IBM Audit – Introduction

IBM Audits have decreased in the past few years, but IBM is still auditing its customers. In today’s world of globalization, it is more important than ever to comply with all licensing requirements, including IBM’s. If you’re wondering what IBM software audit is, keep reading. This article will help you understand what an IBM audit is, what it entails, and what common reasons your company may be found in non-compliance. Here are some common reasons you may be audited by IBM:

What is an IBM software audit?

An IBM software license audit is necessary for an organization to comply with licensing policies and ensure that its software meets its contractual obligations. IBM software has a user-related and hardware-based licensing metric, which means that if your organization fails to meet these, it will face financial risks. In addition, IBM has made it difficult to use a sub-capacity licensing without a ILMT, so it is necessary to obtain full-capacity licensing for all products.

You may receive a letter from IBM notifying you of an audit. In this letter, IBM may state the scope of the audit, target the legal entity for the audit, and even list the name of the auditor. While the letter may be official, it may raise questions about the timing and scope of the audit. To prevent this, you should check your ELAs and determine whether the audit scope is authorized by your ELAs.

The auditor may apply these terms in several ways. The initial draft of the audit report reflects a single point of view and does not take into account all the mitigating factors, the customer may have. For example, some products allow free software installations. Others offer cold/warm standby software installations. Once you’ve received a draft audit report, you’ll need to provide mitigating information from the customer.

Why are you audited by IBM?

You’ve probably been receiving Audit letters from IBM, but do you know why? IBM is trying to capture more revenue from its customers by requiring them to buy licenses and pay retroactive maintenance fees. If you’re the one who’s triggered an audit, here are some ways to avoid it. Make sure to read through the audit scope before sharing it with others. Ensure you’ve double-checked your Excel sheet.

IBM has many confusing products, and complicated licensing. Even if you’ve purchased a sub-capacity licensing, you still have to comply with their terms and conditions, or they’ll audit you. If you’ve already deployed IBM software, it’s probably not worth it to pay maintenance fees based on old licensing models. IBM’s auditing process is not very helpful, and you should be prepared for it.

IBM disguises its discussions of software licensing as “education” or “evaluation”. It assumes you don’t know how to comply with its policies, but their auditors may find your software out of compliance. They’ll also challenge your entitlement to additional programs, such as DB2 Advanced. In this way, they’ll find you need to buy more licenses to get your IBM applications back into compliance.

While you’re going through an IBM audit, you don’t have to panic. You can protect your legal rights and your reputation by hiring an experienced attorney. Our technology professionals and lawyers have the legal skills necessary to successfully guide you through the process. IBM audits are difficult to deal with, but our attorneys can walk you through the process and help you protect your business. So, if you’re facing a similar situation, contact our firm and let us help you.

IBM License Agreements

The Passport Advantage (PA) contract remains the IBM Standard contract. The Enterprise Software & Services Offering (ESSO) contract is sometimes used as a global contract framing several contracts of the same group.

Under a contract, a customer can purchase a license entitlement to have the right to use the product and / or optional maintenance which, if subscribed, must be renewed annually on the total purchased licenses. If the maintenance has not been renewed, after a period of one year, the customer must buy Reinstate licenses if they want to use a newer version and reactivate their right for support. Finally, a trade-up is a license to upgrade the product range like a change from Domino Messaging Server to Domino Application Server.

IBM Licensing Metrics

• Storage Capacity Unit (SCU), formerly known as Terabyte Metric (TB): This measure was made public by IBM for Spectrum Control and Virtualize in June 2016. (TPC, SVC).
• PVUs (Processor Value Units) are calculated using a server’s number of cores multiplied by a processor type-specific coefficient. We use the terms full capacity or sub-capacity depending on the usage rights.
• Resource Value Unit – The idea of a resource is very ambiguous, and the specificity is predicated on a degressive accounting. Resource Value Unit (RVU)
• Authorized User: relates to how many individuals can use the solution.
  These variants include AUVU (Authorized User Value Unit), XUVU (External User Value Unit), and EUVU (Employee User Value Unit). The license text should be read as one rule (often degressive).
  Depending on the number of users connected at once, floating user and concurrent user
  Based on the number of sessions open at any given time, a simultaneous session.
  Based on the amount of personnel and other parties with access to the information system, the CEO (in the broad sense). The number of workstations is frequently used to evaluate auditors.

