IBM Defends Pricing Model

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March 03, 2003 (Computerworld) -- IBM remains fully committed to its Workload License Charge mainframe software pricing model and will continue to try to make it easier for users to implement it. That was the message delivered by an IBM executive at the Share large-systems user conference in Dallas last week.
IBM announced WLC in October 2000 along with its 64-bit zSeries mainframes. Under the pricing model, IBM z/OS users pay for software based on the average size of their workloads and not on the overall system capacity.
Despite the promised benefits, users have complained that WLC is hard to implement and understand . IBM itself has acknowledged that the model isn't for everyone and requires a lot of careful upfront analysis before adoption.
"There is still some confusion. This is still tricky for some users," said Marcy Nechemias, an IBM pricing manager. "But the overall message here is that WLC is here to stay." She added, "There have been some rumors that IBM is going to discontinue WLC. Those are completely untrue."
Hewitt Associates LLC, a human resources outsourcer in Lincolnshire, Ill., has been using WLC since November 2001. The company is saving approximately 25% in monthly mainframe software licensing costs, said Dan Kaberon, Hewitt Associates' Parallel Sysplex manager.
"It was a good deal on the first day of the first month, and it has become easier to implement and more valuable for us to exploit with every change that IBM has made," Kaberon said.
In many instances, companies aren't moving to WLC simply because they see little benefit in it, said Stan King, president of Information Technology Co., an IBM business partner in Falls Church, Va. None of the 65 data centers that are directly supported by Information Technology has adopted WLC, King said. In all 65 cases, mainframes and associated software are being used at full throttle in production environments. Such shops won't see the same benefits from WLC, which favors users that don't fully max out capacities or those that have variable workloads, King said.
"There can be tremendous saving in this for those who own application development shops or are using mainframes on a limited basis or have brand-new requirements," King added.
Nechemias said IBM will work with users to understand specific concerns and address them where possible.
For instance, in response to user demands, IBM has made changes in the way usage is defined and measured under WLC. More recently, IBM discontinued plans to develop a license manager technology that was to have been used with z/OS, after users complained that it was too intrusive and complex to install.
In the same vein, IBM is currently working with users to clarify issues related to a four-hour rolling average metric IBM uses in some cases to measure software usage, Nechemias said.
"We are just dotting the i's and crossing the t's" to clarify things for users, Nechemias said. Later this year, IBM plans to highlight several customer case studies showing how early users who have implemented WLC are taking advantage of it, she said.
IBM's move to educate users about WLC comes at a time when barely 40% of all z/OS users have adopted the pricing model, despite its touted benefits.
"In terms of an adoption rate, one of the gating factors is that a lot of users are running z/OS in a mixed environment" with OS/390, said Mike Chuba, an analyst at Stamford, Conn.-based Gartner Inc. That makes WLC hard to implement, he said.
Another major factor is that WLC's benefits can vary widely depending on the overall capacity of installed mainframes and the applications that run on them, so users need to do the necessary analysis before making a move, Chuba said.
For instance, a mainframe user with less than 1,000 MIPS installed is unlikely to see much of a price benefit and is probably better off with current Parallel Sysplex licensing models, Chuba said. On the other hand, a user with more than 1,000 MIPS running multiple software packages could benefit substantially by moving to WLC, he said.

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