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M E T I S MANAGEMENT CONSULTINGIBM Mainframe Software Licensing Structure OverviewMunich, July 2012NOTICE: Proprietary & ConfidentialThis material is proprietary to METIS Management Consulting GmbH (METIS). It contains trade secrets and confidential information, which is solelythe property of METIS. This material is solely for the internal use of METIS’ clients or business partners. This material shall not be used,reproduced, copied, disclosed, transmitted, in whole or in part, without the express consent of METIS. METIS 2012. All rights reserved
IBM MAINFRAME SOFTWARE LICENSING STRUCTURE OVERVIEWMainframe costs are traditionally controlled by capacity or license managementwhile mainframe alternatives constitute a more fundamental approachCost Reduction ApproachesMainframe cost reductionCapacity managementUtilize specialtyprocessors (IFL,ICF, zIIP, zAAP)IncreasevirtualizationUse cappingmethodsMainframealternativesLicense managementUse resourcegroupsOptimization of mainframe LOIO/ELA/ESSO.Change of IT architectureSource: METIS Analysis METIS 2012 – Proprietary & Confidential2120725 MMC IBM Mainframe Software Licensing Structure Overview
IBM MAINFRAME SOFTWARE LICENSING STRUCTURE OVERVIEW“Mainframe software licensing of IBM is transparent and easily understood”Quote from IBM’s System z Software Pricing Guidelines“Customers may only select the VWLC-pricing model for a z196 system, incase the z196 is part of a VWLC-Sysplex, for which the business conditionsof AWLC Transition Charges for Sysplexes must be applied and at least oneof the following systems is in place (z10 EC, z10 BC, z9 EC, z9 BC).”Source: IBM System z Software Pricing Guidelines (2011) METIS 2012 – Proprietary & Confidential3120725 MMC IBM Mainframe Software Licensing Structure Overview
IBM MAINFRAME SOFTWARE LICENSING STRUCTURE OVERVIEWA professional license management needs to consider the various conceivablecontract typesIBM Software ContractsContract typeBasic contractOEMASLSpecial ial conditionsfor end customers)Special bids1)Academic(research and teaching)Source: AVNET (2011), METIS Analysis; Note: OEM Original equipment manufacturers; ASL Application-specific licensing; PA(E) Passport advantage (express); OIO Open infrastructure offering;ELA Enterprise licensing agreement; ESSO Enterprise software & service option; 1)Beside basic contracts, IBM has “special bid” contracts where customers can agree upon special arrangements. METIS 2012 – Proprietary & Confidential4120725 MMC IBM Mainframe Software Licensing Structure Overview
IBM MAINFRAME SOFTWARE LICENSING STRUCTURE OVERVIEWNumber and complexity of available contract types and licensing models isspecific for mainframe environmentsSystem z Licensing ModelsProduct drivenMLCLicense modelRelevantcriteriaStructure driven Mainframe modelMLC modelCapacityOperating modeIPLA/OTC Pricing model Capacity Basis for calculationIPAA Company’s size, multinationalitySource: IBM System z Software Pricing Guidelines (2011), METIS Analysis; Note: MLC Monthly license charge; IPLA International product license agreement; OTC One time charge; IPAA Internationalpassport advantage agreement. METIS 2012 – Proprietary & Confidential5120725 MMC IBM Mainframe Software Licensing Structure Overview
IBM MAINFRAME SOFTWARE LICENSING STRUCTURE OVERVIEWAn inappropriate license agreement for mainframe software can lead tosuboptimal cost structures (1)Licensing of MLC ProductsMLC1)License modelz196MainframeAWLCWLCMWLC.zNALCPSLCMLC tyFWLCSubcapacityFullcapacitySubcapacityOperating modeSubcapacityStandalone1)MLCSource: IBM System z Software Pricing Guidelines (2011), METIS Analysis METIS 2012 – Proprietary & ConfidentialFullcapacity6Sysplexsoftware includes license fees and support costs. Basis for the calculation are the MSU.120725 MMC IBM Mainframe Software Licensing Structure Overview
IBM MAINFRAME SOFTWARE LICENSING STRUCTURE OVERVIEWAn inappropriate license agreement for mainframe software can lead tosuboptimal cost structures (2)Licensing of IPLA/OTC ProductsIPLA/OTC1)License modelMSU basedvalue unitEngine basedPricing modelProcessorvalue unitValue unitFullcapacityCapacityBasis for DB2-, IMS-, CICS-Tools,Websphere; ApplicationDevelopmentSource: IBM System z Software Pricing Guidelines (2011), METIS Analysis METIS 2012 – Proprietary & ConfidentialSub capacityExecutionbasedz/OS basedz/VM and related middleware1)IPLAReferencebasedFull machinebasedLinux middlewaresoftware requires up-front, one time license fee and ongoing, optional, annual subscription and support charges. Basis forthe calculation is the value unit.7120725 MMC IBM Mainframe Software Licensing Structure Overview
IBM MAINFRAME SOFTWARE LICENSING STRUCTURE OVERVIEWAn inappropriate license agreement for mainframe software can lead tosuboptimal cost structures (3)IPAA LicensingIPAALicense modelType of enterprisePassport AdvantageModelType of licenseNew licenseMajor enterprisesMultinationalsPA ExpressPARenewalReinstatementTradeUpNew licenseRenewalReinstatementTradeUpSource: AVNET (2011), METIS Analysis METIS 2012 – Proprietary & Confidential8120725 MMC IBM Mainframe Software Licensing Structure Overview
Source: IBM System z Software Pricing Guidelines (2011), METIS Analysis; Note: MLC Monthly license charge; IPLA International product license agreement; OTC One time charge; IPAA International passport advantage agreement. System z Licensing Models MLC IPLA/OTC Mainframe model MLC model nationality Capacity Operating mode
