Broadcom Mainframe Renewal & Audit Tips
Introduction – Renewal and Audit Risks in Mainframe Deals
Broadcom’s CA mainframe software contracts are high-value, high-stakes agreements. Large enterprises often spend tens of millions of dollars on these tools, so a renewal can have a significant impact on their IT budgets.
Complicating matters, Broadcom mainframe audits frequently coincide with renewal time. The vendor may leverage compliance findings to pressure customers into unfavorable terms. In other words, when you go to renew a CA mainframe contract, you might simultaneously face an audit – doubling the risk.
To protect your costs and stay in compliance, you need a proactive strategy that treats renewals and audits as two fronts of the same battle.
Broadcom has a reputation for employing tough tactics and implementing steep price increases at renewal. Many CIOs and CFOs have been shocked by renewal quotes with double-digit or even triple-digit percentage increases over prior spending.
Unless you push back and prepare well in advance, you may be locked into significantly higher fees or face hefty penalties. Read our ultimate guide to Broadcom Mainframe Software Licensing (CA Technologies): Negotiation Strategies for IBM Z Environments.
This guide offers strategic tips for negotiating your Broadcom mainframe renewal while also defending against audits. Our focus is on cost protection and compliance defense, so you can renew on fair terms without fear of surprise audit bills.
Mainframe Renewal Strategy
Start planning early and secure executive sponsorship. Don’t wait until a few months before expiration to address a Broadcom mainframe contract renewal.
Begin preparations 12 to 24 months in advance. Early planning gives you time to gather data, line up resources, and avoid last-minute pressure.
Form a renewal team that includes IT asset managers, procurement, and, importantly, CIO/CFO sponsorship. Given the financial stakes, senior executives need to be aware and involved.
Broadcom’s sales teams take customer C-level involvement seriously – having your CIO or CFO visibly backing the negotiation can encourage Broadcom to moderate their demands. Early executive alignment also ensures internal consensus on goals, ensuring everyone is on the same page before entering discussions.
Audit your current usage before Broadcom does.
A critical first step is performing an internal usage audit of all your CA/Broadcom mainframe software. Review what you’re actually using versus what you’re paying for. This involves examining IBM Sub-Capacity Reporting Tool (SCRT) reports for mainframe CPU usage (MSUs/MIPS) and verifying the deployment of each CA product.
Identify any shelfware – licenses for products that are installed but not actively used. For example, maybe you have a CA tool in production that no one has touched in a year, or a legacy product still licensed “just in case.”
Plan to eliminate or downsize those at renewal. Why pay maintenance on unused software? By cleaning up shelfware, you remove unnecessary cost and also reduce potential compliance exposures (an unused product might be deployed in ways you’re not tracking).
Going into renewal, know exactly what you need and don’t need – this lets you drop redundant tools and counter any Broadcom claim that you require a pricey bundled package.
Ensure flexibility, Broadcom Mainframe True-Down Rights – How to Reduce License Costs When Usage Declines.
Benchmark costs and push for price protections.
It’s wise to benchmark your mainframe software costs against those of your industry peers or available data. Broadcom’s mainframe pricing (often based on MIPS/MSU or capacity tiers) can vary widely across customers. Understanding the going rate can strengthen your position when Broadcom proposes a renewal price.
If you can show that your cost per MSU is above what similar companies pay, you have leverage to request a reduction or at least resist an increase. Regardless of benchmarks, always negotiate caps on annual price increases for multi-year deals.
Broadcom often builds in yearly uplifts (for example, 5–7% per year is not uncommon in their standard terms). Try to limit annual uplifts to a reasonable percentage (e.g., 3% or lower).
Capping the increase protects you from compounded cost spikes. Insist on pricing protections in plain language – no complex formulas that could hide bigger hikes.
The goal is to secure predictability and prevent Broadcom from hiking fees aggressively year after year.
Build flexibility with the right contract structure.
Consider the pros and cons of different renewal structures in light of your plans. Broadcom may offer a multi-year renewal or even a Portfolio License Agreement (PLA) covering many products.
A multi-year deal can provide cost stability and sometimes discounts in exchange for a longer commitment. This is beneficial if your mainframe usage will remain steady or grow – you lock in rates and avoid yearly battles.
However, if you anticipate a decline in mainframe workload (for instance, migrating some applications off the mainframe or optimizing usage), a rigid multi-year agreement could leave you overpaying for capacity you no longer use.
