IBM Adjusts Mainframe Pricing Model to Reflect How Customers Actually Measure Their Businesses
Among a slew of announcements out this week from IBM about its latest zSystems — the mainframes that form the backbone of the company’s large enterprise offering — was tucked a reference to a new pricing system. Called “Container Pricing,” the new scale is designed to better match how customers actually use their computing resources in today’s world of hybrid cloud infrastructure.
Mainframes, the original virtual machines, are often partitioned into sections, each processing different workloads. Some partitions have a single workload while others have more than one. In the past, pricing was based on the size of the partition. When a new workload was added, the partition could be expanded, which would often raise the price.
With Container Pricing, billing is tied to a customer metric, like transactions per hour, rather than a computing metric, like partition size. Since most business managers know what their costs and profits are on, say, a transactions-per-hour basis, it’s easy for them to accept a cost per transaction because, as long as a transaction hits profitability targets, it’s worthwhile. These clear economics lend themselves to understanding and measurement.
Partitions are well suited to security, audit, and redundancy, requirements near and dear to the hearts of IT managers, but business managers are likely to find Container Pricing easier to get a handle on.
At the moment, IBM has three initiatives going in Container Pricing.
The largest intermediate-term opportunity is in general IT development and test (DevTest). Most large companies and many smaller ones have ongoing software development engineering groups on staff, who need to set up separate environments to manage the development process. They don’t want to mix their containers with production partitions. With Container Pricing, they can report separately and monitor their activity without affecting the rest of system. IBM calls its Container Pricing in these instances “competitive.”
Payment processing represents a concrete and immediate application. “Payments-as-a-service,” with its transaction basis, is a perfect fit for Container Pricing. In fact, this application has been in the works for awhile, starting with IBM’s customers telling the company how they wanted to be billed. It was natural enough for IBM to respond to what its customers said they needed. Payments turned out to be a slam dunk for Container Pricing.
The vaguest application, and deliberately so, IBM just calls “New Application.” Really, new application is a process in which a new workload for a particular customer is considered eligible for Container Pricing, and a price is negotiated and implemented in a standard way. Once a few examples have begun to accumulate, IBM can turn the new application into a standard item on its menu. So, it’s sort of a template for future Container Pricing applications.
The payments application has been thought through in detail, and DevTest is pretty straightforward, but New Application is just a sketch for the moment. IBM expects to create more solutions based on business metrics, but will keep the existing pricing system for those who want it. Or customers can choose to mix the old and new. As of the new hardware and software introduction, IBM can flag container workloads and measure them separately.
The new pricing will be available on existing z13 hardware and the new z14s just announced. The hooks will be implemented in zOS version 2.3 by “end of year” and reapplied at that time to version 2.2, which comes out with the z14 hardware in July. Software enhancements include tweaks to the OS and reporting tool.
Container Pricing can be tailored to organizations whose relationship with IBM is via enterprise license agreements, which involve smooth monthly payments. In some months, resources are underutilized and in others, they may slip over the top. But many business managers prefer a more predictable payment, with some leeway on either side for actual volume. Container pricing can be annualized this way.
IBM expects the proportion that elects to adopt Container Pricing to rise over time, as cloud services, even those delivered on premise, become increasingly common. Anything “as a service” is consumed on some basis other than machine usage. That basis can be measured and priced.
This new pricing model will create transparency for customers, and, given its aggressiveness, is likely to accelerate z14 adoption. Users who know their computing costs, and can see them as a percentage of revenue, will be able to invest in the z14 with confidence.