Wednesday, June 11, 2014

Action Plan for addressing mainframe MLC software costs

By Bill Moran


Estimates are that between 30% and 45% of typical mainframe costs result from IBM monthly (MLC) software charges; a considerable amount of money in any shop. Mainframe software pricing, when examined, is a complicated subject. Despite efforts otherwise, IBM’s software pricing model contributes to that complexity. In this paper, we first examine how this came about. Then, we discuss a BMC product that addresses the problems.

Originally, most software was priced based on the size of the system it was licensed to run on. It was assumed the software would use the full system capacity.  However, customers complained that software that only used a small percent of the system was priced the same as software that used all of the system.  IBM agreed. In response, they introduced “sub capacity” pricing as an attempt to match pricing and system utilization. The older metric had the merit of simplicity; unfortunately, the new metric required tracking capacity usage, complicating matters significantly.

For MLC (monthly licensed charge) software, system usage over the month is tracked and recorded.  Monthly payments are based on a four hour rolling average of usage over the month. System Management Facility[1]  records usage in each LPAR. Each month, the customer runs the Sub-Capacity Reporting Tool[2], sending the results to IBM.  As another aid to customers, they maintain a website[3]  focused on mainframe software pricing.

Yet, customers have problems of:
  • ·        Complexity - IBM lists 8 major pricing plans plus others[4]. Plans are dynamic changing from time to time, for example, IBM recently changed its pricing to provide favorable treatment (i.e. reduce costs) for transactions  originating from mobile[5] devices.
  • ·        Overwhelming data quantities - A medium-sized system can generate so many SMF records in a month that analyzing them is an overwhelming task.
  • ·        Transparency – with no automated way to consolidate and plot the data to get a clear picture of what is actually happening, auditing IBM charges is challenging.
  • ·        Inability to plan – Manually analyzing raw data to optimize usage to get the best results at lowest cost is very difficult.  Customers turning to manual spreadsheets to address these problems have found their use tedious, frustrating and error-prone.

There is no silver bullet available to solve all of these problems. However, a recently released tool, BMC Cost Analyzer for zEnterprise®, helps in several ways by:
  • ·        Providing graphic reports that show exactly the usage of the various LPARs in the system.
  • ·        Breaking out the cost drivers by products and by workloads
  • ·        Allowing What-if scenarios to evaluate the effect on billing of workload placement, product placement, and capping.
  • ·        Facilitating audits of IBM software bills.

For organizations that only prepare the required information for IBM and do nothing else to manage MLC costs, it is quite possible to achieve savings of 20% or more by implementing a cost management program and using BMC’s new offering. Here is what an action plan might include.

Action Plan

  • ·        Start by getting the facts on how much is spent on the mainframe. Make sure to count only actual mainframe expenditures. In many data centers, all costs for power, cooling, etc. are allocated to the mainframe with none attributed to other servers.
  • ·        Get exact figure for MLC software costs. This is necessary to identify the amount of potential savings. How does it relate to overall mainframe costs?  If no active management has been done, potential savings could exceed 20%.  The potential amount provides a savings goal, and is a guide to how much to budget for tools/efforts to save.
  • ·        Permanently assign someone to monitor mainframe software pricing, to pay attention to the various IBM plans and determine which apply.
  • ·        Actively monitor what is going on in the datacenter. In addition to running the mandated reports and sending IBM the output, review BMC’s 10 step program. Review the helpful series of videos[6] BMC prepared with an outside consultant, Mr. David Wilson of SZS Consulting. The program includes the Cost Analyzer, but covers many other subjects as well, such as managing negotiations with IBM.
  • ·        If using spreadsheets to monitor pricing, closely examine the value realized versus the time taken to prepare them. There may be a less expensive solution.
  • ·        Review BMC’s Cost Analyzer, identify potential savings from its regular use. The tool will give maximum value only if used as a part of a comprehensive plan to manage software costs.


Software pricing contributes significantly to overall mainframe costs. Most installations need, but lack an active program to monitor/reduce software costs. BMC’s Cost Analyzer for zEnterprise can play a major role in cost containment and optimization plans. It should be investigated to quantify savings it can help achieve. The results may be a pleasant surprise.

[1] Supplied by IBM, SMF is a part of the operating system that creates records of most system events.
[2] Sub-Capacity Reporting Tool, SCRT as it is popularly known.
[3] See Someone in the shop needs to be familiar with this web site to keep up with the various plans for IBM software.
[4] There are special considerations for US Federal customers.
[5] Customers should review this change to see if it applies to them; if it does they need to apply for it.
[6]  Here  is the URL for the David Wilson videos.