In such cases, you may prefer an annual renewal cycle or a shorter term, allowing you flexibility to adjust licenses as needed. If you opt for a multi-year or broad PLA, negotiate true-down rights – the ability to reduce your license counts or costs if your usage decreases.
True-down clauses ensure you’re not stuck paying for yesterday’s peak forever. Also, scrutinize any bundled agreements: Broadcom might pitch a big bundle of CA products for a “simplified” deal.
This can make sense, but only if it includes what you truly need and allows you to remove components that become unnecessary.
Always preserve the flexibility to true up or true down based on actual usage, and document those rights in the contract.
Prepare alternatives and backup plans. Part of a strong renewal strategy is knowing your options. Broadcom assumes many mainframe customers feel “locked in” to CA products. Challenge that assumption by evaluating alternatives ahead of renewal.
Identify if other vendors (IBM, BMC, etc.) offer equivalent tools for any high-cost CA product you have. Even if a full switch isn’t immediate, having a credible plan B (such as migrating from CA Top Secret to IBM RACF for security, or from CA 7 to BMC Control-M for scheduling) gives you leverage.
Broadcom may think twice about a huge price hike if they see you’re willing to consider a competitor.
At minimum, internally calculate what it would take to replace certain tools or reduce usage, and use that knowledge in negotiation conversations (“If costs go too high, we will explore moving workload X off the mainframe or switching product Y to an alternative”).
This underscores that you’re not entirely at their mercy. Even within Broadcom’s own offerings, explore newer licensing models – for example, Broadcom has introduced a consumption-based model for mainframe licensing.
If your usage is highly variable, a consumption model may save costs compared to a fixed model (or vice versa).
The key is to complete this homework well in advance (again, 12–24 months prior) so you have data and contingency plans ready by the time renewal talks begin.
Broadcom’s Audit Approach
Broadcom (since its acquisition of CA Technologies) has become aggressive in auditing mainframe software usage.
Understanding how these audits work will help you prepare. Broadcom typically invokes the audit clauses in your contract to request proof of compliance with the terms.
They heavily rely on IBM’s Sub-Capacity Reporting Tool (SCRT) data for any CA products licensed by mainframe capacity (MSUs/MIPS). SCRT reports show your actual peak usage on each LPAR for IBM software, and third-party vendors like Broadcom can use them to verify that your usage of CA tools doesn’t exceed what you’ve licensed.
For example, if you licensed a CA database tool for 500 MSUs but your SCRT shows a peak of 600 MSUs on the LPARs where it’s running, Broadcom will flag that as over-deployment.
They also audit installation records – checking that you haven’t installed CA products on machines or partitions that aren’t covered by licenses. Any unauthorized installations or usage beyond entitlement will be considered non-compliant.
One notable aspect of Broadcom’s audit practice is timing and leverage. It’s not uncommon for Broadcom to initiate an audit in close proximity to your contract renewal date. This is a tactical move: if they discover compliance gaps (like unlicensed use or overuse of capacity), they can use that as leverage during renewal negotiations.
Essentially, Broadcom might say, “You’re out of compliance and owe us $X in penalties or back licenses,” creating pressure on you to resolve that quickly. The underlying threat is that if you don’t settle, they could cut off support or even licenses for critical mainframe software – a risk most companies can’t bear.
By aligning audit findings with renewal, Broadcom aims to put you at a disadvantage, so you’ll accept a higher-priced deal or purchase additional products to address the compliance issue.
In addition, Broadcom auditors may scrutinize idle or underused licenses, not because you owe money on those (if they’re paid for, unused licenses aren’t a compliance problem per se), but as part of the conversation to upsell or adjust your portfolio.
They might suggest eliminating “waste” but then repurpose that spend elsewhere in the Broadcom suite. Always remember that the audit team and sales team often work hand in hand.
Broadcom’s audits are typically thorough, but they focus on identifying revenue opportunities. Over-deployment or unlicensed use will trigger financial demands.
If they find you running a CA product without a license, expect an immediate push to purchase that license (often at a high price and including back-maintenance fees for the period of unlicensed use).
If your usage exceeded your contracted level, they’ll seek to bill you for the overage or move you to a higher licensing tier going forward (again, usually at less favorable rates absent negotiation).
Essentially, any non-compliance is viewed as either a chance to enforce penalties or to upsell your contract.
Knowing this, your goal is to avoid giving them such openings – through diligent preparation – and, if an issue is discovered, handle it carefully as part of a broader negotiation (not just by blindly cutting a check).