IBM Audit process

• IBM license audits are necessary to verify compliance with licensing agreements and capture more revenue. Often, customers are notified about pending audits by mergers, company expansion, or cancellation of maintenance. IBM audits all of its customers around the world on a regular basis. While the primary objective of an audit is to determine whether a licensee is compliant with licensing agreements, it may also be a good opportunity to generate additional revenue for the company. To avoid this, customers should check to make sure the scope of the audit is allowed by their licensing agreements. If they are not, they should also negotiate to restrict the scope and timing of the audit.
• The IBM license audit process begins with an information request. IBM will send you instructions for data collection. You should gather information about all of your IBM software installations and licenses. The audit team may also propose monetary or non-monetary settlements. The settlement may include license costs and future maintenance fees. It is essential to review these findings carefully and object to anything that you don’t agree with. In some cases, IBM might propose a monetary settlement, which may include retroactive maintenance fees. If you think your license costs are too high, consider consulting an IBM expert for guidance. This expert will guide you through the audit process and help you manage your IBM license costs efficiently.
• The IBM license audit process can be challenging. Because IBM is one of the largest and most complex companies in the world, it can be challenging to keep track of licensing. However, if you plan ahead of time, you can avoid the costly audit penalties and the loss of Sub-Capacity eligibility. And if you’re a big company, it’s important to keep up with the latest licensing changes so you don’t end up paying for licenses that you don’t need.

Common reasons for non-compliance for IBM software

• IBM has an ELA, but it doesn’t guarantee that all customers will comply with it. If your organization has undergone a major restructuring, for example, your license agreement may be at risk. Organization restructures often cause significant changes to license agreements. During these changes, shortfalls in entitlement often occur. In such cases, it’s vital that you prepare the auditor to challenge your entitlement to these additional programs.
• Another common reason for non-compliance with an IBM software license audit is that your company hasn’t kept an accurate record of all purchases. For example, your organic network can expand, so your license records may go missing between purchase and installation. As a result, you need to ensure that you maintain an accurate record of every purchase and install it. Otherwise, you may face a costly audit and an even bigger fine.
• Compliance with IBM license agreements can be complicated. While the IBM Sub-Capacity Reporting Tool (SCR) is designed to help you manage your licenses, it often does not capture the full scope of your software use. Many customers overlook the eligibility criteria for their IBM Sysplex and sub-capacity licensing. Additionally, bills can be misunderstood. In addition to this, billing systems may not be optimized for customer consumption, which can result in non-compliance.

What is IBM ILMT?

The License Metric Tool (ILMT) is a powerful software tool for assessing IBM software usage and costs. It helps IT managers understand the overall effectiveness of IBM’s software deployment. The IBM ILMT includes three components: a license meter, a licensing agent, and a license-tracking tool. Each of these components identifies IBM software that is installed on a supported system. The license meter runs regular scans to determine which products are being used.

ILMT provides a single centralized view of all hardware and software assets for a business. It provides detailed information on operating systems, hardware infrastructure, and hostname. It also provides a list of virtual servers in public clouds. These data are helpful in determining software cost, as well as for reporting purposes. In addition, the tool helps manage the security of IBM software, including its versions and products. IBM Security explains how ILMT helps clients manage costs and achieve compliance.

Some companies believe that the IBM ILMT is broken, but it is an important part of software license management. A failed ILMT deployment can negatively impact an audit performed by IBM. The best way to ensure compliance with the ILMT process is to have IBM involved in the implementation services contract. For example, if ILMT is not implemented properly, it may impact a business’s ability to be correctly licensed.

How to negotiate IBM Audit settlement

There are several factors to consider in negotiating an IBM license audit settlement. While the company may be able to get more favorable terms by using alternative purchases, it’s important to make sure you’re not extending your subscription to IBM products or services. The auditor’s findings can be lengthy and contain errors. Ideally, the auditor will give you a week to review them. Next, you should negotiate with the IBM auditor to determine if the audit results are fair and reasonable. If the audit result isn’t satisfactory, you’ll either have to buy the license shortfall from IBM or extend the subscription for an additional two years to avoid being charged more than you’re entitled to under the license.

A customer approached Redress with the expectation that it would receive a fair settlement. The company’s software estate contained very few IBM products. Therefore, the customer had no desire to extend the IBM investment into other products. The company was able to obtain a $950,000 settlement with no further obligations to purchase new software, which was an important concession for them. The final settlement was much higher than the initial offer. However, the company’s initial offer of $750,000 was not acceptable.

Depending on the scope of your software license, you may be able to negotiate an IBM license audit settlement if you have a complete list of the programs and applications you use. This is possible because IBM software partners often embed IBM software in their products. For example, the IBM software audit team might find that DB2 is out-of-compliant because the customer was using it in bundled configurations, requiring no incremental licensing. Then, the auditors may challenge your entitlement to secondary programs such as SQL Server, or even a Linux distribution.

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