IBM License Metric Tool v 7 1 Customer

Agenda § Why Virtualization Capacity (Sub-capacity) Licensing is Important to You § What is IBM License Metric Tool § Software License Management Responsibilities § IBM Passport Advantage Virtualization Capacity (Sub-capacity) Requirements § IBM License Metric Tool Topology & Reports § IBM License Metric Tool & Tivoli License Compliance Manager Additional Information § IBM Passport Advantage Virtualization Capacity (Sub-capacity) Licensing § IBM’s Comprehensive IBM & ISV Software Asset Management Solutions 2 © 2008 IBM Corporation

Why Virtualization Capacity (Sub-capacity) Licensing is Important to You § Virtualization capacity (Sub-capacity) software licensing enables customers to license (and pay) for less than the full capacity of a server or group of servers § Supports diversified workload consolidation onto virtualized servers § Distributed system sub-capacity licensing compliments Processor Value Unit (PVU) licensing § PVUs provide a fair price for value received, and are based on the performance capacity of one processor core § Sub-capacity licensing lets customers license to a subset of the server capacity, down to one core, by leveraging eligible virtualization technologies Note: Recognizing the use of the word “Virtualization” becoming commonplace in the industry, IBM is changing the name of it’s offering from “Sub-capacity” to “Virtualization Capacity”. You should expect these names to be used interchangeably for a period of time, after which “Sub-capacity will be phased out in favor of “Virtualization Capacity”. 3 © 2008 IBM Corporation

What is IBM License Metric Tool? § IBM License Metric Tool v 7. 1 (ILMT) helps Passport Advantage clients determine their full and virtualization capacity (sub-capacity) Processor Value Units (PVU) licensing requirements. § ILMT is a no-charge offering for Passport Advantage customers – Part #: D 561 HLL ILMT Sub-capacity PVU License with S&S for 12 Months – Part #: E 027 NLL ILMT Sub-capacity PVU S&S Annual Renewal PCs § ILMT helps calculate the maximum processor core capacity in PVUs, including supported virtualized servers, that are available to installed Passport Advantage PVU-based software. § Passport Advantage PVU-based virtualization capacity (sub-capacity) offerings license terms require IBM License Metric Tool reports to be created, verified, adjusted, signed, and saved. Servers § IBM License Metric Tool http: //www-306. ibm. com/software/tivoli/products/license-metric-tool/ 4 © 2008 IBM Corporation

Software License Management Responsibilities § IBM Customer – Responsible for ensuring compliance with a software product’s license terms • Requires internal processes and controls to track compliance for all vendor software products across the enterprise § IBM – Defines license scope, metrics and terms • • IBM Passport Advantage software does not have ‘hard stop’ scope and use restrictions imbedded in products. Customer operations requires flexibility to deploy software to meet acceptable service levels at any time. – Provides IBM License Metric Tool at no-charge to assist customers with tracking deployed PVU-based licenses – Offers Tivoli License Compliance Manager & Tivoli License Compliance Manager for z/OS to help customers optimize all their vendor licensed software. (IBM and ISV) • 5 A complete Software Asset Management solution that helps customers proactively determine software overlicensing (savings opportunity) and under-licensing (potential compliance risk) © 2008 IBM Corporation

No-Charge IBM License Metric Tool Benefits § Achieve and maintain compliance Use the reports to help determine if you have the appropriate number of Processor Value Unit (PVU) license entitlements for each Passport Advantage PVU-based product installed in your IT environment. § Support Distributed Server Virtualization Helps manage diversified workload consolidations onto virtualized servers with partition specific PVU-based software inventory reports. § Lower liability risks Reduce the risks of not meeting your Passport Advantage PVU-based contractual licensing conditions as well as the unplanned cost of license compliance payments. § Track IBM PVU-based software inventory Helps maintain a continuously updated inventory of where IBM Passport Advantage PVU-based software assets are installed on your networks. 6 © 2008 IBM Corporation

