IBM says its mainframe pricing model isn't for everyone

IBM says its mainframe pricing model isn't for everyone

Nearly two years after IBM announced a new pricing model aimed at making mainframe hardware upgrades cheaper, the company is urging users to be careful about how and where they apply it.

At last week's Share user show in San Francisco, IBM said its Workload License Charge (WLC) can reduce the huge software fee increases that are traditionally associated with mainframe upgrades. But the key to savings lies in understanding a system's capacity requirements and software usage patterns and in knowing what software products to run in each mainframe partition.

WLC appears to offer users a way to lower the cost of mainframe upgrades, said Rob McCurley, a senior vice president at AFLAC. The insurance company is Web-enabling a core mainframe-based policy management application using IBM's WebSphere application server technology.

"IBM is working very hard to keep the mainframe a viable server platform," and WLC is part of the company's effort, McCurley said.

However, users who fail to completely analyse their individual situations could end up disappointed -- and have no way to go back to previous pricing models, said Marcy Nechemias, an IBM pricing manager.

"The concern that we have is that customers will make snap judgments without doing a full analysis, and that might get them to WLC before they should," Nechemias said.

IBM announced WLC in October 2000 along with its 64-bit zSeries mainframes. WLC lets users pay for mainframe software based on the average size of their workloads and not on a system's capacity.

Users can choose from several WLC options, including the following:

- A full-capacity WLC model that works the same way as other capacity-based licenses, except that it uses a different pricing metric for computing software costs.

- A subcapacity WLC model that charges users based on their software's average utilisation of a mainframe partition over a four-hour period.

- A defined-capacity model, where users can define the hardware capacity they need within a partition for a particular workload and pay software fees for that defined capacity.

Things to Watch For

But there are several "gotchas," analysts said.

For instance, a usage-based licensing option available on several crucial pieces of IBM software isn't available under WLC. So some users may actually be better off sticking with their current license models, said Al Sherkow president of I/S Management Strategies.

Seasonal variations in software usage could affect savings for those who choose a subcapacity option, Nechemias said.

Companies that opt for the defined-capacity method get more predictable bills. But the model works by forcing resources to remain within the defined capacity, hurting performance in some situations, Sherkow added.

"The key difference [from previous models] is that users, for the most part, didn't need to be concerned about where specific products were running, because IBM and the other vendors were charging by system capacity," Sherkow said. With WLC, users need to pay special attention to the software mix in a partition to see savings, he said.

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