Audit Preparation Steps
The best defense against a surprise audit finding is a proactive approach – prepare in advance.
Here are key steps to take well before Broadcom ever audits you:
- Run your own SCRT and usage reports: Don’t wait for Broadcom to tell you your usage; review it yourself regularly. IBM’s SCRT tool should be run monthly to track your peak MSUs for each licensed product. Internally audit each Broadcom/CA tool: which LPARs is it on? What’s the highest usage, and is it within your entitlement? Monitor any emerging growth trends. By knowing your numbers, you can identify potential compliance issues early. If you see that, say, a capacity upgrade on a mainframe pushed your usage over your license cap, you can address it immediately (e.g., by purchasing an incremental license or adjusting workloads) before Broadcom finds out.
- Verify and consult with experts: It’s wise to validate your internal findings with an outside perspective. Engage IBM or a third-party mainframe licensing advisor to review your SCRT outputs and license entitlements. These experts can confirm if you’re measuring correctly and not missing something. They can also interpret tricky cases (for instance, if a product is installed but inactive, how does that count?). A mainframe licensing consultant can perform a mock audit and identify any weaknesses in your compliance. Think of it as a “pre-audit” checkup. This not only gives you peace of mind, it also provides documentation. If Broadcom’s team later claims a violation that you believe is unfounded, you’ll have an independent analysis to back you up. Many enterprises choose to hire such specialists because Broadcom’s licensing rules can be complex – having expert allies levels the playing field.
- Clean up your environment: Before any official audit, remediate obvious compliance risks. Uninstall any CA software instances that you are not entitled to or are not actually using. Sometimes, test or development environments still contain CA products that were never properly licensed, or an old project installed an agent or component that has been forgotten. Discover these now and remove or license them appropriately. Likewise, if you have old versions or copies of CA tools that are no longer needed, remove them. The cleaner and more controlled your environment, the fewer opportunities an audit has to catch something. Also, ensure you’re adhering to license restrictions (for example, some licenses might be tied to specific machines or capped at a certain capacity – make sure those conditions are met). By self-policing your deployments, you demonstrate strong governance and reduce the chances of a nasty surprise.
- Organize documentation and proof of entitlement: An audit will require you to show proof of your licenses (entitlement certificates, contracts, invoices) and possibly usage records. Get all your paperwork in order ahead of time. Maintain a centralized repository of your Broadcom/CA contracts, including any amendments, license schedules, and maintenance renewals. Be aware of the terms each contract outlines regarding audit rights, notice periods, and compliance obligations. Also, keep copies of correspondence or approvals from Broadcom (for example, if you ever got a special permission or exception in writing). During an audit, being able to quickly produce evidence of your entitlements and past communications can shorten the process and clarify any misunderstandings. Additionally, document your internal usage records – for instance, have the last 12 months of SCRT reports neatly filed, along with a summary of current deployments. This level of preparation not only makes the audit smoother, it signals to Broadcom that you are a diligent customer. They may be less inclined to push trivial issues if they see that you have everything in order.
By following these steps, you essentially conduct an audit on your own terms. If you find compliance gaps, you then have a choice: quietly fix them (e.g., purchase needed licenses or remove excess usage before anyone asks), or prepare to disclose and negotiate them with Broadcom as part of your renewal.
Often, if the gaps are small and easily remedied, it’s best to self-correct without making a fuss. For larger issues, you might hold off and address them in negotiation (as discussed in the next section), but at least you won’t be blindsided.
The overall aim is to be audit-ready at any time – no scrambling, no panic if that notification letter arrives from Broadcom.
Audit Defense During Renewal
If Broadcom does initiate an audit (or you know an audit issue exists) during your renewal cycle, don’t treat it as separate from your renewal negotiation. Instead, integrate your compliance resolution into the new deal.
Never simply pay an audit penalty invoice outright without exploring how it can be folded into your contract discussions. Broadcom’s goal may be to scare you with a compliance bill so that you rush to sign an expensive renewal or buy additional licenses at list price.
Resist that pressure by shifting the conversation: “Let’s resolve any compliance findings as part of the renewal agreement.” In practice, this could mean agreeing to license any overused capacity in the future but under the negotiated (discounted) rates of your new contract, rather than paying a retroactive fine at full price.
Often, you can negotiate a settlement in the form of future spend – e.g., committing to an expanded product set or an upgraded edition as part of renewal, which addresses the compliance issue in a way that’s palatable to both sides.