IBM License Metric Tool Capabilities § Discover IBM License Metric Tool scans your network to determine what PVU-based IBM distributed software (including Linux on System z) is installed on discovered servers and the quantities and types of activated processor cores available to them. § Analyze IBM License Metric Tool calculates the server's maximum processor core capacity including supported virtualized servers that is available to installed IBM software and determines the required number of PVU entitlements. § Report Audit reports and delta comparisons presenting product offering and PVU data can be generated for viewing and printing. Each signed audit report creates a certified record history for audit purposes. § IBM License Metric Tool information – Helps provide reported number of PVUs in your environment to compare with your license entitlement records. – Key activity to help ensure compliance with IBM Passport Advantage PVU-based licensing terms. 7 © 2008 IBM Corporation

IBM Virtualization Capacity (Sub-capacity) Licensing ILMT Requirements § Passport Advantage PVU-based virtualization capacity (sub-capacity) software customers must implement IBM License Metric Tool v 7. 1 (ILMT) within 90 days from physical General Availability. • Physical GA: August 1, 2008, 90 days later: October 31, 2008 • Part #: D 561 HLL (ILMT Sub-capacity PVU License with S&S for 12 Months) § Passport Advantage PVU-based virtualization capacity (sub-capacity) software customers are responsible for maintaining ILMT audit reports for two years, with a maximum fiscal quarter interval between signed reports, and making these reports available during an audit. § Exceptions • Small Environments • Tivoli License Compliance Manager Customers * A complete description is available at the IBM Passport Advantage Sub-Capacity Licensing Website: http: //www-306. ibm. com/software/lotus/passportadvantage/subcaplicensing. html 8 © 2008 IBM Corporation

IBM Virtualization Capacity (Sub-capacity) Licensing ILMT Requirements: Exceptions § Small Environments… – ILMT does not support the customer's eligible virtualization technology. Once support for an eligible virtualization technology becomes available (via Fix Pack, new version, release, or modification), you will be required to install IBM License Metric Tool within 90 days of that availability date. In order to be notified when IBM License Metric Tool support for eligible virtualization technologies become available, you will need to subscribe to "My Notifications" via http: //www. ibm. com/support/mynotifications (after July 21, 2008). – ILMT will not be required for customers with less than 1, 000 employees and contractors worldwide. This exception does not apply to Service Providers* and customers who have contracted with a Service Provider* to manage their sub-cap server environment. * Service Providers are any entity that provides IT Services for end user customers, either directly or through a reseller – ILMT will not be required for customers with less than 1, 000 PVUs total worldwide physical server capacity where PVU sub-capacity products are deployed. For these exception customers, use of ILMT, is recommended, but not required for Sub-Capacity Licensing. In lieu of ILMT, customers are required to manually manage, track, and prepare Audit Reports documenting their virtualization capacity by product for their eligible environments during each calendar or fiscal quarter and maintaining this documentation for at least two years to demonstrate ongoing compliance. * A complete description is available at the IBM Passport Advantage Sub-Capacity Licensing Website: http: //www-306. ibm. com/software/lotus/passportadvantage/subcaplicensing. html 9 © 2008 IBM Corporation

§ IBM Virtualization Capacity (Sub-capacity) Licensing ILMT Requirements: Exceptions Tivoli License Compliance Manager Customers – IBM Tivoli License Compliance Manager customers (IBM’s Software Asset Management offering to help optimize IBM & ISV software licenses) will have 180 days from physical General Availability of IBM Tivoli License Compliance Manager V 2. 3 (D 561 CLL only) with the fix pack that brings ITLCM V 2. 3 up to date with current Passport Advantage Sub-Capacity Licensing requirements for eligible virtualization technologies to migrate. This fix pack is expected to be released by the end of 2008. • Customers are responsible for maintaining Tivoli License Compliance Manager reports for two years, with a maximum fiscal quarter interval between signed reports, and making those reports available during an audit. (All statements regarding future IBM direction and intent are subject to change or withdrawal without notice and represent goals and objectives only. All statements regarding IBM's plans, directions, and intent are subject to change or withdrawal without notice. ) – Customers who deployed IBM Tivoli License Compliance Manager for IBM Software V 2. X (IBM’s previous no-charge offering for sub-capacity reporting) have 180 days from physical General Availability to migrate to IBM License Metric Tool v 7. 1. • • 10 Physical General Availability: August 1, 2008, 180 days later: January 31, 2009 Customers are responsible for maintaining License Metric Tool reports for two years, with a maximum fiscal quarter interval between signed reports, and making those reports available during an audit. © 2008 IBM Corporation

