System z Top Gun © 2008,2009 IBM Corporation 1 System z Software Pricing IBM System z z10 ECz10 BC Amy Tobenkin Worldwide System z Sales January 2009

System z Top Gun © 2008,2009 IBM Corporation 2 Agenda  Software Pricing Overview  Parallel Sysplex ® Aggregation  Sub-Capacity Pricing  z/VSE ™ Sub-capacity pricing  IBM System z ™ Application Assist Processor (zAAP) and IBM System z9 ™ Integrated Information Processor (zIIP)  System z New Application License Charge (zNALC)  z/VM ® and Linux ®  On/Off Capacity on Demand

System z Top Gun © 2008,2009 IBM Corporation 3 IBM System z Software Pricing System z: Monthly License Charges (MLC) System z: One Time Charges (OTC) Distributed: One Time Charges IBM Customer Agreement (ICA) International Program License Agreement (IPLA) Monthly ‘term’ license ‘Perpetual’ license, annual maintenance (optional) ‘Perpetual’ license, maintenance bundled in Y1, optional 12 mo maintenance Sub-Capacity: October 2000Sub-Capacity: Aug 2004Sub-Capacity: April 2005 License to a machine, sysplex aggregation License to an enterprise, Enterprise aggregation License to an enterprise, Relationship Acronyms ending in ‘LC’Value Units Engine-based, Passport Advantage ® Program e.g., DB2 ®, CICS ®, IMS, MQSeries ®, COBOL compilers, PL/1 compilers, Domino ™, z/OS ®, z/VSE ™ e.g., Products that run on UNIX ®, Microsoft ® Windows ®, Linux ® …including middleware for Linux on zSeries!!!

System z Top Gun © 2008,2009 IBM Corporation 4 Financial Benefits of Sysplex Aggregation *All prices are estimates in USD and subject to change Lower Cost of Incremental Growth

System z Top Gun © 2008,2009 IBM Corporation 5  IBM Parallel Sysplex ® Aggregation Criteria: –Hardware requirements Common Coupling Facility and Common Sysplex Timer ® or Server Time Protocol (STP) –Software requirements Common Systems Enablement Function –Operational requirements 50% Workload Rule –Verification requirements Sysplex Verification Package  Applies to Parallel Sysplexes with: –Workload License Charges (WLC) –System z New Application License Charges (zNALC) –Parallel Sysplex License Charges (PSLC) See the Web: Parallel Sysplex Aggregation

System z Top Gun © 2008,2009 IBM Corporation 6 What is Sub-Capacity?

System z Top Gun © 2008,2009 IBM Corporation 7 sub- (prefix) Below; under; beneath: subsoil. Subdivision: subregion. Less than completely or normally; nearly. System 100 MSUs Full-Capacity Pricing Metrics rely on the total rated capacity of the MACHINE where a product executes. 30 MSUs DB2 CICS z/OS 50 MSUs IMS z/OS ibm.com/zseries/library/swpriceinfo/hardware.html G What is Sub-Capacity? Sub-Capacity Pricing Metrics rely on the utilization of the LPAR(s) where a product executes.

System z Top Gun © 2008,2009 IBM Corporation 8 Generic Sub-Capacity Example SYSA SYSBSYSC 219 MSUs 139 MSUs z/OS DB2 z/OS z/OS z9 EC 240 MSUs DB2 = 139 MSUs z/OS = 219 MSUs

System z Top Gun © 2008,2009 IBM Corporation 9 Who is Eligible for Sub-Capacity?

