IBM Software License Charge Options:

Navigating the Maze

By

Don Fowler, MCE Inc., August 2005

 

The Maze Of Licensing Options for z/Series is a direct response by IBM to addressing their Mainframe Charter of 2003 objective to offer value. At one time, life was simple and there was only Monthly License Charge (MLC) and One Time Charge (OTC).

Now with usage based pricing, one can choose from a myriad of licensing options to best fit the software’s execution characteristics and hardware platform, at the lowest pricing. This article will focus on several specific IBM software licensing charge options available to the CICS TS, DB2, IMS, and Websphere MQ for z/OS users. The options discussed are probably the best to address the majority of the installations in the z/900, z/990 and z9 hardware classes. Specific options for the entry-level z/800, large Parallel SYSPLEX, or qualified Web Enablement-only server environments should be addressed with your IBM Software Business Partner.

 


                       

 

 

                        Workload License Charges (WLC) is a monthly license pricing option designed to support usage-based on demand business requirements for a z990, a z900 or a z800 server running z/OS in z/Architecture (64-bit) mode. The z800 must participate in a fully qualified Parallel Sysplex to be eligible for WLC.

 

WLC is broken into two types of charges: Variable WLC and Flat WLC. Variable WLC apply to products such as z/OS, DB2, IMS, CICS, MQSeries, System Automation, NetView and Domino. Flat WLC apply to legacy products such as less current compilers and older MVS/VM/VSE utilities. Once WLC is adopted, applicable VWLC and FWLC charges are applied.

 

Customers may choose to implement WLC in one of two ways:

 

The workload is based on ‘Defined Capacity’ expressed in MSUs (Millions of Service Units per hour) which is calculated on the LPAR(s) utilization where the software runs on a rolling 4-hour basis. Variable Workload License Charges Structure is currently set up on nine tiers based on these calculated MSU values (see Table 1 below).

 

Base WLC

3 MSUs

Level 0*

4 - 45 MSUs

Level 1

46 - 175 MSUs

Level 2

176 - 315 MSUs

Level 3

316 - 575 MSUs

Level 4

576 - 875 MSUs

Level 5

876 - 1315 MSUs

Level 6

1316 - 1975 MSUs

Level 7

1976+ MSUs

                                                                   Table 1 – Variable Workload License Charges Structure

*Effective 1 July 2003, IBM made the base charges for Variable Workload License Charges more granular, by reducing the base from 45 MSUs to 3 MSUs. Since the base charge was reduced to 3 MSUs, a Level 0 was introduced to cover the MSUs between 4 MSUs and 45 MSUs. The more granular base provided customers with a lower cost of entry for VWLC products, requiring a minimum of 3 MSUs rather than a minimum of 45 MSUs. Customers with workloads smaller than 45 MSUs can license as little as 3 MSUs of VWLC software.

           

 Entry Workload License Charges (EWLC) is for the smaller z800 and z890 organizations. EWLC enables qualifying z800 and z890 platforms to pay for sub-capacity eligible IBM software based on the utilization of the LPAR or LPARs where that product executes. This sub-capacity pricing provides the potential to lower software charges on a standalone z800 or z890.                                       

                       

EWLC is similar to Sub-Capacity WLC, in terms of implementation and mechanics. Both pricing metrics offer LPAR-based pricing for sub-capacity eligible software products, based on the highest rolling 4-hour average utilization of the LPAR or LPARs where the eligible product executes.

 

Both EWLC and WLC may also be implemented at full capacity (based on the MSU rating of the machine), rather than sub-capacity. Sub-Capacity pricing, for either EWLC or WLC, requires the customers to

·         fully migrate all OS/390 to z/OS in 64-bit mode,

·         discontinue their OS/390 licenses, and

·         utilize the Sub-Capacity Reporting Tool to generate Sub-Capacity Reports.

 

The Sub-Capacity Reports Tool must be executed and the generated reports sent via e-mail to IBM each month.

 

Standalone z800 clients can choose to take EWLC pricing. The other option for z800 standalone customers is zSeries Entry License Charges (zELC). If they choose to take the EWLC pricing option, all sub-capacity eligible products must be moved to the EWLC pricing metric. The remaining, non-sub-capacity eligible products will be priced using zSeries Entry License Charge (zELC) pricing. To qualify for EWLC, a z800 machine must have a z/OS license.

