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Understanding and Managing z-pricing

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Speakers: Jacky Houfbauer - z/Cost Management e Alexey da Hora - 4Bears All you need to know about the IBM z licensing, from the methods to the contract and how the links between hardware and software could impact the pricing. Best practices to forecast and build a z/budget, to control what you planned and to follow-up your z/Environment and to apply a z/Financial management.
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  • 1. Understand and Manage z/Pricing Jacky Hofbauer from zCost Management Alexey da Hora from 4bears Proibida cópia ou divulgação sem permissão escrita do CMG Brasil. 1
  • 2. AGENDA  Terms Used and z/Configurations  z/Configurations  MileStones  IBM Pricing Strategy  Pricing Methods  Agreements  Conclusion Proibida cópia ou divulgação sem permissão escrita do CMG Brasil. 2
  • 3. ULC 1998PSLC 1994 On/Off CoD 2003 MLC vWLC 2000 2002 IPLA 2001 zCAP 2016 IWP 2011 aWLC 2010SALC 2005 SubCa p IPLA 2004 CMP 2016 MWP 2014 zAA P 2004 zNAL C 2007 DB2 VUE 2008 zIIP 2006 S.E 2009 2010 Technologies Dividends TTO / TUP z990 z9 z10 z196 zEC12 z13 IBM z Pricing Strategy z MILESTONES In green: the pricing methods impacted by ASC
  • 4. MSUs for Software Pricing  MSU:  Metric used for  capacity sizing  capacity planning  software pricing  Techies understand MSU as a Capacity metric  Software Asset Manager or Purchase Manager understand MSU as “$$$”  Capacity Planners have a MSU transversal view (Capacity & Cost)  How to target the real capacity in MSUs of CPCs:  LSPR (*) : z Systems ITR ratios for IBM processors  Cheryl Watson CPU Chart  IBM publish only Software MSU and stopped to publish Hardware MSU. (*):Large Systems Performance Reference for IBM z Systems
  • 5. z Pricing Strategy: the Charter  Before 2000:  Full Capacity Pricing  Some leverage as PSLC, ULC, etc..  Then, the Mainframe Charter:  The three pillars of the mainframe charter  Innovation == z Technologies Investment  Community == increase the mainframe skills  Value == lower the MF Cost (software and hardware cost)  The « Value » pillar:  You pay for what you use in MLC === xWLC (variable Workload licence charge) === Soft-Capping feature to control the billing level  Sub Capacity Report Tool:  Charged on monthly usage in MSUs monthly based by computing the highest hour in the month per product.
  • 6. z Pricing Strategy: Based On….  Based on the Growth:  More MSUs you use, less is the MSU price  Attractive pricing methods:  PSLC,IWP,CMP …  New Workload Incentives pricing methods:  MWP,zCAP,zNALC…  The practice of discounting MSU:  Through Technologies Dividends before z196  Through Technologies Update Pricing (TUP or TTO) from z196 to z13  Mobile  zCap  Based on new technologies:  Benefits of Technologies Dividends  Based on Pricelist:  Software prices increase yearly or every 2 years.
  • 7. z/OS Pricing Overview:  Monthly License Charges (MLC)  Including right of use and support  The base of the IT Systems:  zOS and childrens as RMF,SDSF,DFHSM,RACF,etc..  CICS,IMS,DB2,MQ and Websphere,PL/1,Cobol,etc..  Several options for large (Enterprise class) machines:  AWLC, CMLC, FWLC, PSLC, ULC, WLC  Several options for small (Business class) or new workloads:  AEWLC, CMLC, zNALC, zELC, SALC, EWLC, FWLC, TWLC, ULC, IWP, GSSP  Charged on monthly usage in MSUs based on 00:00 on the 2nd day of the month through 24:00 on the 1st day of the next month  International Program License Agreement (IPLA)  One-time charge (OTC) up-front plus Subscription and Support (S&S) each year  Value Unit pricing is based on some metric such as MSUs, etc.  Product Tools as Data Management Tools, CICS & IMS Tools, DB2 Tools, Netview,Omegamon/Tivoli,TWS, Debug Tool,….