System z Top Gun © 2008,2009 IBM Corporation 10 Workload License Charges* *WLC are available on System z10, z9 EC, z990, z900, z9 BC (plex), z890 (plex) and z800 (plex) Full-Capacity mode - use rated MSU capacity or Sub-Capacity mode - use MSU values from Sub- Capacity Reports System z10 z/OS 64-bit z/OS in 64-bit mode required. Remove all OS/390 for a CEC to qualify…

System z Top Gun © 2008,2009 IBM Corporation 11 Entry Workload License Charges for z10 BC, z9 BC and z890 z10 BC-A01, z9 BC- A01 and z are the exception to this rule, and are priced using zELC Full-Capacity mode - use rated MSU capacity or Sub-Capacity mode - use MSU values from Sub- Capacity Reports System z10 z/OS 64-bit z/OS in 64-bit mode required. Remove all OS/390 for a CEC to qualify…

System z Top Gun © 2008,2009 IBM Corporation 12 Sub-Capacity Possible Benefits  Grow Hardware Capacity Independently of Software Capacity –Pay for software only based on the LPAR(s) where the software executes –Grow software with 1 MSU level of granularity –Spike into "spare" capacity without software charges –Manage utilization without having to turn engines on and off  Flexibility to Pay for What you Need each Month –In the case of ELA, your monthly payments are fixed and your actual sub-capacity monthly software inventory value is compared against your MLC cap  Pay on Average Utilization, not Maximum Utilization –Highest observed rolling 4-hour average utilization across a month –Sub-Capacity Reporting Tool manages measurement/reporting

System z Top Gun © 2008,2009 IBM Corporation 13  z/VSE V4: –z/Architecture (64-bit) mode only z10 EC, z10 BC, z9 EC, z9 BC, z990, z890, z900, z800 –Up to 8 GB real processor storage  z/VSE Price/Performance Through New Pricing Metric –Midrange Workload License Charges – MWLC Low full capacity price points Sub-capacity option Available on System z10 and System z9 servers only (z10 BC, z10 EC, z9 BC and z9 EC)  Additional Price/Performance Through Sub-Capacity –Some hardware footprint consolidations more attractive now  MWLC requires current servers (z10 BC, z10 EC / z9 EC / z9 BC) and z/VSE V4 –Presence of z/VSE V3 or VSE/ESA forces full-capacity pricing * z9 BC A01 is priced zELC, not MWLC z/VSE V4 – New Pricing Metric & Sub-Capacity!

System z Top Gun © 2008,2009 IBM Corporation 14 z/VSE: MWLC High End Price/Performance Before MWLC After MWLC z9 EC Model MSUs z/OS Stack (239 MSUs) WLC Sub-Cap 9672 Model R45 35 MSUs VSE Stack $176K/mo $20K/mo z9 EC Model MSUs z/OS Stack (239 MSUs) WLC Sub-Cap VSE Stack (25 MSUs) MWLC Sub-Cap TOTAL $196K/mo TOTAL $182K/mo $176K/mo$6K/mo *Prices subject to change without notice; all prices shown in USD *Sample software stack includes: VSE CF V8, HLASM, VTAM, DITTO, COBOL

System z Top Gun © 2008,2009 IBM Corporation 15 Price/Performance

System z Top Gun © 2008,2009 IBM Corporation 16 Generation to Generation IBM Software Savings Possible * Sample Software Stack Includes: z/OS Base plus features, DB2 v9, CICS v3, IMS v9, MQ v6 All Prices are estimates in USD and are subject to change The announced MSUs for SW pricing purposes on z10 EC and z9 EC servers are designed to offer improved software price/performance. z990 z9 EC ~10% MSU reduction compared to z9 EC z10 EC Example Software MSUs for similar HW capacity. Sample 3 Year Savings for z10 EC SW * Compared to: SW MSU Examples ~19% MSU reduction compared to z990

System z Top Gun © 2008,2009 IBM Corporation 17 zAAP/zIIP

System z Top Gun © 2008,2009 IBM Corporation 18 System z Application Assist Processor (zAAP)  zAAP – New processor type dedicated exclusively for Java language based workloads under z/OS – e.g. WebSphere  Enabled by zSeries innovative PR/SM ™ virtualization –CPs and zAAPs in the same z/OS LPAR –Java work ONLY directed to zAAPs by z/OS 1.6+  Can help lower cost of computing for Java technology-based application servers –Attractively priced on z10 EC, z10 BC, z9 EC, z9 BC, z990, and z890. –No IBM software charges on zAAPs  Required Elements –z/OS 1.8* or higher –zAAP hardware feature –Java SDK * Originally supported with z/OS1.6 which is no longer a supported release