IBM License Metric Tool Topology Admin Server Web Browser Interface § Integrated Solutions Console § Administration § Reporting DB 2 Data Repository § Historical repository § Administration § Inventory § Auditing § Reporting § Web. Sphere Application (e. WAS) Agents § Data collection § HTTP/HTTPS ILMT includes a limited-use license for: Ø DB 2 Universal Database (9. 1) 11 communication with Admin Server © 2008 IBM Corporation

IBM License Metric Tool Main Menu 12 © 2008 IBM Corporation

IBM License Metric Tool Reports 13 © 2008 IBM Corporation

IBM License Metric Tool Reports 14 © 2008 IBM Corporation

IBM License Metric Tool Flexibility § The License Metric Tool will report PVU-based software products where its agents are deployed. § The user has the ability to mark any product that should not to be taken into account in computing the total PVU license allocation for a product. – IT environment • Backup, Disaster recovery if not actively doing work (warm/cold) • Product instance not compatible with the system (used in case of shared disks) – Software license entitlement • • Evaluation, Trial etc. under terms of the ILAEP or similar IBM terms Early Support Program (ESP), Beta/Alpha, or similar IBM program Component of bundle, restricted-use License as part of a larger bundled offering Not licensed based on PVUs (i. e. user-based, development/non-production use, etc. ) – Other (additional free-text comment is required when selecting that option) 15 © 2008 IBM Corporation

IBM Also Offers a Complete Software License Management Solution § IBM License Metric Tool provides simple inventory tracking for PVU-based products § For customers who want to optimize all their Software licenses, IBM offers Tivoli License Compliance Manager (TLCM) – For both IBM and ISV software – TLCM Helps customers proactively determine software over-licensing (savings opportunity) and under-licensing (potential compliance risk): • Builds a comprehensive software inventory • Measures software product use activity (invocations) • Measures associated license use activity including complex license types • Automatically links license entitlements – Enables IT to optimize licenses across organizational units § For more information on Tivoli License Compliance Manager: http: //www-306. ibm. com/software/tivoli/products/license-mgr/ 16 © 2008 IBM Corporation

IBM License Metric Tool (ILMT) Tivoli License Compliance Manager (TLCM) ILMT 7. 1 IBM software TLCM 2. 3 PVU-based only Bundles ISV Software usage (invocations) License management License models (price metrics) supported Processor Value Unit Only Install Instances (# of installs) Install IPLA (# of installed processors, full & sub-cap) Install IPLA Value Unit (# of PVUs, full & sub-cap) Usage IPLA ( # of used processors, full & sub-cap) Usage Concurrent Session (# of distinct sessions) Usage Concurrent Nodelock (# of systems) Catalog management # nodes (deployed agents) 17 Up to 8 K 100 K+ © 2008 IBM Corporation

No-Charge IBM License Metric Tool Benefits § Achieve and maintain compliance Use the reports to help determine if you have the appropriate number of Processor Value Unit (PVU) license entitlements for each Passport Advantage PVU-based product installed in your IT environment. § Supports Distributed Server Virtualization Helps manage diversified workload consolidations onto virtualized servers with partition specific PVU-based software inventory reports. § Lower liability risks Reduce the risks of not meeting your Passport Advantage PVU-based contractual licensing conditions as well as the unplanned cost of license compliance payments. § Track IBM PVU-based software inventory Helps maintain a continuously updated inventory of where IBM Passport Advantage PVU-based software assets are installed on your networks. 18 © 2008 IBM Corporation

§ IBM License Metric Tool http: //www-306. ibm. com/software/tivoli/products/license-metric-tool/ § IBM Passport Advantage Sub-Capacity Licensing Website: http: //www-306. ibm. com/software/lotus/passportadvantage/subcaplicensing. html § Tivoli License Compliance Manager (distributed systems) http: //www-306. ibm. com/software/tivoli/products/license-mgr/ 19 © 2008 IBM Corporation

IBM License Metric Tool v 7. 1 Customer Briefing Backup § Technical Requirements §

