If you’ve been working from home and haven’t made it into the office, you might not have seen the August 24 snail mail from IBM announcing a price increase of 5% on MLC (Monthly License Charge) prices. We want to bring this up because many people are completing their budgeting process for 2022, and they might be using IBM’s prior 4% annual increase in their budgeting.
In addition to the MLC increase, there is also a 6% increase on OTC (One-Time-Charge) and S&S (Subscription and Support) prices. For the majority of customers, the OTC and S&S prices will not impact them if they have an ELA (Enterprise License Agreement) because the ELA will indicate those prices for the term of the contract. It will probably mean an increase for those products for the next ELA. For sites without an ELA, the new OTC and S&S prices will also be effective on January 1, 2022, and you will want to take that into account for your budgeting.
In the past, OTC and S&S costs were a small percent of the total platform costs (we had been quoting 10%). But with the number of clients moving their primary software (Db2, CICS, IMS, etc.) from MLC to OTC (with huge entitlements) or moving to TFP with large entitlements, that is no longer true. OTC costs are eclipsing the MLC costs at many sites. To increase the complexity of monitoring your software bill, MLC usage and costs are reported monthly, but OTC and S&S entitlements are usually not looked at on a regular basis. They become hidden costs.
We recommend that you speak to IBM and the rest of your ISVs as soon as possible to get an estimate of the increase you can expect at your next contract renewal. (And you know there will be an increase!) Most vendors don’t publish prices (except for us!) and realize that it is to their advantage to give customers as little time as possible to line up a competitive product. We have been receiving reports of some vendors increasing costs by over 100% (in one case, almost 300%). IBM and most ISVs will drag their feet until midnight before the renewal of a contract.
Here’s one more thing we think you should look at. We are hearing of vendors who change their interpretation of MIPS or MSUs in the middle or at renewal of a contract. First of all, we think MIPS are a poor metric for usage because there are many interpretations of MIPS, and the interpretations are seldom specified in the contract. MSUs are a better metric because they are show in IBM’s monthly SCRT (Sub-Capacity Reporting Tool) reports. But which MSUs do you use? We recommend using the peak 4HRA MSUs per product in the P5 section of the SCRT report. This is what IBM uses. Unfortunately, at least one vendor has decided to use the N5 section of the report (in the middle of the contract!). The N5 shows the peak of each LPAR, which will typically be at different times of the day, the sum of which is often higher than the physical capacity of the machine. We do not recommend using the N5 section!
If you think that you might have trouble with a vendor, plan ahead to find alternatives for their software. When customers are looking to replace a vendor’s software product, we often use Longpela’s ‘Lookup Mainframe Software‘ site. Enter a product name and you can find its history, a description, and similar software from various vendors. It’s quite valuable.
Finally, please forward this post to your procurement team, who may be very interested in this information.