Latest in System z Software Pricing—Value Unit Edition

Some question how sensitive IBM is to System z costs and pricing.  Those that attended any of David Chase’s several briefings on System z software pricing at Enterprise 2013 this past October, however would realize the convulsions the organization goes through for even what seems like the most trivial of pricing adjustments. So, it is not a small deal that IBM is introducing something called Value Unit Edition (VUE) pricing for System z software.

VUE began with DB2. The purpose is to give z data centers greater pricing flexibility while encouraging new workloads on the z. VUE specifically is aimed at key business initiatives such as SOA, Web-based applications, pureXML, data warehousing and operational business intelligence (BI), and commercial (packaged) applications such as SAP, PeopleSoft, and Siebel. What started as a DB2 initiative has now been extended to WebSphere MQ, CICS, and IMS workloads.

In short, VUE pricing gives you a second pricing option for eligible (meaning new) z workloads. BTW, this eligibility requirement isn’t unusual with the z; it applies to the System z Solution Edition deals too. Specifically, VUE allows you to opt to pay for the particular software as a one-time capital expenditure (CAPEX) in the form of a one-time charge (OTC) rather than as a monthly license charge (MLC), which falls into the OPEX category.

Depending on your organization’s particular circumstances the VUE option could be very helpful. Whether it is more advantageous for you, however, to opt for OTC or MLC with any eligible workload is a question only your corporate accountant can answer (and one, hopefully, that is savvy about System z software pricing overall).  This is not something z data center managers are likely to answer on their own.

Either way you go, IBM in general has set the pricing to be cost neutral with a five-year breakeven. Under some circumstances you can realize discounts around the operating systems; in those cases you may do better than a five-year breakeven. But mainly this is more about how you pay, not how much you pay. VUE pricing is available for every System z model, even older ones. Software running under VUE will have to run in its own LPAR so IBM can check its activity as it does with other software under SCRT.

In summary, the main points of VUE are:

  • One-time-charge (OTC) pricing option across key middleware and packaged applications
  • The ability to consolidate or grow new workloads without increasing operational expense
  • Deployment on a z New Application License Charge (zNALC) LPAR, which, as expected, runs under the zNALC terms and conditions
  • Of course, new applications must be qualified; it really has to be new
  • Allows a reduced price for the z/OS operating system
  • Runs as a mixed environment, some software MLC  some OTC
  • Selected ISV offerings qualify for VUE

Overall, System z software pricing can be quite baffling. There is nothing really comparable in the distributed world. The biggest benefit of VUE comes from the flexibility it allows, OPEX or CAPEX, not from not from any small discount on z/OS. Given the set of key software and middleware VUE applies to the real opportunity lies in using its availability to take bring on new projects that expand the footprint of the z in your organization. As DancingDinosaur has pointed out before, the more workloads you run on the z the lower your cost-per-workload.

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