IBM License Metric Tool Topology Admin Server Web Browser Interface - Integrated Solutions Console - Administration - Reporting DB 2 Data Repository – Historical repository – Administration – Inventory – Auditing – Reporting – Web. Sphere Application (e. WAS) Agents 4 Data collection 4 HTTP/HTTPS ILMT includes a limited-use license for: Ø DB 2 Universal Database (9. 1) 21 communication with Admin Server © 2008 IBM Corporation

Hardware Requirements § Machine for server: –Windows and Linux on System x servers: Intel Pentium IV 1. 5 GHz –AIX and Linux on System p: Model 7044/270, two processor IBM RS/6000 375 –Solaris: Sunblade 2000 model 2 Ultrasparc III processors –HP-UX: rp 2470, 2 PA RISC 2. 0 650 MHz processors –Linux on System z: 1 dedicated processor § Machine for agent: no special requirements 22 © 2008 IBM Corporation

Hardware Requirements § Memory –License Metric Tool server only: 1 GB RAM –License Metric Tool server and its database: 3 GB RAM § Disk space for server: –License Metric Tool server only: ~1. 4 GB –License Metric Tool database: dependant on the amount of data (i. e. 2 GB for 8000 agents, 30 products per agent, 1 month of aggregation data) § Disk space for agent: ~135 MB 23 © 2008 IBM Corporation

Software Prerequisites § Embedded Websphere Application Server (bundled with ILMT) § DB 2 Universal Database (min. 8. 1. 7. 912, 9. 1 bundled with ILMT) § DB 2 FP 9 (if running DB 2 8. 2 on Solaris 10) For a detailed list of supported operating systems refer to ILMT 7. 1 Planning, Installation, and Configuration Guide 24 © 2008 IBM Corporation

Agent – supported platforms Operating system Version IBM AIX 6. 1 64 bit, 5. 3 32 bit and 64 bit, 5. 2 32 bit and 64 bit i 5/OS V 5 R 4, V 5 R 3, V 5 R 2 HP-UX 11 i v 3 on PA-RISC and IA 64 11 i v 2 on PA-RISC 2. 0 64 bit (in 32 bit compat. mode) 11 i v 2 on Itanium® 2 Integrity Server Red Hat Enterprise Linux AS 5. 0 for IBM i. Series/p. Series 64 bit, AS 5. 0 for IBM z. Series 32 bit and 64 bit, AS 4. 0 for IBM i. Series/p. Series 64 bit, AS 4. 0 for IBM z. Series 31 bit SUSE Linux Enterprise Server 10 for IBM i. Series/p. Series/z. Series 64 bit, 9 for IBM i. Series/p. Series 64 bit, 9 for IBM z. Series 32 bit and 64 bit Sun Solaris 10 for SPARC 64 bit, 9 for SPARC 32 bit and 64 bit, 8 for SPARC 32 bit and 64 bit 25 © 2008 IBM Corporation

Agent - supported partitioning technologies Platform Operating System Partitioning technologies HP HP-UX 11 i on PA-RISC 3. 0 and 2. 0 n. PAR, v. PAR HP-UX 11 i v 3 and v 2 on Itanium 2 Integrity Server HP Integrity VM, n. PAR i 5/OS V 5 R 4, V 5 R 3 LPAR, Dedicated LPAR RHEL AS 4. 0 and 5. 0 LPAR, Dedicated LPAR IBM System i SLES 9 and 10 IBM System p AIX 6. 1, 5. 3, and 5. 2 LPAR, Dedicated LPAR RHEL AS 4. 0 and 5. 0 LPAR, Dedicated LPAR SLES 9 and 10 IBM System z RHEL AS 4. 0 and 5. 0 z/VM, LPAR SLES 9 and 10 Sun Solaris 9 and 10 Dynamic System Domains, Solaris Zones 26 © 2008 IBM Corporation

IBM Passport Advantage Software Virtualization Capacity (Sub-capacity) Licensing © 2008 IBM Corporation