  • 8. z/OS Pricing Overview  Old Pricing Options  PSLC - Parallel Sysplex License Charges  ULC - Usage License Charges  Used for DB2, CICS, IMS, WebSphere MQ if they have small usage (< 10% of CPC)  Not compatible with xWLC  New Options:  CMP - Country Multiplex Pricing with CMLC (October 2015):  To control the Growth  To avoid the PSLC constraint  MWP - Mobile Workload Pricing (May 2014)  Can reduce the impact of mobile workloads by up to 60% (May 2014)  zCAP - z Systems Collocated Application Pricing (April 2016)  Incentive pricing for new workload
  • 9. Pricing Methods  MLC & SYSPLEX Options:  PSLC (Parallel Sysplex Licence Charge):  to aggregate pricing in parallel sysplex = one invoice  The rule is to have a sysplex running on more than one machine and consuming more than 50% per machine.  Technical Constraint for Outsourcers or some of customers:  How to keep a sysplex consuming more than 50% every time  CMLC (Country Multiplex Licence Charge):  Allows combining products from multiple LPARs in different sites within one country without the requirement for a parallel sysplex (PSLC Rule of 50%)  CMP is designed to reduce the cost of growth.  The Baseline: the last 3 months MSUs and software bills are averaged and those values are used to create baselines  This Baseline will determine the future bills.  MLC and Incentive Options:  IWP (Integrated Workload Pricing):  allow adding a workload to an LPAR without increasing the MSUs for all other work on that LPAR (not really used on the field)
  • 10. Pricing Methods  MLC and Incentive Options:  MWP (Mobile Workload Pricing):  Need to identify/tag the Mobile transaction and consumption  60% discount on MSUs consumed by transactions that originated on a mobile device.  Calculated/Valued a posteriori through MWRT (SCRT with Mobile feature).  zCAP (z Collocated Application Pricing):  Provide a financial incentive to deploy new applications on z/OS.  Must be a new application to z/OS in the enterprise.  zCAP Discount for a new application using MQ (for example):  Pay all MSUs consumed by MQ for the neww appl in the LPAR.  Subtract 100% of that MSUs from every other IBM product in the LPAR  Subtract 50% of that MSUs from the z/OS MSUs in the LPAR.  Calculated/Valued a posteriori through MWRT (SCRT with zCAP & Mobile feature).
  • 11. Pricing Methods – SCRT  SCRT (Sub Capacity Reporting Tool) from IBM:  Tool used each month in order to qualify for sub-capacity charges  For any of the following price metrics: xWLC, zNALC, VUE, or for select IPLA products on z/OS  Charged on monthly usage in MSUs based on 00:00 on the 2nd day of the month through 24:00 on the 1st day of the next month , so 720 Hours.  Take into account LPAR’ Soft-Capping.  SCRT runs hourly for 720 hours in the month and computes the highest hour in the month per product. Here the rule  Two Family of products are managed by SCRT: MLC with xWLC,zNalc,M WP,zCAP,IWP,PS LC,CMLC.. IPLA with All tools and VUE
  • 12. IBM Soft Capping Feature  IBM Soft Capping is a feature which allows to control the z/OS bill by defining for each LPAR a MAXIMUM for the average consumption of MSU (R4H):  This limit is called Defined Capacity (DC).  The Soft Capping rule:  When Rolling 4 Hours (R4H) becomes superior or equal to DC then the LPAR is capped. That means that the IMSU consumption will not be able to exceed the DC anymore until the R4H becomes lower than the DC again. When R4H > DC, IMSU is limited to DC, until R4H < DC.  Example of a capped LPAR:
  • 13. RMF/CMF – the Metrics Defined Capacity IMSU R4H WLM Cap% RMF CPC View Mainview LPARCAPZ View
  • 14. Soft Capping Feature – Invoicing  How does IBM Soft Capping feature allow you to control the Software bill?  When using the IBM Soft Capping feature, SCRT is computed as follows:  So it takes into account either the peak of R4H or the DC. 1 month SCRT = MAX ( SUM ( min ( Average R4Hs , Average DCs ) ) ) 1 hourLPARs
  • 15. Hour/ LPAR Hour 1 Hour 2 … H 720 Hour/ LPAR Hour 1 Hour 2 … H 720 LP1 51/53/52/49 Av = 51.25  51.25 Value retained to compute SCRT 48/53/52/55 Av = 52  52 … 50/48/46/45 Av = 47.25  47.25 LP1 DC=50 51/53/52/49 Av = 51.25 > DC  50 Value retained to compute SCRT 48/53/52/55 Av = 52 > DC  50 … 50/48/46/45 Av = 47.25 < DC  47.25 LP2 70/68/69/74  70.25 72/68/69/74  70.75 … 75/72/67/71  71.25 LP2 DC=69 70/68/69/74  69 72/68/69/74  69 … 75/72/67/71  69 LP3 81/83/82/79  81.25 80/84/84/82  82.5 … 82/79/80/81  80.5 LP3 DC=81 81/83/82/79  81 80/84/84/82 81 … 82/79/80/81  80.5 LP4 11/13/12/15  12.75 11/13/12/11  11.75 … 13/11/13/12 12.25 LP4 DC=12 11/13/12/ 15  12 11/13/12/11  11.75 … 13/11/13/12  12 Total 215.5 217 … 211.25 Total 212 211.75 … 208.75 Without Soft Capping With Soft Capping Soft Capping Feature – Invoicing (Example)
