Posts Tagged ‘OPEX’

IBM 3Q17 Results Break Consecutive Quarters Losing Streak

November 2, 2017

DancingDinosaur generally does not follow the daily gyrations of IBM’s stock, assuming that readers like you are not really active investors in the company’s stock. That is not to say, however, that you don’t have an important, even critical interest in the company’s fortunes.  As users of Z or Power systems, you want to know that IBM has the means to continue to invest in and advance your preferred platform.  And a 20+ consecutive quarters losing streak doesn’t exactly inspire confidence.

What is interesting about IBM’s latest 3Q17 financials, which ends the string of consecutive revenue losses, is the performance of the Z and storage, two things most of us are concerned with.

Blockchain simplifies near real-time clearing and settlement

Here is what Martin Schroeter, IBM Senior Vice President and Chief Financial Officer said to the investment analysts he briefs: In Systems, we had strong growth driven by the third consecutive quarter of growth in storage, and a solid launch of our new z14 mainframe, now just called Z, which was available for the last two weeks of the quarter.

DancingDinosaur has followed the mainframe for several decades at least, and the introduction of a new mainframe always boosts revenue for the next quarter or two. The advantages were apparent on Day 1 when the machine was introduced. As DancingDinosaur wrote: You get this encryption automatically, virtually for free. IBM insists it will deliver the z14 at the same price/performance of the z13 or less. The encryption is built into the cost of silicon out of the box.

A few months later IBM introduced a new LinuxOne mainframe, the Emperor II. The new LinuxOne doesn’t yet offer pervasive encryption but provides Secure Service Containers. As it was described here at that time: Through the Secure Service Container data can be protected against internal threats at the system level even from users with elevated credentials or hackers who obtain a user’s credentials, as well as external threats.

Software developers will benefit by not having to create proprietary dependencies in their code to take advantage of these security capabilities. An application only needs to be put into a Docker container for Secure Service Container deployment. The application can be managed using the Docker and Kubernetes tools that are included to make Secure Service Container environments easy to deploy and use. Again, it will likely take a few quarters for LinuxONE shops and other Linux shops to seek out the Emperor II and Secure Service Containers.

Similarly, in recent weeks, IBM has been bolstering its storage offerings. As Schroeter noted, storage, including Spectrum storage and Flash, have been experiencing a few positive quarters and new products should help to continue that momentum. For example, products like IBM Spectrum Protect Plus promises to make data protection available in as little as one hour.

Or the IBM FlashSystem 900, introduced at the end of October promises to deliver efficient, ultra dense flash with CAPEX and OPEX savings due to 3x more capacity in a 2U enclosure. It also offers to maximize efficiency using inline data compression with no application performance impact as it achieves consistent 95 microsecond response times.

But probably the best 3Q news came from the continuing traction IBM’s strategic imperatives are gaining. Here these imperatives—cloud, security, cognitive computing—continue to make a serious contribution to IBM revenue. Third-quarter cloud revenues increased 20 percent to $4.1 billion.  Cloud revenue over the last 12 months was $15.8 billion, including $8.8 billion delivered as-a-service and $7.0 billion for hardware, software and services to enable IBM clients to implement comprehensive cloud solutions.  The annual exit run rate for as-a-service revenue increased to $9.4 billion from $7.5 billion in the third quarter of 2016.  In the quarter, revenues from analytics increased 5 percent.  Revenues from mobile increased 7 percent and revenues from security increased 51 percent. Added Schroeter: Revenue from our strategic imperatives over the last 12 months was also up 10% to $34.9 billion, and now represents 45% of IBM.

OK, so IBM is no longer a $100 + billion company and hasn’t been for some time. Maybe in a few years if blockchain and the strategic imperatives continue to grow and quantum catches fire it may be back over the $100 billion mark, but not sure how much it matters.

DancingDinosaur is Alan Radding, a veteran information technology analyst, writer, and ghost-writer. Please follow DancingDinosaur on Twitter, @mainframeblog. See more of his IT writing at and here.

BMC and Compuware to Drive Down Mainframe Costs

February 20, 2015

This year jumped off to an active start for the mainframe community. The introduction of the z13 in January got things going. Now Compuware and BMC are partnering to integrate offerings of some their mainframe tools to deliver cost-aware workload and performance management. The combined tools promise to reduce mainframe OPEX even as z systems shops try to leverage their high-value mainframe applications, data, and processing capacity to meet rapidly evolving business challenges.

 compuware bmc logos hi res

Not that things had been quiet before, especially if you consider IBM scrambling to reverse successive quarters on poor financial performance with a slew of initiatives. During that time Compuware went private last fall; about a year earlier BMC went private. Now you have two companies collaborating to deliver tools that will help mainframe shops reduce their software costs. DancingDinosaur has covered previous cost-saving and efficiency initiatives from each of these companies here and here.

Driving this collaboration is the incessant growth of new mainframe workloads, which will likely accelerate with the new z13. Such workload growth is continually driving up the Monthly License Charge (MLC) for IBM mainframe software, which for sub-capacity environments are generally impacted by the highest rolling four-hour average (R4HA) of mainframe utilization for all applications on each LPAR, as measured in MSUs. IBM is helping with discounts for mobile workloads and its new ICAP and country multi-plex pricing, which DancingDinosaur covered here, but more is needed.

The trick requires continually managing those workloads. In effect, IT can most effectively reduce its sizable IBM z Systems software costs by both 1) tuning each application to minimize its individual consumption of mainframe resources and 2) orchestrating application workloads to minimize the LPAR utilization peaks they generate collectively at any given time.  Good idea but not easy to implement in practice. You need automated tools.