Notice This presentation contains relative processor core performance estimates and includes technology upgrade examples which are based on relative processor core performance estimates. While these estimates are calculated by IBM using a blended average of industry standard performance benchmarks, actual performance may vary based on each customer’s unique server configuration and workload, among other factors. Any errors in the presentation are unintentional and will be corrected immediately upon being brought to IBM's attention. Should any such errors occur, this does not relieve customers from their responsibility to obtain licenses for, and to be in compliance with, the required level of authorized use for each product. 28 © 2008 IBM Corporation

Name change to “Virtualization Capacity” § Recognizing the use of the word “Virtualization” becoming commonplace in the industry, IBM is changing the name of it’s offering from “Subcapacity” to “Virtualization Capacity” § You should expect these names to be used interchangeably for a period of time, after which “Sub-capacity will be phased out in favor of “Virtualization Capacity” 29 © 2008 IBM Corporation

Why Virtualization Capacity (Sub-capacity) Licensing is Important to You § Without virtualization capacity (cub-capacity) licensing, customers must license to the full capacity of the server or group of servers § Virtualization capacity (sub-capacity) licensing compliments Processor Value Unit (PVU) licensing § PVUs provide a fair price for value received, and are based on the performance capacity of one processor core § Virtualization capacity (sub-capacity) licensing lets customers license to a subset of the server capacity, down to one core, by leveraging eligible virtualization technologies § As x 86 (Intel/AMD) multi-core chips add more cores per chip, customers can use Subcapacity licensing to reduce the number of cores licensed § As RISC based servers continue to become more powerful, customers can leverage virtualization technologies to optimize their system design and improve their overall Total Cost of Ownership 30 © 2008 IBM Corporation

Agenda § Processor Value Units (PVUs) licensing overview § Virtualization capacity (sub-capacity) licensing for virtualized environments overview § Virtualization (sub-capacity) licensing requirements and eligible technologies 31 © 2008 IBM Corporation

Terminology § Multi-core chips have more than one processor core on the socket Single-core Processor Core Chip Socket 1 Dual-core 1 2 IBM requires PVU licenses per Core Oracle requires fractional licenses per Core Microsoft requires one license per socket IBM continues to license based on the number of cores 32 © 2008 IBM Corporation

Licensing is based on Processor Capacity Available Licensing Principles Price 4 Price scales to value 4 Balance precision with simplicity 4 Price Competitively Processor capacity available (Number of cores X PVUs per core) 4 Why not charge based on processor usage or utilization? 4 A transition to processor usage or utilization would require prices to be reset based on average system utilization 4 Average system utilization is estimated @ 5 -20%, but every customer is different 4 Customers with higher than average utilization would pay more, and visa versa IBM continues to license based on the number of cores 33 © 2008 IBM Corporation

Why IBM changed from ‘per processor’ to PVUs • IBM POWER dual-core (2001) • x 86 dual-core (2005) / x 86 quad-core (2006) • Sun Niagara octi-core (2005) – Diverging performance characteristics of processor cores (Core disparity) • IBM POWER very fast Core Performance § Changes in underlying hardware technology caused “per processor” to no longer be a “fair” licensing metric – Multi-core chips: One Processor Core ng asi cre n I Decr ea sing ity c a ap C Core Disparity Capa c • x 86 and Sun Niagara relatively slower ity Time § Unique software licensing requirements needed for differing technologies – Virtualization technologies gaining wider adoption – Sub-capacity licensing compliments PVU licensing granularity § More complex software licensing structures result 34 © 2008 IBM Corporation

Processor Value Units (PVUs) § Each middleware program has a unique price per PVU § PVUs are transferable among systems, by product, within the enterprise § Acquire the appropriate number of PVUs for each processor core Processor Technology Example PVU entitlements per processor core * IBM Power 6 cores 120 All Single-core and most RISC dual-core 100 x 86 Dual or Quad-core 50 * See PVU website for complete list of PVUs by processor technology § Provides flexibility and granularity – – Fair price per core for software value on multi-core technology Continue to deliver software price performance improvements on new processors License transferability across distributed systems Enables virtualization capacity licensing at processor core PVUs provide flexibility through granularity 35 © 2008 IBM Corporation