  • 16. Enterprise Agreements to frame the used methods  ELA (Enterprise License Agreement):  Based on the capacity planning for MLC and IPLA:  Yearly valuation of all products consumption in the Datacenter  Commitement per year in Currency.  IBM’s method of providing a discount to encourage  long-term agreement  customer agrees to purchase  A 5-year ELA has a larger discount than a 2-year ELA  ELA typically covers MLC products, OTC products,and Passport Advantage (non- Mainframe) products.  Some discounts might apply to MLC  Often discounts apply to OTC  Discounts always apply to Passport products  Benefits of ELA  Some discounts  Better for budgeting  Total spending divided in even payments (monthly,quarterly, yearly)  This takes a lot of effort in planning, so increasing the length of ELA reduces staff time
  • 17. Enterprise Agreements and Commitments  MLC Commintment into an ELA:  Monthly or Quarterly Follow-UP to control the contractual limit  What happen at the end of the year with the invoicing:  In case the total of the year reaches the contractual limit:  The customer need to budget the gap and pay this amount to IBM  In case the total of the year is less than the contractual limit:  The customer waste money ==== capacity planning is mandatory  IPLA Commintment into an ELA:  If Sub Capacity is used:  Same follow-up as MLC  If Full Capacity is used:  Just pay the bill
  • 18. ELA: how to define the commitment  A relevant Capacity Planning is mandatory:  End Users’ Business Plan (activity evolution hypothesis) taken into account –  Elaboration of a capacity plan & Servers capacity optimization –  Verification of Sysplex aggregation compliance (if PSLC)  Forecast of Software billing levels –  How to do it:  Using CPT (CCP-Tool for Capacity and Cost Planning Tool from zCost Management)  Load hypothesis into CPT  Servers capacity optimization  Forecast of Software billing levels (as described above)  Yearly valuation of all products consumption in MSU  Convert MSU in currencies (by using an API)  Elaboration of IT investment budgets  Elaboration of optimized Software contracts (including ELA) thanks to CPT
  • 19. ELA: how to follow-up the commitment  How to follow-Up the MLC Commitment:  Using D4Z (from zCost Management and 4bears)  monthly valuation  Stacked monthly view to follow-up the trend  Set the contractual limit as a targetline
  • 20. Enterprise Agreements and Commitments  How to respect the MLC Commitment:  Using ASC from zCost Management  Set Up the CPCMAX value for each CPC linked to the contractual limit  CPCMAX could be monthly adapted:  By withdrawing MSU to CPCMAX in case the commitment is in danger  Or by increasing CPCMAX in case of……. Example with a 18000 MSUs commitment in the year, so 1500 MSU per month: ASC could adjust the montly limit depending of the activity while controling the yearly limit. ( M a y 2 0 1 4 ) ( M a y 2 0 1 4 ) ( M a y 2 0 1 4 ) ( M a y 2 0 1 4 ) ( M a y 2 0 1 4 ( M a y 2 0 1 4 ) ( M a y 2 0 1 4 ) ( M a y 2 0 1 4 ) ( M a y 2 0 1 4 ) ( M a y 2 0 1 4 ) ( M a y 2 0 1 4 (1500 MSU Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec
  • 21. Enterprise Agreements: Conclusion  A well-managed capacity planning is mandatory  Thanks to profesionnal tools as CPT  A Cost Control Policy needs to be applied  Thanks to professional tools as ASC  Financial and Contract Management are mandatory  Thanks to profesionnal tools as D4Z
  • 22. Solutions Positioning
  • 23. • Process making sure the IT is provided at the right time, for the right cost and in sufficient quantity • Process ensuring that the IT is used as efficiently as possible. PAST FUTURE TODAY Solutions Definitions & Products Products: . CCP Tool by zCost Management . CAZe by BMC Products: . Dino Explorer Suite (4Bears) by zCost Management . TDS by IBM . SAS/MXG by SAS Institute . MICS by CA . CMM by BMC . EPV for z/OS by EPV Technologies Etc.. • Includes all the required information to size and provide the resources the current and future services will need, and the associated costs • Plan used to manage the resources required to provide the IT service. Capacity and Cost Planning Products: . AutoSoftCapping (ASC) by zCost Management . iCap by BMC . zDynacap by zIT Consulting . • Process to optimize costs depending on resource utilization • Process guaranteeing the compliance with budget commitments. Cost Control Capacity and Perf. Mngt.
  • 24. PAST FUTURE TODAY CCP-Tool ASCDino Explorer for zCost Smart Application for ASC Users  Based on ASC SMF Records  3 Goals: – Manage (real-time oriented) – Analyze (historic oriented) – Control (cost control oriented)  G.A December 2015 MLC Cost Control  Cost control in all contexts: – Standard Soft Capping – All-inclusive contracts (ELA OIO,…)  Leverage for contracts negotiation  Performance optimization Capacity & Cost Planning  Capacity Planning (HW & SW): – Hardware acquisition plan – Contracts negotiation (IBM, ISVs)  Evaluation of different scenarios  Contracts follow-up
  • 25. Obrigado! Proibida cópia ou divulgação sem permissão escrita do CMG Brasil. 25
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