The key is to make Broadcom feel confident they’ll get their money (through the renewed contract) while you avoid cutting a no-value check purely for penalties.
Push for credits or discounts in exchange for true-up.
If an audit finds you were, say, 10% over your licensed MSUs, you will likely need to purchase that 10% to become compliant. However, you have leverage here: Broadcom wants a multi-million-dollar renewal from you, and you can make that conditional on forgiving or offsetting the compliance costs.
For instance, rather than paying back maintenance on that unlicensed 10%, you negotiate that Broadcom will credit those fees as part of the new deal, or adjust the discount higher on the renewed licenses to make up for it.
Use the timing to your advantage: it’s often easier to get concessions now, when Broadcom is vying for your renewal, than after you’ve signed. Make it clear that your willingness to invest further with Broadcom (renewing for multiple years, maybe adding a new product, etc.) hinges on resolving the audit amicably.
This tactic commonly results in Broadcom waiving some portion of the compliance claims in return for a signed contract.
You might say, “We’ll agree to license the additional usage moving forward, but we expect no punitive back charges and a fair discount on the new licenses.”
In many cases, Broadcom would prefer to secure the long-term revenue and will be flexible on the one-time pain.
Include protective terms in the renewed contract. Since you’re likely negotiating contract terms during renewal, take the opportunity to insert clauses that limit Broadcom’s audit power and frequency.
For example, you can add language to cap the frequency of audits and the amount of advance notice you receive. Additionally, include confidentiality protections and provide clarity on the process.
Here are some sample contract clauses (in plain English) you might negotiate for:
- “Broadcom may audit no more than once every 24 months, with 90 days’ written notice.” – This caps audit frequency so you don’t face annual or surprise audits, and ensures you have time to prepare.
- “Audit results shall remain confidential and not be shared outside the parties.” – This keeps any compliance issues private, preventing Broadcom from, say, using your audit story as sales leverage elsewhere or embarrassing the organization.
- “Annual renewal uplifts shall not exceed 3%.” – While not about audits, this clause is crucial in renewal contracts to control cost: it limits the year-over-year price increase Broadcom can impose.
- “Any audit findings shall be addressed as part of renewal negotiation, not as separate penalties.” – This explicitly ties what we discussed above into the contract. It ensures that if an audit finds something, you won’t be immediately billed; instead, the expectation is to address it through the normal course of business (i.e., your next renewal or an amendment).
Don’t be afraid to propose such clauses – they are reasonable safeguards that many enterprises have successfully included. Broadcom may push back on some, but they’re often open to reasonable limits, especially if you present it as standard corporate policy or a non-negotiable from your side.
Getting audit terms in writing is far better than relying on verbal assurances. Also, ensure there’s language that disputes are handled cooperatively.
For example, if you disagree with an audit finding, the contract might allow a mediation period or a third-party review before Broadcom can take action.
The overarching goal is to remove ambiguity and reduce your risk. By codifying these protections, you prevent Broadcom from wielding the audit stick too freely in the future.
Finally, remember that renewal time is your best chance to reset the rules. If previous contracts had onerous terms (such as unlimited audit rights or uncapped fee increases), now is the time to revise them.
Leverage the fact that Broadcom wants you to renew; use that as negotiation currency to improve terms. Tie as many loose ends as possible into one package – pricing, compliance settlement, audit restrictions, flexibility for the future, etc.
When done right, the outcome is a new agreement that not only addresses immediate issues but also prevents future surprises.
Checklist – Renewal & Audit Safeguards
For a quick reference, here’s a checklist of key safeguards to help manage your Broadcom mainframe renewal and audit risk:
- Initiate renewal preparation early: Kick off your renewal project at least 18 months before the contract expiration. Early planning is essential to avoid Broadcom’s time-pressure tactics.
- Benchmark and budget: Compare your current MSU/MIPS costs to available industry benchmarks. Set internal budget limits and target price caps (e.g., a maximum annual increase of 3%) as negotiation goals.
- Eliminate shelfware and demand true-down rights: Identify unused CA products and plan to cut them from the renewal. Negotiate “true-down” provisions so if your mainframe workload decreases, you can reduce licensing costs accordingly in future years.
- Limit audit scope and frequency: In the contract, specify the parameters for and limitations on Broadcom’s audit scope and frequency. For instance, allow at most one audit every two years and require prior notice. This prevents constant disruptions and “fishing expeditions.”
- Link compliance to negotiations: If any audit or compliance issues arise, address them within the renewal or contract discussions. Do not agree to separate penalty payments. This way, any license shortfall is resolved via an adjusted contract (often at better rates) instead of a fine.