 

Standalone z890 has EWLC pricing. All sub-capacity eligible products are priced using the EWLC pricing metric. The remaining, non-sub-capacity eligible products are priced using the EWLC Tiered price structure. EWLC Tiered price structure, for non-sub-capacity products offers flat pricing based on z890 server capacity using a tiered structure.

The EWLC Tiered price structure (Figure 2) is exclusive to the z890 server.

 

Tier

Machine Capacity

Tier A

1 - 11 MSUs

Tier B

12 - 15 MSUs

Tier C

16 - 40 MSUs

Tier D

41 - 75 MSUs

Tier E

76 - 1500 MSUs

Tier F

1501+ MSUs

Figure 2 – EWLC Tiered Pricing

 

 

 

 

 

Select Application License Charges (SALC) is available only for MQSeries and only on machines with either Workload License Charges or Entry Workload License Charges. SALC was just recently announced and is the newest pricing option in the IBM portfolio of options.

SALC is an excellent price/performance option on very-low utilization installations of MQSeries. SALC is available for either Sub-Capacity or Full Capacity WLC/EWLC machines.

For an MQSeries installation with the SALC pricing metric, software charges are based upon the utilization of MQSeries.

SALC requires the submission of a yearly "Software Usage Report". IBM provides a reporting tool (ships with OS/390 V2 and z/OS) that analyzes 12 months of Systems Measurement Facility (SMF) data, record type SMF89 and generates the "Software Usage Report". This annual report summarizes the use over the past 12 months and establishes the SALC MSU level for the next 12 months.

To determine the billable ULC or SALC MSUs for a given product, the following algorithm is applied to each product set. A product set encompasses all the active versions of a given product.

 

Pricing is designed to accommodate WebSphere MQ, typically a low usage product that runs pervasively throughout the customer environment. Clients who run WebSphere MQ at a very low usage can benefit from SALC.

 

Alternatively, clients can choose to license WebSphere MQ under WLC or EWLC and still get the benefits of IBM’s sub-capacity licensing structure. The chart below shows a comparison of SALC, ULC and WLC pricing for the new Websphere MQ for z/OS.

 

 

 

 

The following is a direct quote from the IBM Announcement Letter 205-183:

 

“Start-up measurements upon ordering a new SALC license:

New licenses for MQ added to a WLC or EWLC machine will be charged as WLC/EWLC until the first two months of SALC measurement data is received.

 

When converting a WLC or EWLC license for MQ to SALC pricing, the two months of measurement data may already be available and can be used for determining the initial SALC MSU value. In this case, the two months of historic measurement data is used to establish the on-going charges. Retroactive adjustments will not apply.”

 

   

 

 

 

 

z/Series International Program License Agreement (IPLA) is the most confusing of the agreements. IPLA programs have a one-time-charge (OTC) and an annual (optional) maintenance charge, called Subscription & Support. Subscription & Support has an annual charge that provides customers access to IBM technical support and enables you to obtain version upgrades at no charge.

 

The most common pricing metric for IPLA software on the mainframe is Value Unit pricing.

 

Value Unit pricing for eligible zSeries IPLA programs enables a lower cost of incremental growth and enterprise aggregation. Each zSeries IPLA product with Value Unit pricing has a single price per Value Unit and a conversion matrix, called Value Unit Exhibit, for converting from some designated measurement to Value Units. Most commonly Millions of Service Units (MSUs) is the measurement designated by IBM to be converted to Value Units. Some other measurements are engines or messages. Since MSUs are the most common measurement, that measurement will be used for the remainder of this description.

Value Unit pricing offers price benefits for customers. For each zSeries IPLA program with Value Unit pricing, the quantity of that program needed to satisfy applicable IBM terms and conditions is referred to as the 'required license capacity'.

Subsequent acquisitions of Value Unit priced programs offers additional price benefits for customers. The quantity of each zSeries IPLA program that you have acquired is referred to as 'entitled license capacity'. If you wish to grow your entitled license capacity for a zSeries IPLA program, the calculation to determine additional needed Value Units is based upon the number of Value Units already acquired.

For each zSeries IPLA program with Value Unit Pricing, you should:

To simplify conversion from the designated measurement to VUs or vice-versa, use the Value Unit Converter Tool.

For each zSeries IPLA program with Value Unit pricing, the quantity of that program needed to satisfy applicable IBM terms and conditions is referred to as the 'required license capacity'. Your required license capacity is based upon the following factors:

In cases where sub-capacity is applicable, the following terms apply for Execution-Based: The required capacity of a zSeries IPLA sub-capacity program with these terms equals the capacity of the LPAR(s) where the zSeries IPLA program executes.