According to Frank DeSalvo, former research director at Gartner: “The partnership between BMC and Compuware launches an integrated opportunity for mainframe customers to manage workload inefficiencies in a manner that has not been achievable to-date.”   This partnership, however, “helps organizations leverage their IT budgets by enabling them to continuously optimize their mainframe workloads, resulting in cost effective decisions for both current and future spending.,” as DeSalvo was quoted in the initial announcement.

Specifically, the Compuware-BMC collaboration brings together three products: BMC Cost Analyzer, BMC MainView, and Compuware Strobe.

  • BMC Cost Analyzer for zEnterprise brings a financially intelligent workload management tool that enables z data centers to identify MLC cost drivers and take appropriate measures to reduce those costs.
  • BMC MainView provides real-time identification of application performance issues, enabling customers to quickly eliminate wasteful MSU consumption.
  • Compuware Strobe delivers deep, granular and highly actionable insight into the behavior of application code in the z systems environment.

The partners integrated the products so they actually work together. One integration, for instance, allows BMC Cost Analyzer to call Compuware Strobe for a detailed analysis of the specific application component for peak MLC periods, enabling customers to proactively tune applications that have the greatest impact on their monthly software licensing costs. A second integration with BMC MainView allows customers to either automatically or manually invoke Strobe performance analysis—empowering mainframe staffs to more quickly, efficiently, and consistently when performing cost-saving tuning tasks.

compuware bmc screen shot Courtesy of Compuware, click to enlarge

BTW, at the same time Compuware introduced the latest version of Strobe, v 5.2. It promises deep insight into how application code—including DB2, COBOL 5.1, IMS and MQ processes—consume resources in z environments. By providing these insights while making it easy for multi-discipline mainframe ops teams to collaborate around these insights Strobe 5.2 enables IT to further drive down mainframe costs. At the same time it improves application responsiveness.

Besides the software licensing savings that can result the organization also benefits from performance gains for these applications. These too can be valuable since they positively impact end-user productivity and, more importantly, customer experience.

DancingDinosaur feels that any technology you can use to automate and streamline your systems operations will benefit you because people are always more expensive and less efficient than technology.

Alan Radding is DancingDinosaur. Follow this blog on Twitter, @mainframeblog. View my other IT writing at and here.

New IBM Initiatives Speed System z to Hybrid Cloud and IoT

November 20, 2014

Cloud computing, especially hybrid cloud computing, is going mainstream. Same is happening with the Internet of Things (IoT).  For mainframe shops unsure of how to get there IBM promises to speed the journey with the two recent initiatives.

Let’s start with hybrid clouds and the z. As IBM describes it, enterprises will continue to derive value from the existing investments in IT infrastructure while looking to the cloud to bolster business agility. The upshot: organizations increasingly are turning to hybrid clouds to obtain the best of both worlds by linking on-premises IT infrastructure to public cloud.

To that end, IBM has designed and tested various use cases around enterprise hybrid architecture involving System z and SoftLayer. These use cases focus on the relevant issues of security, application performance, and potential business cost.

One scenario introduces the cloud as an opportunity to enrich enterprise business services running on the z with external functionality delivered from the cloud.

hybrid use case

Here a retail payment system [click graphic to enlarge] is enriched with global functionality from a loyalty program that allows the consumer to accumulate points. It involves the z and its payment system, a cloud-based loyalty program, and the consumer using a mobile phone.

The hybrid cloud allows the z data center to maintain control of key applications and data in order to meet critical business service level agreements and compliance requirements while tapping the public cloud for new capabilities, business agility, or rapid innovation and shifting expenditure from CAPEX to OPEX.

Since the z serves as the data backbone for many critical applications it makes sense to connect on-premises System z infrastructure with an off-premises cloud environment. In its paper IBM suggests the hybrid architecture should be designed in a way that gives the businesses the flexibility to put their workloads and data where it makes most sense, mixing the right blend of public and private cloud services. And, of course, it also must ensure data security and performance. That’s why you want the z there.

To get started check out the uses cases IBM provides, like the one above. Already a number of organizations are trying the IBM hybrid cloud: Macy’s, Whirlpool, Daimler, and Sicoss Group. Overall, nearly half of IBM’s top 100 strategic outsourcing clients already implementing cloud solutions with IBM as they transition to a hybrid cloud model.

And if hybrid cloud isn’t enough to keep you busy, it also is time to start thinking about the IoT. To make it easier last month the company announced the IBM Internet of Things Foundation, an extension of Bluemix. Like Bluemix, this is a cloud service that, as IBM describes it, makes it possible for a developer to quickly extend an Internet-connected device such as a sensor or controller into the cloud, build an application alongside the device to collect the data, and send real-time insights back to the developer’s business. That data can be analyzed on the z too, using Hadoop on zLinux, which you read about here a few weeks ago.

IoT should be nothing new to System z shops. DancingDinosaur discussed it this past summer here. Basically it’s the POS or ATM network on steroids with orders on magnitude more complexity. IDC estimates that by 2020 there will be as many as 28 billion autonomous IoT devices installed. Today it estimates there are nine billion.

Between the cloud, hybrid clouds, and IoT, z data centers will have a lot to keep them busy. But with IBM’s new initiatives in both areas you can get simple, highly secure and powerful application access to the cloud, IoT devices, and data. With the IoT Foundation you can rapidly compose applications, visualization dashboards and mobile apps that can generate valuable insights when linked with back office enterprise applications like those on the z.

DancingDinosaur is Alan Radding, a veteran IT writer/analyst. You can follow DancingDinosaur on Twitter, @mainframeblog. Also check out my other IT writing at and here.

Latest in System z Software Pricing—Value Unit Edition

December 5, 2013

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.

Follow DancingDinosaur on Twitter, @mainframeblog

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