System z Top Gun © 2008,2009 IBM Corporation 19  Specialty engine for the System z9 and System z10 server designed to help: –Customers integrate data across the enterprise –Improve resource optimization and lower the cost of ownership for eligible data serving workloads  z/OS manages and directs work between the general purpose processor and the zIIP –Number of zIIPs per server not to exceed number of standard processors –No changes anticipated to DB2 for z/OS V8 applications  DB2 for z/OS V8 was the first IBM exploiter of the zIIP with –z10 EC, z9 EC and z9 BC –z/OS 1.8 or later (Available with z/OS 1.6 which is no longer a supported release) –DB2 for z/OS V8 or later –Additional zIIP function with XML IBM System z Integrated Information Processor (IBM zIIP)

System z Top Gun © 2008,2009 IBM Corporation 20 High utilization For illustrative purposes only Actual workload redirects may vary Reduced utilization Portions of eligible DB2 enclave SRB workload executed on zIIP DB2/DRDA DB2/Batch Ent App DB2/DRDA DB2/Batch DB2/DRDA TCP/IP (via Network or HiperSockets) CP zIIP Enterprise Applications that access DB2 for z/OS V8 via DRDA over a TCP/IP connection will have portions of these SQL requests directed to the zIIP Example: Enterprise Applications with zIIPs

System z Top Gun © 2008,2009 IBM Corporation 21 Adds zAAP instead of upgrading to 706 or 707 Java workload runs on zAAP engine Full Capacity WLC charges remain at 488 MSUs BEFORE: 488 MSUs five CPs SYSASYSB J J J J J AFTER: 488 MSUs five CPs + one zAAP SYSASYSB J J J J J z Logical View Physical View z sysa highly utilized sysa less utilized For illustrative purposes only Actual workload redirects may vary z/OS V1.6 or higher z10 EC, z9 EC, z9 BC, z990, z890 only zAAP Example One, Full Capacity WLC

System z Top Gun © 2008,2009 IBM Corporation 22 Adds zAAP instead of upgrading to 706 or 707 Java ™ workload runs on zAAP engine Sub-Capacity charges for Products in SYSA reduced from 100 to 75 MSUs BEFORE: 488 MSUs five CPs SYSASYSB J J J J J AFTER: 488 MSUs five CPs + one zAAP SYSASYSB J J J J J z Logical View Physical View z sysa highly utilized sysa less utilized r4hr avg=100r4hr avg=75 For illustrative purposes only Actual workload redirects may vary z/OS V1.6 or higher z10 EC, z10 BC, z9 EC, z9 BC, z990, z890 only zAAP Example Two, Sub-Capacity WLC

System z Top Gun © 2008,2009 IBM Corporation 23 zNALC Formerly NALC & z/OS.e

System z Top Gun © 2008,2009 IBM Corporation 24 zNALC – a great value! System z New Application License Charges (zNALC) for z/OS  Attractive pricing for z/OS operating system for qualified new workloads on the System z platform  Customers looking to add new applications to System z as well as existing NALC and z/OS.e customers will be interested in zNALC. zNALC provides:  Single Qualified New Workload pricing metric across System z product line  LPAR-level granularity –Sub-capacity announced and supported – no need for full machine dedicated to new workload  zNALC ‘Qualified New Workload’ Criteria replaces NALC Fixed Application List –A wider choice of workloads  Improved z/OS pricing –Incremental Price/Performance improvements including Parallel Sysplex ® Aggregation  No separate z/OS product or product number

