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z/OS Price Increases Effective 1 April 2012

Originally Written: Monday, 20 February, 2012
Last Updated (minor edits): Wednesday, 22 February, 2012

IBM announced price increases for many features of z/OS including the Base feature on January 2nd, 2012. In the US the announcement letter number is 312-001. (In Europe, Middle East, and Africa the announcement was December 30, 2011 with letter number ZA11-1053.) For sub-capacity pricing the February 2 through March 1st usage will be sent to IBM by March 9th via SCRT, and will be used to “adjust” IBM inventory MSUs for each machine. These price increases will be used when IBM prepares April 1st MLC invoices. The individual increases are around 5% for the tiers that have been changed of the AWLC, VWLC and ZELC metrics. Not all tiers have changed, so this is not an across the board z/OS price increase. For example, some z/OS features only have an increase for the initial 3 MSUs. If you are using multiple machines in a z/OS PricingPlex the increase is effective once per PricingPlex, not once per machine. If you are using Measured Usage and PSLC the z/OS increases are around 6.7%.

While some of the earlier discussions of the announcement focused on the 6% increase per tier, this update will show that from a total software stack perspective is closer to 2%.

IBM's initial announcement of z/OS Version 1 was October 3, 2000; along with announcements for Workload License Charges, and the z900 mainframe. There have been some adjustments in the tiers and new pricing metrics have been introduced (EWLC, AWLC, AEWLC) I believe this is only the second price increase for z/OS Version 1 in the United States. IBM has been providing significant enhancements to z/OS since the initial announcement with each of 12 releases. The preceding price increase was announced December 31, 2008 with an effective date of April 1, 2009. Also recall that when OS/390 was replaced with z/OS when used with z900s in 64-bit zArchitecture Mode and with Workload License Charges that z/OS V1 was actually less expensive than OS/390.

All sites using AWLC, VWLC, PSLC, GOLC, NALC, zNALC and many ZELC machines will see an increase due to increases in the z/OS Base Feature. For smaller machines the EWLC metric was increased effective January 1st, 2012 and AEWLC (Advanced Entry WLC) was only introduced in July, 2011 and they have not changed with this announcement. The only features with changed at or above the 45 to 175 MSU tier are DFSMS DSSHSM, SOMObjects, and Security Server.

Changes in 350 MSU and 4,000 MSU MLC Invoices

I expect that few IBM sites use z/OS alone. CICS, DB2, other middleware and other products are may be used depending on the mainframe workload. The software stack that I used for this analysis begins with z/OS, DB2 V8, CICS V3, WebSphere MQ Series V6, Netview V5 and COBOL V3. I also included a few z/OS features: HCM, HLASM Toolkit, RMF, SDSF and Security Server. The 350 MSU stack with VWLC and AWLC both with earlier prices, and the increased prices is in Figure 1 below:

Figure 1: 350 MSU Stack Before and After Price Increase

At 350 MSUs the z/OS Base feature has increased 5.8% for VWLC and 5.9% for AWLC, yet the total stack has increased less than 2.3%. Note that as additional products are added to the stack, be they sub-capacity products, or FWLC products, the percent increase of the entire stack will decrease. The same stack with 4,000 MSUs is in Figure 2 below. The z/OS Base Feature has a slightly higher percent increase, while the other z/OS features have smaller increases. Also the total stack increase is now around 1.7%.

Figure 2: 4,000 MSU Stack Before and After Price Increase

Refer to Increases with Version Changes for Perspective on This Change

Price changes for IBM Monthly License Charge (MLC) products generally occur with the announcement of new versions of products. At a variety of MSU levels the MLC increase of DB2 V8 compared to DB2 V7 was more than 12%. In the same vein DB2 V9's increase was more than 9.5%, and DB2 V10's increase was around 11%. For CICS TS V2 through V4 the increases were more than 14.5%, 11.7%, and 13.7%. Again, these calculations are across a range of MSU levels.

Figure 3: Monthly MLC Charges as MSUs increase with product version changes for DB2, CICS, and WebSphere MQ Series. The four bars on the left side two bars on the right side of each group are with the VWLC metric. The two bars on the right side of each group use the AWLC metric. This is the same software stack as the bar labeled "VWLC DB2 V10, CICS V4, MQ V7". The right most bar shows the impact of this z/OS price increase. The increment between the two AWLC bars is much smaller than the increases of the version changes.

Another point to be made, not included in this analysis, is the value of IBM's mainframe “technical dividend” which was initially introduced with the Mainframe Charter and the z990 in August 2003. (The IBM mainframe charter web page is no longer available, but you can review my thoughts and analysis for additional information.) The technical dividend decreased the billable software MSUs relative to the true capability of the hardware MSUs. The effect of the technical dividend both for sub-capacity billable machines and full-capacity machines was that lower MSUs generally led to lower software charges for IBM and for ISV products. So while DB2, CICS and other software products were increasing charges with new versions the hardware technical dividend was lowering billable MSUs. In Figure 3 the increases that accompany the version changes are more easily viewed at the higher MSU levels. The advantage of AWLC when z196s are in use is also viewable. Above 1,975 MSUs the advantage of the AWLC metric pricing is to lower the monthly charges to a level that is back two versions. This is partly due to the AWLC further lowing the charge per MSU at 1,316 MSUs and higher. Figure 4 divides the bars of Figure 3 by the MSUs showing the effective volume discount that larger sites receive. With the z196 and later the z114 machines IBM stopped providing a further separation of hardware and software MSUs as had occurred with the preceding 3 mainframe technologies.

Figure 4: An alternative representation of Figure 3, in this case the Monthly MLC Charges are divided by the MSUs, to provide a "per MSU" view of the analysis

The Analysis Above Was Prepared With Our LCS Software

The LCS_PRICING is part of the LCS Interactive Report Component which has been updated with the new prices for z/OS and was used for all the analysis above. The LCS SMF component has already been updated for the these pricing changes. The Interactive Reports allow sites to do a quick what-if analysis using Microsoft Excel.  

Last Updated: Wednesday, 22 February, 2012