Customer Technology Upgrade Examples*: IBM POWER 6 § Assuming Equivalent Software Workload: Decreasing # of PVU Licenses for equivalent workload: ü Significant SW Price Performance improvements as customers migrate to new technology *Based on Externally Published Industry Benchmarks 36 © 2008 IBM Corporation

Customer Technology Upgrade Examples*: IBM POWER 6 § Assuming Workload Grows by 50%: POWER 5 POWER 6 (2 H 04) (2 H 07) System p PVU / Core PVU Licenses Required 32 cores 16 sockets 100 3, 200 System p PVU / Core PVU Licenses Required 24 cores 12 sockets 120 2, 880 -10% Change % +3% POWER 5+ POWER 6 (2 H 05) (2 H 07) System p PVU / Core PVU Licenses Required 28 cores 14 sockets 100 2, 800 System p PVU / Core PVU Licenses Required 24 cores 12 sockets 120 2, 880 Change % Significant SW Price Performance improvements as customers migrate to new technology *Based on Externally Published Industry Benchmarks 37 © 2008 IBM Corporation

Benefits Of The Processor Value Unit Structure § Provides flexibility and granularity – Fair price for software value on multi-core technology • Continue to deliver software price performance improvements – Easy transition from per processor licensing • Maintain license transferability across distributed systems – Enables virtualization capacity (sub-capacity) licensing at processor core § Licensing which can adapt to virtualization – Necessary granularity for technology trends 38 © 2008 IBM Corporation

Virtualization Capacity (Sub-Capacity) Licensing Overview 4 Full capacity licensing – Customers acquire licenses for all the physical processor cores 4 Virtualization Capacity (Sub-capacity) licensing – Customers acquire licenses for the lower of Virtualization Capacity or Full Capacity of the server, or group of servers – Virtualization Capacity License Counting Rules differ by Virtualization Technology, see specific rules for your Virtualization Technology Environment: Virtualization Capacity License Counting Rules Example Licensing Scenarios Follow 39 © 2008 IBM Corporation

IBM Passport Advantage Software – Sub-capacity Licensing Full Capacity: Physical Cores on Server 1 Server 8 Physical Cores Server 1 Software Products Physical Cores MQ WAS 8 4 Customers must acquire licenses for all of the processor cores in the server available to the software products: Cores to License 40 Server 1 MQ software 8 WAS software 8 © 2008 IBM Corporation

IBM Passport Advantage Software – Sub-capacity Licensing Virtualization Capacity Example (x 86 or RISC) 1 Server 8 Virtual Cores 8 Physical Cores Server 1 PAR 2 MQ MQ Software Products WAS Virtual Cores 4 Physical Cores 4 8 PAR (or VM) = Partition 4 Eligible Virtualization Technologies can be used to create ‘Partitions’ or ‘Virtual Machines’ (VMs) which restrict processor capacity (ie. virtualization capacity) available to a sub-set of the server or group of servers 4 License for the lower of Virtualization Capacity (using LPARs, Partitions, Virtual Machines) or Full Capacity available in the Server. PAR 1 PAR 2 Virtualization Capacity Full Capacity MQ software 4 4 8 8 WAS software 4 - 4 8 Cores to License 41 © 2008 IBM Corporation

IBM Passport Advantage Software – Sub-capacity Licensing Virtualization Capacity Example: Power. VM Shared Pool (this example is applicable for IBM Power. VM Virtualization Technology only) 1 Server 16 Virtual Cores 8 Physical Cores Server 1 Software Products PAR 1 PAR 2 PAR 3 PAR 4 MQ MQ 4 4 4 License rule: the lower of the sum of each partition or the virtualization capacity of the shared pool 4 License rule: the lower of the sum of each shared pool or the virtualization capacity of the Server WAS Virtual Cores in Partitions 4 Virtual Cores in Shared Pool 4 6 Physical Cores Shared Processor Pool 8 4 License for the lower of the Virtualization Capacity based on number of virtual cores, the Virtualization Capacity of the Shared Pool, or the Full Capacity of the Server PAR 1 PAR 2 PAR 3 Sum of PARs 1 -3 Shared Pool Capacity PAR 4 hide Virtualizatio n Capacity Full Capacity MQ software 4 4 4 12 6 4 10 8 WAS software 4 - - 4 6 - 4 8 Cores to License 42 © 2008 IBM Corporation