 

On/Off Capacity on Demand allows you to enable and disable hardware engines to meet temporary peak business needs. On the zSeries platform, this hardware offering is available exclusively on the z990 and z890 servers. Charges related to both hardware and software are tied to the duration of the temporary enablement and the capacity enabled.

Daily On/Off CoD software charges apply to select zSeries software products, licensed under the International Product License Agreement (IPLA).

 

For On/Off CoD on z990 or z890, software charges are calculated based upon the amount of temporary capacity (in MSUs) and the duration the temporary capacity is available (in days).

 

The discussion of IPLA could go on for another four or five pages. There are a multitude of terms and conditions and caveats associated with this option. Determining if IPLA is the option for you is well beyond the scope of this paper. 

 

Most of the software products that we deal with that fit the IPLA are CICS tools and DB2 tools and WebSphere MQ.

 

 

  zSeries Entry License Charge (zELC) is a monthly license charge pricing option designed to support the zSeries 800 servers. IBM introduced zSeries Entry License Charge to deliver appropriate software price performance for a variety of z800 customer needs.

 

The zELC pricing is only available on z800 in 31-bit mode.

 

The zELC pricing is determined based on the particular z800 model (0E1, 0A1, 0B1, 0C1, 0X2, 001, 0A2, 002, 003, 004) where the software is licensed. See IBM form Exhibit for zSeries 800 Software License Charges, Z125-6588 for actual software prices by z800 model number.

 

 

 Usage License Charges (ULC), which is formally known as IBM S/390 Usage Pricing, is designed to extend usage-based pricing to a wider range of customers˘ circumstances. For customers where individual major subsystem usage characteristics are less than 25% of the standalone processor or Parallel Sysplex, S/390 Usage Pricing may provide a cost-effective alternative versus capacity licensing with Parallel Sysplex License Charges (PSLC).

 

This is a good option for users of DB2, CICS TS, IMS, or MQ subsystems where the subsystem usage is less than 25% of the processor.   

 

Charges will be based upon the Peak MSUs. Usage reported between thresholds of features 1, 2, or 3, will be rounded up to the next MSU level.

As an example, using CICS TS 3.1, the customer pricing would be determined by selecting either: 

Feature 1   (if usage is below 0.25 MSU)
Feature 2   (if usage is between 0.26 and 0.50)
Feature 3   (if usage is between 0.51 and 1.0)
 
Feature 3+    (# MSUs from 2-11 times the charge associated
               with feature number 4) + (# MSUs from 12-44
               times the charge associated with feature
               number 5) + (# MSUs from 45-78 times the
               charge associated with feature number 6) +
               (# MSUs above 78 times the charge associated
               with feature number 7 -- if applicable)

 

 

ULC should provide easier budgeting and reduced administrative burden with the annual reporting requirement.

 

 

 

Determining what’s best. The Sub-Capacity Planning Tool is a planning tool that analyzes your mainframe's LPAR utilization and rolling 4-hour average LPAR utilization, in terms of Millions of Service Units (MSUs). This tool is designed to assist you in planning for sub-capacity pricing by providing you with planning information for "sizing" your LPARs. The Sub-Capacity Planning Tool can be used for analysis for sub-capacity software charging including: Workload License Charges, Entry Workload License Charges and Sub-Capacity Value Unit Pricing.

The Sub-Capacity Planning Tool is designed primarily for planning purposes in situations where the Sub-Capacity Reporting Tool (SCRT) cannot run such as non-zSeries hardware, z/OS not in 64-bit mode, SMF89 records not collected, etc. If you already meet the requirements for running the SCRT then you may use that tool instead as it will give you a more definitive view of how many MSUs per eligible product you would actually be billed for under Sub-Capacity WLC or EWLC.

If you want more detail on any of the IBM pricing options available to you, go to this web site:
 http://www-1.ibm.com/servers/eserver/zseries/swprice/

If you don’t use any tools today to assist in managing your software and determining the best licensing options, consider tools such as ISOGON SoftAudit for z/OS. There is a very good 2004 z/Journal paper on what a tool like this can do for you in the way of determining usage, verifying your vendor invoices, and negotiating your next software contract. 

If you want more information on SoftAudit either request additional information by clicking here, or go to the ISOGON website.