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The law of gravity says that what goes up must come down. Too bad that doesn’t readily seem to apply to mainframe Monthly License Charge (MLC) software costs. Fortunately, however, you can reduce MLC costs by identifying the cost reduction projects that have the best chance of success and leveraging mainframe cost optimization solutions. Meeting this financial challenge is critical because the costs for mainframe MLC products – like DB2, IMS, CICS, to name a few – are increasing annually by 4 to 7 percent. In fact, IBM has announced a 4% increase this coming January.

The biggest part of the mainframe budget – about 30 percent – is spent on MLC software. MLC cost increases can occur without any correlation to business revenue or usage. They can also be triggered by customer-facing web applications that cause unplanned peaks on your mainframe.


Here are seven strategies to help your organization get started with mainframe MLC cost reductions and can help you identify projects with the most potential for optimal ROI.

1. Understand Sub-Capacity Pricing
There’s a big misconception about MLC pricing that can impact cost reduction efforts. Did you know that MLC software is generally charged based on peak MSU usage for the month, and not on the full machine capacity? MLC software products are priced monthly according to a peak four-hour rolling average (4HRA) of resource usage measured in millions of service units (MSUs) of machine capacity. Yet IT funding is typically determined by the amount of resources consumed, which is measured in CPU seconds.

So, the most effective approach is to find ways to manage MLC costs and reduce them. But how?


You can adopt chargeback and tuning strategies tied to the impact of MLC costs and identify and focus on projects that impact the 4HRA. Modeling technology can provide this insight to help you save while also avoiding unnecessary changes to applications.


2. Use a Cost Analyzer Solution to Provide Insight and Identify Projects with the Highest ROI

Be sure to model proposed changes to the peak 4HRA to determine whether they will have a positive impact and to predict the amount of this impact on MLC costs. BMC Cost Analyzer can provide this information and help you to determine which projects offer the highest returns. You can model the next peak, which can prevent investing time and money for changes that may not turn out to be worthwhile.


3. Tune for Profitability

If your tuning is only focused on reducing CPU usage, you may not get the results you want because not all CPU seconds or all MSUs are equally expensive. Instead, identify the workloads running in the 4HRA billing peak and determine if they can be reduced, slowed, or scheduled for another time.


4. Examine your Chargeback Systems
The rules governing software license charges and the proportion of IT expenses devoted to these charges have both changed, and you need to adapt your chargeback systems accordingly. If your chargeback system is based on a fixed-cost CPU second, for example, you may attempt to reduce peak usage during online windows to delay hardware upgrades. However, these actions may not be aligned with the timeframe for reducing MLC costs.


5. Do Your Homework before Signing New Agreements
Do everything possible to lower your current peak 4HRA before signing a renewal agreement for your MLC software. You need to implement these reductions before your negotiations begin.

6. Identify Workloads Running in the 4HRA Billing Peak and Make Adjustments When Needed

If workload resource consumption is not driving hardware upgrades or the peak 4HRA, then reducing consumption won’t save money. However, if you tune the work that impacts the peak 4HRA, the bill is lowered and MLC costs are reduced. This action can meet the budget needs of the business units you support and even lead to increases in IT funding.


7. Avoid Risks by Making Sure that You’re Tuning the Right Workloads
Sometimes tuning efforts can backfire. If you eliminate a bottleneck in the critical path of a batch stream that causes significantly more work to be scheduled sooner, this action could contribute to the 4HRA. If the workload is now running much faster, IT can use capping or other scheduling methods to slow the processing. However, you still need to have the ability to view the impact to see trend data for peaks and the workloads that contribute to them. BMC Cost Analyzer can model changes that occur from capping and identify any cost reduction.


You can eliminate budget surprises and have the funds you need for new initiatives by actively managing mainframe MLC costs. Read this white paper, Deliver Better Results for Mainframe Cost Reduction Initiatives, to help identify projects with the most potential to deliver optimal ROI.