IBM Mainframe – Enterprise Software License Agreements Pros & Cons

An often quoted phrase in the Mainframe user base is “why are our Mainframe software costs so high”?  Sometimes we might have to look closer to home when finding the answers to our questions…

Over the years, Mainframe software portfolios in the customer environment might have become unwieldy, with duplication of software function, unused software, unsupported software products, and so on.  Typically this scenario occurs due to Merger & Acquisition (M&A) activity, where in an ideal world, a standard LPAR (image) with an optimally configured software portfolio would be deployed, which inevitably will generate the requirement for a modicum of migration activity, from one software product to another.  The complexity of software migration can change dramatically from a simple change, generally associated with Systems Management (E.g. Monitors) products to enormously complex, generally involving Database Subsystems (E.g. Adabas, DB2, IDMS, et al) and Programming Languages (E.g. COBOL, PLI, et al) while there is some middle ground with some Systems Management products (E.g. Security, Storage, Scheduling) that maintain metadata (policy data).  Therefore only the truly committed Mainframe user will adopt and fully commit to this standard LPAR methodology, benefitting to some extent from lower software costs.

Similarly over the last 20 years or so, the perceived requirement for Enterprise Software License Agreements has increased, where the fundamental premise is that such agreements make life easier for both the customer and ISV alike.  An interesting notion indeed, and one must draw one’s own conclusions as to whether such a utopia can exist; therefore as always, the caveat emptor (let the buyer beware) term must apply!

However, with such fully encompassing requirements and associated pricing mechanisms, the need for each and every major ISV to have a fully rounded software portfolio has ensued.  Therefore we have witnessed a lot of M&A activity in the Mainframe ISV market place, where several dominant players have emerged, in no particular order, BMC (Advantage), CA (FlexSelect, MLP, OLP) and IBM (ESSO, ELA), while some might say ASG should be included in this list.  Generally it seems to be the norm that each and every Mainframe customer will have at least one Enterprise Software License Agreement in place, typically with IBM because of the need to deploy the z/OS (z/VM, z/VSE, zLinux) operating system, generally in conjunction one other, whether ASG, BMC or CA.

The advantages of an Enterprise Software License Agreement are primarily:

  • Simplified license management via many products from one supplier
  • A several (3-5) year license agreement, only requiring periodic review and negotiation
  • Perceived cost benefit, with discount based upon volume, both in terms of software and CPU power
  • Perceived deployment benefit, treating Distributed and Mainframe platforms equally
  • Simplified support, as each and every software product should have the same look and feel

However, for a balanced review, we must identify the potential disadvantages, for example:

  • Is each and every software product from this single supplier the best for our business?
  • How do we renegotiate this agreement, because our business requirements have unexpectedly changed?
  • How do we exit this agreement, because our relationship with this supplier has failed?
  • How do we calculate a tangible cost and value for each and every product we deploy?

As always, the devil is in the detail, and although most pros and cons seem fairly innocuous at first glance, the considerations generated regarding contract termination or renegotiation are significant.  For example, if the Mainframe user chooses a 3 year Enterprise Software License Agreement, do they need to decide at least 18 Months before contract expiration that they must migrate to alternative software products, to terminate their relationship with a supplier?  So at first glance, volume discount and simplification look good, but how expensive and disruptive will contract termination be?

In real-life human terms, this is somewhat analogous to Marriage, a long-term relationship between two parties that choose to declare significant commitment to one another, but perhaps, the realm of possibility exists that said relationship will fail, and of course, in the absence of a bulletproof pre-nuptial, complications occur, and exit from the relationship is both financially expensive and disruptive.  Hmmm, so where is the equivalent of a pre-nuptial for the Enterprise Software License Agreement?  In an ideal world, the commercially savvy customer will have planned for such a possibility, but whether they have or have not, the supplier will have been paid for their software, and the customer may not have any choice but to renew or extend their agreement!  So which party is the winner and which one is the loser in such a scenario?  Does one party benefit from a heads we win and tails you lose proposition?

How does the Mainframe customer choose the best software product for their business requirement?  In an ideal world, they document their business requirement, collect information on market place offerings, review pricing options, generate a shortlist of suitable products, and eventually choose the “best-of-breed” product.  How is such a structured and balanced approach possible when deploying the Enterprise Software License Agreement?  The first thought must be cost based, as software has already been paid for, so if there’s a product in the portfolio we could use, we need to use it, whether it’s the best product or not.

If a Mainframe user is using an internal chargeback system for computing use, how can they fairly cost the pricing metric, if they don’t know the price of software products used?  Equally, how can the Mainframe user attempt to identify single product pricing when Enterprise Software License Agreements detail no granularity of pricing information?  Perhaps a modicum of research might help, where some global Government regulations dictate that contract details must be published for public scrutiny.  Therefore ISV Mainframe software list pricing details can be identified, for example, IBM and BMC.

One must draw one’s own conclusions, where some Mainframe customers may perform a structured review of the market place, and even though the technical recommendation might be for a product not covered by an Enterprise Software License Agreement, typically from a smaller ISV, the product chosen is one already paid for, or at least available from the Enterprise Software License Agreement.  This generates several issues, including but not limited to, alienating the smaller ISV community, having used them for expediency, and not delivering the best solution for your business…

So does the self-fulfilling prophecy ensue, where the Mainframe customer questions the cost of Mainframe software, but perhaps implicitly or unknowingly, said Mainframe user has contributed to such an environment, where a limited number Mainframe ISV’s control the Mainframe software market?

Isn’t it somewhat of a paradox that in The UK, the monopolies commission would review the merits of an M&A between two major grocery supermarket or energy supplier companies, and yet whether in The UK or globally, there are several major ISV’s (E.g. ASG, BMC, CA, IBM) dominating the Mainframe software market, primarily via Enterprise Software License Agreements?  Can this really be a good thing for the Mainframe user, limited supplier choice and therefore a lack of healthy competition?

Perhaps it is the responsibility of the Mainframe user to actually choose software impartially, and from time-to-time choose the best product, regardless of ISV.  This might generate a more active market place for software choice, while it was forever thus, the larger ISV is so big that they can easily acquire the smaller ISV who has developed and sold a good product, but at least the Mainframe ISV market place continues to evolve.  In this case, it seems somewhat logical that the Mainframe user is in control of their destiny, but only by safeguarding that their default option is not the Enterprise Software License Agreement.  They encourage an active and impartial ISV software market by dispassionately reviewing the open market and choosing the best Mainframe software product for their business!

Lewis Carroll once said “integrity is doing the right thing, even when no one is watching”!  When was the last time a major ISV declared an open book policy for your business, offering you flexible options to benefit from their Enterprise Software License Agreement, while allowing you to choose a best-of-breed software product, but not from their software portfolio, giving you a discount (credit note) for their software product that didn’t match your business requirement?