System z Top Gun © 2008,2009 IBM Corporation 25 zNALC expands the definition of ‘qualified new workload’  zNALC can provide more choice of qualifying applications*  zNALC provides a definition of Qualified Applications: –Qualifies a range of commercially available UNIX and Microsoft Windows applications –Qualifies a range of enterprise application data serving workloads –Qualifies a range of Java ™ language business applications running under WebSphere Application Server –See the zNALC announcement letter for terms, conditions, and details  NALC was applicable only to a short list of select applications  z/OS.e disables or disallows certain products, applications, and workloads * zNALC is available only on LPARs dedicated to a qualified new workload application. In general, qualified applications are those that IBM considers 'new workload', such as Java language business applications running under WebSphere Application Server, Lotus ® Domino ™, SAP, PeopleSoft, and Siebel among others.

System z Top Gun © 2008,2009 IBM Corporation 26 z/VM and Linux

System z Top Gun © 2008,2009 IBM Corporation 27 Integrated Facility for Linux (IFL) If an engine-based zSW IPLA product runs on any CPs it must be licensed on all the CPs. If an engine-based zSW IPLA product runs on any IFLs it must be licensed on all the IFLs.

System z Top Gun © 2008,2009 IBM Corporation 28 z/VM V5 Pricing  z/VM V5, with Improved Engine-based pricing –Provides a lower entry point of $22.5K (Base feature) –Lower Cost of incremental growth versus z/VM V4 –Enterprise-Wide Aggregation  Value Unit Pricing, Convert engines to Value Units (VUE021) –z/VM V5 Base License is $2,250 per Value Unit –z/VM V5 Base S&S is $563 per Value Unit Value Unit Exhibit 021 (VUE021): engines 1 - 3, need 10 VU per engine engines 4 - 6, need 9 VUs per engine engines 7 - 9, need 8 VUs per engine engines , need 7 VUs per engine engines 13 – 16, need 6 VUs per engine engines 17 – 20, need 5 VUs per engine engines 21 – 25, need 4 VUs per engine engines 26 – +, need 3 VUs per engine ***** cumulative ***** EXAMPLES: 1 engine = 10 VUs 2 engines = 20 VUs 3 engines = 30 VUs 4 engines = 39 VUs 5 engines = 48 VUs 6 engines = 57 VUs 7 engines = 65 VUs 8 engines = 73 VUs 9 engines = 81 VUs 10 engines = 88 VUs 11 engines = 95 VUs 12 engines = 102 VUs 13 engines = 108 VUs 14 engines = 114 VUs 15 engines = 120 VUs *All prices are estimates in USD and subject to change

System z Top Gun © 2008,2009 IBM Corporation 29 Linux for System z: Example * Select IPLA products eligible for sub-capacity pricing **All prices are estimates in USD and subject to change 690 MSUs IFL Quantity of Integrated Facility for Linux (IFL) features indicates the number of specialized Linux engines z/VM WAS Base DB2 Ent Ed 690 MSUs ProductLicense Price ** z/VM V520 Value Units $45,000 lic $11,260 S&S DB2 Ent Ed D51NALL 200 Value Units * $66,250 Passport Advantage SRP (LIC+12) WAS Base D51HNLL 200 Value Units * $20,000 Passport Advantage SRP (LIC+12)

System z Top Gun © 2008,2009 IBM Corporation 30 PVU Web Site: www- 306.ibm.com/software/lotus/passportadvantage/pvu_licens ing_for_customers.html  For current generally available processors only, as of publish date.  PVU requirements for future processor technologies may differ.  For PVU requirements for any processors not listed above, please contact IBM.  IBM SW defines "Processor" as a Core.  Each IFL or CP engine is equivalent to 1 processor core. Passport Advantage Software licensed based on Processor Value Units. This includes middleware for Linux on System z. e.g. WebSphere for Linux on System z, DB2 for Linux on System z PVU Table 