Keep this checklist handy as you plan – it encapsulates the proactive steps and negotiation points that can save millions and a lot of headaches. Each item is a guardrail against the typical pain points enterprises face with Broadcom’s renewals and audits.
FAQs
Q: How far in advance should I plan a Broadcom mainframe renewal?
A: Ideally, start planning 12 to 24 months. Broadcom mainframe contracts are complex and expensive, so you want plenty of lead time. Approximately 18 months ahead is a sweet spot for beginning internal audits, stakeholder alignment, and strategy development. Early planning ensures you’re not rushed and can even explore alternatives before Broadcom’s renewal clock winds down.
Q: How does Broadcom audit mainframe usage?
A: Broadcom can audit under the contract’s audit clause, typically by analyzing your IBM Sub-Capacity Reporting Tool (SCRT) reports and deployment data. They’ll look at your peak MSU/MIPS usage for CA products to ensure it doesn’t exceed what you’ve licensed. They may also ask for proof of licenses and check that you haven’t installed software on unlicensed systems. Audits are often remote data reviews, but Broadcom can request additional documentation or even an on-site review if something appears to be off. They must provide notice (as per your contract terms), and you’ll then need to compile and share the required usage information.
Q: What happens if an audit shows overuse or non-compliance?
A: If a Broadcom audit finds you’re using more than entitled (for example, running a product without a license or exceeding licensed capacity), Broadcom will likely demand that you remedy it. This typically involves purchasing additional licenses to cover the overuse, potentially reimbursing maintenance fees for the period of non-compliance, or, in some cases, paying a one-time penalty. However, rather than simply paying a bill, you should address the issue through negotiation. In many cases, you can settle the compliance gap by agreeing to a contract update – essentially licensing the needed capacity in the future (often with a discount or as part of a larger deal). The worst-case scenario if you ignore an audit finding is that Broadcom could terminate support or licenses for that product; however, most often it doesn’t come to that if you work with them to find a solution. The key is not to panic: these findings can almost always be resolved through additional licensing arrangements, ideally on terms you negotiate as fair.
Q: Can audit penalties be negotiated at renewal?
A: Yes, absolutely. In fact, it’s advisable to handle any audit issues during renewal negotiations rather than separately. Broadcom is often open to incorporating compliance resolutions into the renewal process because they ultimately want you to sign a new contract. You can negotiate away or greatly reduce punitive penalties. For example, instead of paying a hefty fine, you might agree to extend your contract or purchase an additional module at a discounted rate to resolve the shortfall. It becomes part of the overall deal value. Be upfront that you expect any compliance problems to be resolved “commercially” as part of the renewal – not via a separate check. Most Broadcom account representatives prefer this approach as well, as it converts an adversarial audit into a positive sale. Just ensure that any agreement (such as waiving back charges or providing a credit) is documented in writing in the new contract or a settlement letter.
5 Actionable Tips to Close the Deal
- Begin renewal planning 18 months: Time is your ally. Starting early lets you set strategy, avoid deadline panic, and counter Broadcom’s last-minute pressure tactics.
- Conduct quarterly self-audits of usage: Don’t wait for Broadcom’s audit. Run SCRT reports and internal compliance checks every quarter to catch any issues and optimize usage – you’ll go into negotiations knowing exactly where you stand.
- Bundle audit outcomes into the renewal: If an audit identifies a compliance gap, incorporate it into your renewal agreement. For example, address it by adding the necessary licenses in the new contract rather than paying a separate fine. This converts a potential penalty into part of your investment, often on more favorable terms.
- Cap price increases in the contract: Ensure your agreement includes a cap on annual price uplifts (e.g., 3% per year). This protects you from future budget shocks and enforces cost predictability throughout the term.
- Leverage C-level support in negotiations: Have your CIO and CFO directly involved in both the renewal negotiation and any audit discussions. Their engagement demonstrates to Broadcom that your company is serious about securing a fair deal, and it enables quicker, high-level decision-making. Broadcom is less likely to play hardball when top executives are at the table.
By following these tips, you’ll be well-equipped to renew your Broadcom mainframe contract on favorable terms while confidently managing any audit challenges that arise.
The overarching message is to prepare early, stay informed, and negotiate everything. Broadcom may drive a hard bargain, but with the right approach, you can protect your costs and maintain a compliant mainframe environment without drama. Good luck with your renewal and audit defense!
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