Mastering Mainframe Pricing Models to Optimize Your IT Costs

If your business uses a mainframe, keeping on top of your operating costs isn't just about being financially smart, it's a strategic necessity. Mainframes are a significant, long-term investment and understanding how to optimize these costs can yield substantial savings. Yet with so many factors at play, it can be challenging.

In this article, we will cover some key concepts and strategies for successfully managing your mainframe costs. From understanding your software pricing model to setting effective savings objectives, here's how you can control and reduce your mainframe budget effectively.

Understanding Your Cost Levers

When it comes to managing your mainframe costs, the first step is understanding the major cost drivers you can influence: installed capacity, peak consumption, and total consumption.

• Installed capacity is a technique used to license many software products, and many mainframe professionals are used to managing these costs through capping of total capacity installed or with capped “penalty box” partitions to limit the cost of individual software products. Having to add an engine or two to installed capacity can cost millions.
• IBM Monthly License Charge (MLC) pricing is set by peak consumption measured by the peak 4-Hour Rolling Average (4HRA) consumption using the Sub-Capacity Reporting Tool (SCRT). Lowering this peak can lead to substantial cost savings, and many sites are now adept at predicting and controlling what runs in this critical period.
• IBM are now offering customers the option of Tailored Fit Pricing (TFP), which is a total consumption-based approach, where staying within your negotiated annual consumption baseline keeps your business from pricing penalties but reduces the ability to make financial savings below your agreed baseline charge.

Knowing how these levers impact your costs is important, particularly when moving between options. For example, a TFP reporting job that has run quietly for decades on a quiet Sunday afternoon (that no one needed or looked at its output for 10 years) can be just as important cost wise as the key online transaction you have been continually tuning to manage peak processing.

Crafting Effective Savings Objectives

Setting clear, measurable goals is essential for any cost optimization project. It's not enough to have an objective of "saving 120 MIPS (Millions of Instructions Per Second) ". A benchmark is needed. For instance, aiming to "save 50 MSUs (Million Service Units) against the monthly MLC peak in SCRT" is a goal with a clear target and measurable outcome.

Documenting your current cost base and method of measurement helps support your saving objectives. Whether you're looking to reduce MLC usage, manage total consumption, or avoid a capacity increase, having a well-defined goal makes the project's value and direction clear to all stakeholders.

Strategic Optimization Techniques

To effectively reduce your MLC expenses, the first step is identifying and addressing your peak 4HRA usage. Consider implementing the following strategies:

• Reviewing and optimizing batch processing schedules
• Identifying and eliminating inefficient coding practices
• Utilizing Capacity Management tools, such as z/OS Workload Manager (WLM), to control workload peaks

Conversely, TFP pricing is driven by maintaining low consumption levels within your agreed baseline. To optimize your TFP costs, it's important to understand the bounds of your contractual agreement, including growth rates and re-baseline clauses. Here, staying well-informed and strategizing thoughtfully will be pivotal to your success.

Using Analytics for Decision Making

Leveraging the data available to you can significantly enhance your mainframe cost optimization efforts. Detailed analytics, like those available from CPT Global’s proprietary tools, give you a view into the trends, patterns, and anomalies happening on your mainframe. With increased modernization of applications and the more direct way mainframe data is being accessed, it is becoming more important to flag what is changing, understand what is driving the change, and how it can potentially impact your costs.

Predictive analytics  and capacity planning also play a role in forecasting future consumption and, in particular, the point at which you will pass some threshold that will increase the cost base. This can be especially helpful when negotiating with vendors for upgrades or software agreements – which is another area where our team is highly skilled – as you can use data to validate your needs and negotiate better terms.

Implementing a Continuous Improvement Process

Sustainable optimization relies on establishing a continuous improvement process. Mainframe cost management shouldn't be viewed as a one-time project, but instead as an ongoing effort. With continuous monitoring, analysis, and adjustment of strategies based on performance and business needs, you can strike an optimal balance between performance and cost.

Your continuous improvement process might include:

• Regularly reviewing your mainframe usage, SCRT reports, and financial data to assess the effectiveness of your optimization strategies.
• Establishing a feedback mechanism to gather insights from IT operations, finance, and other stakeholders involved in mainframe management, highlighting areas for improvement or adjustment.
• Adjusting your optimization strategies to include renegotiating contract terms, adjusting workloads, or adopting new technologies.
• Keeping your team informed on best practices in mainframe management and cost optimization, empowering them with the skills to identify and implement cost-saving measures effectively.

Overcoming the challenges of mainframe cost optimization requires a full understanding of your pricing model and having clear, measurable objectives. It also takes specialized expertise. For many companies, bringing on a partner like CPT with skills and experience on these types of projects will be critical to your success. That way, you can ensure you’re getting the independent perspective and unbiased advice you need to make the right decisions for your business.