System z Top Gun © 2008,2009 IBM Corporation 31 On/Off Capacity on Demand

System z Top Gun © 2008,2009 IBM Corporation 32 z990 OOCoD Example 3 days 15 Sept 1pm - 16 Sept 1pm (one day) 16 Sept 1pm - 17 Sept 1pm (one day) 17 Sept 1pm - 17 Sept 3pm (one day) Hardware View: 2 Engines Hardware Charges = 3 Days * 2 Engines = 6 Processor-Days IPLA Software View: to = 302 MSUs to 402 MSUs = 100 MSUs IPLA Software Charges = 3 Days * 100 MSUs = 300 MSU-Days z (302 MSUs) unused engines Data Prop. (5655-E52) IMS High Perf. Load (5655-E07) DB2 Utilities Suite (5697-E98) z (402 MSUs) Data Prop. (5655-E52) IMS High Perf. Load (5655-E07) DB2 Utilities Suite (5697-E98) 76 activate deactivate 15 Sept., 1pm 17 Sept., 3pm

System z Top Gun © 2008,2009 IBM Corporation 33 Sub-Cap MLC Software with OOCoD November MLC Bill (based on September Sub-Cap Report) Highest observed rolling 4-hour average (max 402 MSUs) z (302 MSUs) unused engines Data Prop. (5655-E52) IMS High Perf. Load (5655-E07) DB2 Utilities Suite (5697-E98) z (402 MSUs) Data Prop. (5655-E52) IMS High Perf. Load (5655-E07) DB2 Utilities Suite (5697-E98) 76 activate deactivate 15 Sept., 1pm 17 Sept., 3pm

System z Top Gun © 2008,2009 IBM Corporation 34 Full-Cap MLC Software with OOCoD September MLC Bill (sent to customer at the end of Aug) All MLC software at 302 MSUs Special OOCoD Bill (sent to customer after OOCoD event) MLC 402 MSUs Minus MLC 302 MSUs + = z (302 MSUs) unused engines Data Prop. (5655-E52) IMS High Perf. Load (5655-E07) DB2 Utilities Suite (5697-E98) z (402 MSUs) Data Prop. (5655-E52) IMS High Perf. Load (5655-E07) DB2 Utilities Suite (5697-E98) 76 activate deactivate 15 Sept., 1pm 17 Sept., 3pm Due to month of OOCoD, customer pays 402 MSUs

System z Top Gun © 2008,2009 IBM Corporation 35 Please Visit the System z Software Pricing Web site ibm.com/zseries/swprice

System z Top Gun © 2008,2009 IBM Corporation 36 Reference Information  System z Software pricing Web site –ibm.com/zseries/swprice  Parallel Sysplex Aggregation –ibm.com/zseries/swprice/sysplex  zNALC web site –ibm.com/zseries/swprice/znalc.html  Announcement Letters –System z New Application License Charges –US: EMEA/LA: ZA –AP: AP Canada: A  SCRT page –ibm.com/zseries/swprice/scrt/  Sub-capacity Corner web site –ibm.com/zseries/swprice/subcap  NALC –ibm.com/zseries/swprice/znalc.html

System z Top Gun © 2008,2009 IBM Corporation 37 Learning Points - System z Software Pricing  System z Monthly License Charges (MLC) pricing is typically used for DB2, CICS, IMS, MQSeries, COBOL compilers, PL/1 compilers, Domino, z/OS, z/VSE.  z/OS.e disables or disallows certain products, applications, and workloads (such as IMS, CICS) and supports z800/z890/z9 BC/z10 BC servers only.  zNALC replaces z/OSe and NALC for reduced z/OS pricing for qualified workloads across all System z Servers..  Parallel Sysplex License Charges (PSLC) applies to qualified Parallel Sysplexes and significantly lowers software prices by aggregating capacity across the entire qualified Parallel Sysplex.  WLC Sub-Capacity Software pricing is determined by the processor capacity used during the peak rolling four hour average for the LPAR(s) in which the software is running.