help you navigate IBM audit settlements effectively.

1. Know Your Compliance Position

Before entering negotiations, it’s crucial to clearly understand your IBM license entitlements and deployments.

This involves:

  • Conducting an internal audit: Review your licenses and deployments to identify compliance gaps.
  • Developing mitigation strategies: Knowing your vulnerabilities allows you to proactively address them, strengthening your negotiating position.

Why this matters: Being well-prepared demonstrates to IBM that you are serious about compliance, which can positively influence the negotiations.

2. Challenge the Audit Findings

IBM’s audit findings are not always accurate. It’s important to:

  • Scrutinize the auditor’s report: Look for errors such as:
    • Failure to recognize licenses you own.
    • Inaccurate extrapolation methods.
    • Misinterpretation of licensing terms.
  • Push back on questionable findings: Challenging these can significantly lower the settlement cost.

Why this matters: Ensuring the audit findings are accurate prevents you from overpaying based on incorrect assumptions.

3. Negotiate License Purchase Terms

IBM usually requires the purchase of licenses to cover compliance gaps. However, there are ways to minimize costs:

  • Reduce retroactive fees: Demonstrate recent deployments that may affect the audit results.
  • Request reduced quantities: Argue for fewer licenses if the over-deployment was unintentional.
  • Explore alternatives: Consider different license metrics or products that might meet the requirements at a lower cost.

Why this matters: These negotiations can significantly reduce the financial burden of the settlement.

4. Substitute Products and Services

If the settlement includes licenses that don’t provide future value:

  • Negotiate substitutions: Replace those licenses with IBM products or services that better align with your long-term needs.
  • Focus on non-compliant licenses: It’s easier to substitute when the licenses weren’t flagged as non-compliant during the audit.

Why this matters: Ensuring the settlement serves your business goals rather than just resolving compliance issues can provide greater value in the long term.

5. Secure Strong Contractual Protections

A well-negotiated settlement agreement should include:

  • Release of Liability: Ensure the agreement covers all audited products and entities, protecting you from further claims.
  • Forbearance period: Request a period during which IBM agrees not to conduct another audit.
  • Clear post-settlement obligations: Define what your organization must do after the settlement, such as deploying IBM’s License Metric Tool (ILMT).

Why this matters: These protections reduce the risk of future audits and provide clear guidelines for compliance.

6. Engage Experienced Advisors

Given the complexities of IBM licensing, it’s often beneficial to:

  • Hire third-party experts: These professionals can help:
    • Challenge audit findings on your behalf.
    • Negotiate favorable terms using their in-depth knowledge of IBM’s licensing models.

Why this matters: Leveraging advisors’ expertise can lead to a more favorable settlement and reduce financial exposure.

Summary

Negotiating an IBM audit settlement is challenging, but following these strategies can reduce potential penalties and secure better terms.

  • Understand your compliance position to strengthen your negotiating power.
  • Challenge audit findings to avoid overpaying based on errors.
  • Negotiate license purchase terms to minimize costs.
  • Substitute products that better align with your needs.
  • Secure strong contractual protections to guard against future risks.
  • Engage experienced advisors for expert guidance.

Preparation and strategic negotiation are your best tools for reducing the financial impact of an IBM audit settlement. Use these strategies to protect your organization’s interests and achieve the best possible outcome.

Contact our IBM Audit Experts to Help Negotiate your Settlement

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Author
  • Fredrik Filipsson brings two decades of Oracle license management experience, including a nine-year tenure at Oracle and 11 years in Oracle license consulting. His expertise extends across leading IT corporations like IBM, enriching his profile with a broad spectrum of software and cloud projects. Filipsson's proficiency encompasses IBM, SAP, Microsoft, and Salesforce platforms, alongside significant involvement in Microsoft Copilot and AI initiatives, improving organizational efficiency.

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