IBM software audits often result in findings of license shortfalls. But here’s the good news: even if IBM identifies a compliance gap, you may not have to purchase the exact licenses they specify at the listed price.

This eighth blog in our 10-part series explores how considering alternative licensing options during settlement negotiations can save your organization significant costs and help you make smarter long-term licensing decisions.

Quick Recap

In the last blog, we discussed how to thoroughly review a draft Effective License Position (ELP) before it’s shared with IBM. This step allows you to spot errors, challenge assumptions, and provide additional context to reduce inflated findings.

But what happens when some non-compliance remains after your review? That’s where strategic licensing choices come into play.

Why Licensing Alternatives Matter

Auditors typically highlight license shortfalls based on current deployments and the metrics applied (e.g., Processor Value Unit or Authorized User). However, several different license types—or combinations—can often legally cover the same software usage.

By proactively suggesting alternatives, you can:

• Lower Costs: Certain license models (e.g., Authorized User vs. PVU) can reduce exposure dramatically.
• Leverage Discounts: Non-production licenses can cut costs by up to 50% compared to standard production licenses.
• Maximize Flexibility: IBM Cloud Pak licenses can be allocated across multiple products and metrics, reducing the need for separate purchases.
• Offset Retroactive Fees: IBM may waive two years of past-due Subscription & Support fees if you agree to acquire other licenses instead.

Practical Examples of Alternatives

1. Metric Change: Switching from PVU to Authorized User licenses can significantly reduce costs where access is limited to specific users.
2. Environment-Based Licenses: Non-production or restricted-use licenses may cover certain environments at half the cost.
3. Cloud Pak Optimization: Utilizing existing or newly purchased Cloud Pak entitlements can satisfy compliance across multiple IBM products.
4. License Trade-Offs: Negotiate with IBM to purchase new product licenses you actually want—instead of paying retroactive fees on products you don’t.

Negotiation Tip

Licensing alternatives are negotiable—even if IBM proposes a specific solution. Always:

• Review all available license types for the affected product.
• Calculate costs under different metrics and license categories.
• Propose solutions that meet compliance requirements while aligning with your IT strategy.

Final Thoughts

Alternative licenses are not a compromise—they are your best defense against overspending.

Looking ahead

Up next in our series, we’ll explore the critical step of following through on settlement obligations. From implementing agreed changes to cleaning up accounts, this phase ensures that today’s fixes don’t become tomorrow’s compliance issues.

Want to access the full guide on IBM license compliance audits? Download it here:

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About the Author

Koen Dingjan, IBM Service Director

Koen is a seasoned expert in IBM licensing with nearly two decades of experience. A former Deloitte auditor, he has led over 60 IBM compliance reviews and developed an industry-recognised IBM compliance certification course. At ITAA, Koen helps clients manage IBM license compliance, defend against audits, and optimize license management strategies.