The ITAM Review

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IBM Mainframe licensing changes: what’s old is new

Some of you may be surprised to learn that IBM mainframes are still a thing, while others will still have them as a key part of your infrastructure. In fact, according to Datacenter Knowledge, IBM mainframe sales increased 70% in 2017/18!
Perhaps to continue this increase in sales IBM have, for the first time in a long time, introduced significant changes to their mainframe licensing programs. Ross Mauri, General Manager for IBM Z and LinuxONE, said in his blog post:
“As more customers shift to an enterprise IT model that incorporates on-premises, private cloud and public cloud, we’ve developed a simple cloud pricing model to drive the transformation forward.”

Odysseus in front of Scylla and Charybdis (1794-6), Henry Fuseli

Current Licensing

I’m not going to dive too much into IBM mainframe licensing here for – like most software licensing, it is deep and Charybdis-esque – but here is a very high-level overview of where IBM mainframe licensing has been up to now.
Sub-capacity on mainframes has been tracked using the “rolling 4-hour average” (R4HA) value, looking at peaks in product usage across LPARs. The IBM monitoring tools sample the usage every 10 seconds and every 5 minutes, the highest observed utilisation is recorded. The last 48 of these are tracked (5 (minutes) * 48 = 240 minutes – which is 4 hours) and the average is taken to give the R4HA value.
Many organisations find themselves forced to cap their systems to prevent spiralling costs, often meaning they’re not making full use of the hardware they own. These new pricing models are aimed at removing this need, with Terry Glover, director of infrastructure at IBM customer Dillard’s saying: “we can leave capacity on—and pay only for what we use”.

Tailored Fit Pricing

IBM have introduced 2 new models under the Tailored Fit Pricing umbrella that offer “simple, transparent, and predictable pricing for IBM Z software” … “running on the z/OS platform” … “within a given country”.
Both models include provisions for extra test & dev capacity and reduced “growth pricing” across all workloads.

Enterprise Consumption Solution
IBM describe this as a “cloud-like, usage-based licensing model [that] offer price predictability and financial certainty”.
Pricing is based on a per-MSU (million service units) consumed basis, with consumption aggregated hourly and charges based on total MSUs consumed annually. According to IBM, this will be a benefit for organisations with seasonal workload variations and will also remove the need to cap systems.

Enterprise Capacity Solution
Described by IBM as a “full-capacity licensing model [that] offers the simplest pricing model available”.
This model charges based on the overall size of the physical environment and calculations are based on the “estimated mix of workloads running” – however, actual usage can vary across workloads. This model allows customers to run any of the software anywhere within the fully licensed environment, increasing deployment flexibility etc.

Key Requirements

IBM have listed several requirements for organisations looking to take advantage of these new licensing models.

For both options:

    • All machines must be IBM z14™ Models M01-M05 or z14 Model ZR1
    • IBM z/OS v2.2 or later OS

For Enterprise Consumption Solution:

    • Use of the IBM Sub-Capacity Reporting Tool (SCRT) V27.1.0, or later, according to the requirements and guidelines in the SCRT Users Guide.
    • Use of SCRT for each reporting period and submission of the resulting SCRT report to IBM monthly.
    • Use of unique solution IDs that are provided by IBM or the IBM License Management Support (LMS) website.
    • Where a production system is deployed to a z/OS system that runs as a z/VM® guest, RMF Monitor I gatherer option VMGUEST to be specified.

What’s in it for them?

Whenever a vendor changes their licensing model, this is the question you must ask yourself. There will always be a positive aspect for the vendor, otherwise they wouldn’t do it, but it isn’t necessarily a zero-sum game. Just because it’s good for the vendor doesn’t mean it can’t also be good for you. If you can increase your use of your IBM mainframes and run more projects at higher capacity, giving users/customers a better experience – that’s a good thing. You may well find yourself paying more money to IBM to enable this – but if you’re generating more revenue or hitting other metrics, it’s win-win.
The thing to be wary of is if the change means you find yourself paying more for the same outcome. If you’re not getting anything extra out of the new situation, or if what you’re getting isn’t relevant to your business and doesn’t help you hit those metrics, then you’re losing. IBM have stated customers can continue to use the R4HA value if that is more cost effective for them, however, I wonder if it will start to become more expensive/difficult to manage etc. when compared to the newly introduced models?

Further Reading

IBM announcement blog
How the peak four-hour rolling average MSU is calculated
Are you using the right R4HA?
Sub-Capacity for Z Software
IBM Tailored Fit Pricing
Tailored Fit Pricing – more details
DataCenter Knowledge article
DataCenter Knowledge – Why Mainframes aren’t going away

About Rich Gibbons

Rich has been in the world of IT and software licensing since 2003, having been a software sales manager for a VAR, a Microsoft licensing endorsed trainer, and now an ITAM analyst looking at software licensing and cloud.

A Northerner renowned for his shirts, Rich is a big Hip-Hop head, and loves travel, football in general (specifically MUFC), baseball, Marvel, and reading as many books as possible. Finding ways to combine all of these with ITAM & software licensing is always fun!

Connect with Rich on Twitter or LinkedIn.

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