>The prices for CICS and DB2 grow with version.

No, not necessarily. Offload engines are one reason. DB2 V8 will support 
zIIPs, and DB2 V7 won't. V8 also has multi-row fetch/insert and MQTs. Does 
V8 have a higher price?

CICS 3.1 has better performance for thread-safe code and for SOAP (Web 
services) than prior releases. And any CICS Java can now offload to zAAPs. 
Does 3.1 have a higher price?

To use an analogy, if a box of double strength laundry detergent costs 50% 
more, does the original formula really cost less?

Of course your mileage may vary, but there are real, actual reasons why 
core product prices are declining for many shops (or growing slower than 
business growth). And that's leaving aside inflation adjustment. Software 
prices should, by all rights, be increasing at approximately the rate of 
wage inflation. While that's true of mainframe software (if you ignore all 
the effects I just mentioned), unfortunately distributed software has been 
increasing at a faster rate.

>Last but not least: Majority of the prices are MSU dependant. Average 
>MSU per customer grow significantly. Ergo: even if prices remain 
>unchanged, the fees grow up.

MSUs grow only if the business actually grows. I think most people would 
agree that, if your business gets larger, it's fair to pay slightly more 
for software. Otherwise Wal-Mart would pay the same dollar amount for 
software as Karen's Chocolate Shop, with "two locations to serve you" in 
greater Allentown. :-)

There are a lot of reasons why charging MSUs can decline. For example, get 
a new mainframe model with the same computing performance and your MSUs 
will decline by 10%. Jump two models forward and the figure is -19% (i.e. 
the effect of two 10% reductions). Get an offload engine (crypto, IFL, 
zAAP, zIIP) and you could see a dramatic effect, depending on the 
workload. Move workload onto the mainframe to gain architectural proximity 
and you'll see a reduction in the MSUs consumed by the subsystem you're 
connecting to. (Basically DB2 works less hard with Hipersocket attachment 
and even less hard if the work originates in the same LPAR. The net effect 
depends on the workload.)

Many shops have also discovered that WLC charging is beneficial. (If it 
isn't it's OK to stay on another formula.)

There's been a tendency lately for increased granularity (smaller capacity 
steps) in the newer mainframe models, lately the z890. That helps manage 
software costs to more closely match exact business requirements.

On-off capacity on-demand is relatively new, and if you only need a little 
bit of extra boost for a little bit of time (such as annual reporting), 
that's a great option for cost containment. Softcapping is also quite 
handy.

IBM has injected an enormous amount of competition into the tools and 
utilities business in recent years, and that's had quite an impact.

z/OS.e is a relatively new, lower cost offering for z800 and z890. z/VM 
prices have declined across the board as its popularity has surged (with 
Linux).

All of the above is not to say that mainframe software isn't (still) 
"expensive." It is. But has anyone checked the prices of distributed 
software lately? Ouch! There's a reason why Microsoft collects far more 
software revenue than IBM, and it has nothing to do with mainframe 
software. Nor does it have much to do with high volumes of business 
transaction processing either -- there's an awful lot of money spent for 
relatively few transactions.

- - - - -
Timothy F. Sipples
Consulting Enterprise Software Architect, z9/zSeries
IBM Japan, Ltd.
E-Mail: [EMAIL PROTECTED]

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