IBM Passport Advantage Software – Sub-capacity Licensing Virtualization Capacity Example: VMware Server Cluster (this example is applicable for VMware Virtualization Technology only) 3 Servers 12 Virtual Cores 12 Physical Cores Physical Environment Virtual Machines VM 1 VM 2 VM 3 VM 4 Software Product MQ MQ 2 2 Virtual Cores 2 VM 5 Non. IBM 2 VM 6 Server 1 Non. IBM 2 4 cores Server 2 2 4 cores 12 Server 3 4 cores 12 Physical Cores 4 License for the Virtualization Capacity (v. CPU quantity in VMs) or Full Capacity available in a group of servers (Cluster) MQ software Virtual Cores 43 VM 1 VM 2 VM 3 VM 4 VM 5 VM 6 Virtualization Capacity Full Capacity 2 2 - - 8 12 © 2008 IBM Corporation

Summary of Virtualization Capacity Licensing Requirements § Customers must: § Agree to the terms of the Sub-capacity Attachment, and follow Virtualization Capacity License Counting Rules for the Eligible Virtualization Environment(s) § Use Eligible Sub-capacity Products, with sub-capacity part numbers § Use Eligible Virtualization Technologies § Use Eligible Processor Technologies § Use the IBM License Metric Tool (ILMT) and maintain report documentation § Certain ILMT use exceptions may apply Detail information for each of the above requirements can be obtained at this link: Passport Advantage Sub-capacity Licensing 44 © 2008 IBM Corporation

Eligible Virtualization Technologies § A high level summary list of Eligible Virtualization Technologies: § IBM Power Systems, System p, System i Power. VM (with AIX and i. OS) § LPAR, DLPAR, Shared Processor Pools, Micro-Partitioning § IBM System z (with Linux): LPAR, z. VM § Sun Micro and Fujitsu servers (with Solaris) § Dynamic System Domains, Containers/Zones inside Dynamic System Domains and node OS § HP Integrity and 9000 Servers (with HPUX): n. Par& v. Par § x 86 (Intel / AMD) based servers, using the following virtualization technology: § VMware Single server, Server Cluster, and VMotion A detail listing of Eligible Virtualization Technologies is published at this link (see table at bottom of this webpage): Passport Advantage Sub-capacity Licensing 45 © 2008 IBM Corporation

Why Virtualization Capacity (Sub-capacity) Licensing is Important to You § Virtualization capacity (sub-capacity) licensing compliments Processor Value Unit (PVU) licensing § PVUs provide a fair price for value received § Virtualization capacity (sub-capacity) licensing lets customers license to as little as one core § As the number of cores per chip increases on x 86, customers can reduce the number of cores licensed § Customers can use virtualization to optimize their larger systems and improve their overall total cost of ownership 46 © 2008 IBM Corporation

Summary of links in this presentation: IBM PVU Website Virtualization Capacity License Counting Rules

IBM Passport Advantage Software – Sub-capacity Licensing Passport Advantage Sub-capacity Licensing Chronology Date Announcement April 19, 2005 Formal sub-capacity offering announced April 25, 2006 Sub-capacity offering enhanced with x 86 support April, 2007 Suspension of 3 sub-capacity terms November 6, 2007 Elimination of 2 sub-capacity terms that were previously suspended Enhanced support for x 86 to the processor core Intent to support new STG virtualization technologies July 1, 2008 New license metric tool and simplified sub-capacity offering * A complete description is available at the IBM Passport Advantage Sub-Capacity Licensing Website: http: //www-306. ibm. com/software/lotus/passportadvantage/subcaplicensing. html 48

Tivoli Software Asset Management Offerings © 2008 IBM Corporation

Visibility: IBM and ISV Software Assets Tivoli License Compliance Manager Products Challenge: § Obtaining a clear view of software license entitlements linked to what is actually deployed and used across all significant platforms. PCs Servers System z Solution: Automated software license optimization § Tivoli’s unique Software Asset Management capability helps determine software over-licensing (savings opportunity) and under-licensing (potential compliance risk) by linking license entitlement information to software inventory and usage Visualize your software license entitlements linked to software deployment and usage 50 © 2008 IBM Corporation

