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New zEnterprise 196 Hardware,
     AWLC and IBM Software Pricing

Originally Written on Announcement Day: 22 July 2010,
Last Updated: Saturday, 7 August, 2010

IBM announced the zEnterprise 196 on July 22, 2010. The z196 is a new mainframe system available in September that will also offer a zBX, which is a BladeCenter extension available in November. The US announcement letter is 110-170. The z196 will also have a new pricing metric "Advanced Workload License Charges" described in US announcement letter 210-238. AWLC offers "Reduced price points, versus VWLC, for all MSU levels with more than three MSUs".

Where is the Technology Dividend?

With the z990s, z9s and z10s IBM separated the hardware’s ability to run your workloads from the MSU sizes that were announced for those machines. 1,000 MSUs of work on a z900, required approximately 900 announced MSUs on a z990 (I often refer to the announced MSUs as the “Software MSUs”, and the MSUs calculated from the SRM constant as the “Hardware MSUs”.) That same work required approximately 770 announced MSUs on a z9 EC and approximately 680 announced MSUs on a z10 EC. The effect of this technology dividend was that it lowered the TCO for these machines for IBM software and for any ISV software that was charged based on the IBM announced MSUs. Also, for IBM IPLA software, this tech dividend lowered the MSUs for products which in turn lowered the required Value Units for IPLA products, and sites found they had excess value units and could defer acquiring additional value units.

The z196 difference between the hardware’s ability to provide MSUs and the announced MSUs is only slightly different from the z10 EC providing about 2% additional separation. This 2% is in the customers favor, meaning a z196 has about 2% more hardware MSUs with a specific number of z196 announced MSUs than the same number of z10 announced MSUs.

To provide some technology dividend beyond this 2% IBM offers a new pricing metric only for the z196 machines: "Advanced Workload License Charges". This is a significant change in software pricing. As stated above some ISVs were offering software charges based on the IBM announced MSU values for the hardware. A site moving from z9 to z10 technology either achieved a reduction in software charges, or some period of no growth in their software charges due to the approximately 10% difference in SW MSUs. This was also true for IBM’s System z IPLA products whether a site was using sub-capacity or full capacity IPLA. AWLC will only lower your IBM Monthly License Charges and will have little or no effect on your ISV or IPLA software pricing. I expect the ISVs who allow Software MSUs to be used for software pricing are quite pleased that the method of delivering a tech dividend has changed.

As a final thought on the technology dividend, the 10% reductions could not go on much longer. On z10s the separation was about 68% percent. As the tech dividend was providing this benefit, the increased charges with new versions was taking back some of the savings.

AWLC

AWLC will help lower IBM MLC software charges for sites using "VWLC" on standalone machines or in a PricingPlex. EWLC is not available on z196s, and the impact of AWLC for smaller machines depends on the billable MSUs. “EWLC” sites with billable MSUs above 127 will see a monthly savings. While EWLC sites smaller than 127 MSUs will see an increase in their MLC on the z196 with AWLC versus EWLC on older hardware.

Further, AWLC takes advantage of some pricing tiers that only z/OS uses today. With the VWLC metric DB2, CICS, WebSphere MQ, IMS and other MLC WLC products do not lower the charge per MSU above 575 MSUs. For Example DB2 V9's pricing table is shown in Figure 1 below for EWLC, VWLC and AWLC. Note that the VWLC charges are 53/MSU for each MSU above 576. AWLC lowers the charge per MSU at the lower tiers, and at 575 or more MSUs the charge is $51/MSU. Two further tiers are “activated” lowering the charge to $49 from 876 to 1314 MSUs and lowering to $47 above 1316 MSUs. I expected from "Reduced price points, versus VWLC" that the charge would lower at 1,976 MSUs also, but that has not been done for any of the VWLC products. Still the announcement is correct, as the AWLC charge of $47 is less than VWLC’s charge per MSU of $53.

Figure 1 : EWLC, VWLC and AWLC Pricing Tiers for DB2 V9 5635-DB2

AWLC/VWLC Software Stack

To best understand the difference between AWLC and VWLC metrics rather than looking at the pricing on a product by product basis, a typical software stack should be used. To z/OS I added DB2, CICS, MQ Series, COBOL and Netview and computed the VWLC charges and the AWLC charges. This could represent replacing a z10 EC with a new z196.

Figure 2: LCS_PRICING Example for the 800 MSUs Sub-Capacity Software Stack on both a z10 EC in the yellow columns and on a z196 in green shaded columns.

In this case the software stack charged at 800 MSUs on a z10 EC totals 373,208USD. Moving the software, and all LPARs to a z196 results in a charge of 358,331USD, a monthly savings of 14,877USD about 4%. The example above shows one comparision point at 800 MSUs. How does this change across a variety of machine sizes? Figure 3 shows the same software stack at 50 MSU increments from 50 to 2,200 MSUs.

Figure 3: Software Stack & AWLC discount relative to VWLC

The 50 MSU configuration provides about a 2.6% discount. Configurations from 150 to 900 MUS have a discount of about 4%. Remember this discount is for this "sample" software stack, your particular discount may be higher or lower. A discount of 4.5% is provided by 1,350 MSUs, 5% begins at 1,600 MSUs and so on. The largest confiigurations provide a 6% discount.

zEnterprise 196, AWLC and LCS Software

The LCS_PRICING Interactive Report as shown above in Figure 2 has been updated and made available to licensees on 26 July 2010. The enhancements in LCS_Pricing for z196 and AWLC are:

1. the z196 (2817) machines are now available in the drop down lists for "what-if" type analysis of the new machines
2. the AWLC Pricing Metric with current prices for all AWLC products and features
3. the Mixed VWLC/AWLC PricingPlex Transition Plan is supported. LCS automatically determines if the transition plan applies to the PricingPlex and presents the % of installed capacity due to z196s, the discount to be applied, and the discounted MLC charges.

The LCS SMF component has already been updated for the 2817 machine type. Development to support AWLC and the new "Transition Charges for Sysplexes" in the SMF Component is ongoing.

Last Updated: Saturday, 7 August, 2010