Software Asset Management – Business Benefits Compliance Risk Reduction – Software vendor license compliance audits – World Wide impact of Sarbanes-Oxley Act Section 404 – US Office of Management and Budget Circular A-123 Software Cost Management – Identification and reduction of no and low use software – Efficient server consolidations – Optimize software and hardware capacity upgrades – Strong vendor contract negotiation leverage – Reduced software fees through competitive replacement – Improve operational performance and reduce maintenance costs – Invoice validation – Effective charge-back – Disaster recovery and business continuation Opportunity Creation – Software dollars can be redeployed to fund new software acquisitions and projects 51 © 2008 IBM Corporation

Tivoli IT Asset Management Portfolio What did we purchase versus what is deployed? Should we buy or lease? How do I manage vendor contracts and volume purchase agreements? How do I validate invoices and enable accurate reporting? How do I optimize my inventory? What do we own? Have we over-purchased? Savings opportunity? Have we under-purchased? Is this a compliance risk? How do we manage complex license types? What about virtualized environments? What hardware and software is deployed? What is the software use? What is the license use? Who has it? Where is it located? How do we keep this up to date? IT Asset Lifecycle Management IBM Tivoli Asset Management for IT Software License Management Tivoli License Compliance Manager for z/OS IT Asset Inventory IBM License Metric Tool (IBM PVU Only) 52 © 2008 IBM Corporation

IT Asset Inventory & Software License Management Reduce risk and optimize expenses Contracts & Financials License Optimization License Use Software Use Inventory 53 Determine if you are over-licensed (potential savings) or under-licensed (compliance risk) § Discover what is installed and reconcile this with what you purchased § Complex license types are driving discovery to be more robust § Know what software assets are in use and how these are used; map the information to license entitlements Key IBM Differentiators § Support for wide range of complex license types and virtualization • Driven by multi core processors and virtualization technologies on distributed § Only vendor to offer software license management on both distributed and mainframe “… the rise of virtual machines also makes it harder for corporate I. T. managers to track everything the machines are doing. The risks run from security lapses to not even knowing what programs are running, which can expose companies to licensing liabilities and knock them out of compliance with some federal rules. ” The New York Times, Closing the Doors That Virtual Sprawl Leaves Open, Dan Fost, April 9, 2008 © 2008 IBM Corporation

§ A core suite of solutions representing the full integration of data, processes, tooling, workflow automation and people. § Single UI, common data layer, workflow engine, applications and reporting. § Tivoli Process Automation Platform When installed together, functions are literally a tab or pull-down menu away providing industryleading integration. Tivoli License Compliance Manager 54 Tivoli Change and Configuration Management Database Enables customers to manage all asset classes on a single platform combined with service request, change and configuration management. Tivoli Service Request Manager § Tivoli Asset Management for IT Tivoli Process Automation Platform Maximo Asset Management A unified solution on a common platform for asset and service management Tivoli License Compliance Manager for z/OS IBM License Metric Tool © 2008 IBM Corporation

IBM provides Asset & Service Management solutions that help clients realize their business goals through: Visibility Control Automation See your business Govern your assets Build agility into Operations Control Cost, Mitigate Compliance Risk, Improve Service Levels 55 ü See what you have, where it is, who is using it and what it costs ü Reduce TCO of all strategic assets throughout their lifecycle ü ü Role based views ü Mitigate, regulatory, environmental and safety compliance risk Optimize software licenses, reduce over/under buying ü Increase production and labor efficiency and spare parts optimization ü Reduce outages and failures with proactive asset management practices ü Automate workflow to enhance operational efficiencies ü Help IT and Operations make strategic purchasing decisions with reliable inventory data © 2008 IBM Corporation

§ Tivoli License Compliance Manager (distributed systems) http: //www-306. ibm. com/software/tivoli/products/license-mgr/ § Tivoli License Compliance Manager for z/OS http: //www-306. ibm. com/software/tivoli/products/license-compliance-mgr/ § Tivoli Asset Management for IT http: //www-306. ibm. com/software/tivoli/products/asset-management-it/ 56 © 2008 IBM Corporation