Tivoli Spring Launch Enhanced ValueBased Pricing for the

Tivoli Spring Launch Enhanced Value-Based Pricing for the Tivoli Portfolio Consolidation David Harakal, IBM Tivoli Pricing April 2002 David Harakal/Austin/IBM dharakal@us. ibm. com

Topics to cover § Portfolio Consolidation Goals and results § Timeline § Enhancements to Value-Based Pricing § Migrations § Pillar-specific packaging & pricing Note: Presentation does not address MLC-based models offerings § Channel-specific Pageinformation 2

Goals § For Sales / Business Partners Make it easier to close sales Gain access to more accounts Close more deals without special bids Ensure pricing positions us favorably against competition Ø Greater consistency with SWG for easier crossbrand sales Ø Ø § For customers Ø Ø Ø Fewer decisions required More flexible licensing Better leverage of Passport Advantage Page 3

Launch Highlights § 60% Fewer Offerings Ø Consolidation, NOT abandonment § Per Processor pricing for servers Ø Price per processor varies by offering Ø Consistent with the SWG Strategy Ø TMP conversions not required for most products § Dramatically simpler pricing for Storage § Steeper Passport Advantage discount slope Page 4

Change Summary Value-Based Pricing Enhanced Value-Based Pricing 3 Server Tiers Servers priced per processor Differentiate RISC & Intel No distributed processor servers differentiation Tivoli Management Processors, clients, etc. Points 13. 5% Level H PA 32% Level H Discount discount Virtually no price breaks All customers see for smaller customers Pagereasonable price breaks 5

What’s NOT Changing? § Environment-managed licensing model § Licensing is product specific § Maintenance included with the license § z-Series part numbers for revenue tracking § Quick Quoter available for deal Page 6

Impact and Timing of Portfolio Consolidation NOTE: Products consolidated, NOT abandoned Page 7

Product Families C&O Configuration Management Workload Scheduling Remote Control Security Access Management Risk Management Identity Management Privacy Management P&A Business Impact Management Event Correlation & Automation Monitoring Storage Management Storage Resource Mgmt (3 Q) Page 8

Timeline § 9 th April – Launch - Orders for new offerings accepted § 9 th May - Prior offerings no longer available Ø 23 rd May for Storage Ø Products consolidated into new offerings, not abandoned Ø No more licenses available for 5697 -xxx, 5698 xxx, and prior Passport offerings § July 1 - Prior support offerings modified 9 Ø Existing support Page for 5697 -xxx and 5698 -xxx

Tivoli Pricing History June 1996 - Tivoli announces Tivoli-Flex pricing • First implementation of the environment-managed concept • 5697 -xxx PID numbers with bundled support • Single server price - only scalability was client vs. server February 2000 - Tivoli Value-Based Pricing announced • 5698 -xxx PID numbers, added Tivoli Select Support • Introduced 3 -tiered server model for better scalability • Reinforced and extended the environment-managed licensing model September 2001 - Tivoli joins Passport Advantage • Very Shallow discount slopes • Maintained pricing parity with non-PA offerings • Channel partners enabled to resell PA Maintenance April 2002 - Tivoli Portfolio Consolidation • Simplify the portfolio by consolidating similar products • Reset pricing where needed to bring street prices in line with published PA pricing, Page including 10 moving to a steeper PA discount slope

Enhanced Value-Based Pricing

Tivoli’s Environment-Managed Pricing model • Environment managed model is a Tivoli differentiator. • In competitor's models, pricing depends on architecture. • With Tivoli, only systems in the environment managed require licenses. • Applies to most products Page 12

Pricing metrics for Enhanced Value-Based Pricing § Servers Managed processors (Most products) Ø Executing (Managing) processors (Net. View, Ø Switch Analyzer) Ø MSUs (via Tivoli Management Points - TBSM for z/OS, Access Mgr for Bus. Integration, Workload Scheduler, NPM and NPM/IP) § Clients managed § Network Nodes managed (Net. View, Risk Manager) § Ports managed (Switch Analyzer) Note: Production and test environments require § Registered user accounts licensing. (Scalable-Usage model) Page 13

How to price servers § Distributed versus z-Series server licensing Ø“zrev”, “Host Edition” and “for z-Series” indicate pricing for the host component of an end-to-end solution Ø"zrev" part numbers are priced the same on host and distributed, and the processor licenses are interchangeable ØProducts with "Host Edition" or "for z-Series“ are priced per MSU ØFor z-Series offerings, a no-charge Custom Build Registration part number enables CBPDO, Server. Pac and other media deliverables § Pricing is for the hardware platform, not the OS ØLINUX on z-Series is priced per MSU for products with Page an MSU pricing metric on 14 the host

How per-processor works for servers (continued) ü Physical partitions – price per processor in the physical partition Ø IFL on the host Ø SP, Ultra 10 K, HP Super. Dome ü Virtual/Logical partitions – price per processor or per MSU for the entire system Ø Ø No LPAR pricing z/OS, MVS, etc - No workload pricing for IPLA Regatta, Ultra 15 K Firebird Tivoli will assess SWG model for virtual partitions for distributed servers when announced Page 15

MSU ratings for LINUX on z-Series servers Page 16

Environment Managed model example Page 17

Environment-Managed Model – generic example § Server processors managed Total – 20 Ø Mail/Messaging & Collaboration – 4 Ø Databases – 4 Ø Applications – 2 Clients – 7 (includes technical workstations) Ø Web Servers -2 Ø § Page 18

What happens when a customer adds processors? § Example (independent from prior slide) Customer has 20 (twenty) 2 -way servers to manage Ø Adds 2 processors to each server 1½ years later Ø § Transaction 1 – Acquire 40 processor entitlements § 1 st anniversary – Renew maintenance for 40 entitlements § Transaction 2 – Acquire additional 40 processor entitlements § 2 nd Anniversary – Renew maintenance for all 80 processor entitlements Page 19

New Passport Advantage Discounting Tivoli moving to the same Passport Advantage discount slope as Websphere & MQSeries No changes to channel margins or transactional discounting rules in Passport Advantage. Page 20

Pillar Specifics Performance & Availability Configuration & Operations End-to-End

Before and After Packaging Page 22

Products available April 9 th (P&A) & Pricing Models Page 23

Before and After Packaging (Cont’d) Page 24

Pricing Models Page 25

Before and After Packaging – C&O Pricing Models Page 26

Additional notes § Monitoring "PACs" pre-req IBM Tivoli Monitoring E. g. , a database server would require licenses for IBM Tivoli Monitoring AND IBM Tivoli Monitoring for Databases Ø Monitoring for <software> is per server, not per server per PAC Ø § TBSM Separate S/390 (per MSU) and distributed products (per processor) Ø No separately chargeable features Ø § Scheduler for Applications Ø Pre-req IBM Tivoli Workload Scheduler for the servers in the environment for licensing and deployment Page 27

Monitoring Example (with TEC and Service Level Advisor) Customer wants to monitor the following servers: • 50 Intel 2 -way servers (file and print servers) • 5 Intel 4 -way servers with Exchange • 5 4 -way p-Series servers with Oracle They want to use TEC and manage the service levels of for Oracle not yet re-priced – 5 Tier 2 servers – all servers Tivoli Manager order 1, 100 Tivoli Management Points 50 2 -way Intel -> 100 5 4 -way for Exchange -> 20 + 5 4 -way for Oracle -> 5 x 4 -Way for Exchange = 20 Processors

Workload Scheduling Example Customer wants to schedule the following servers • z-Series server (z-800 -003, 84 MSUs) • 5 LINUX images in an IFL on a 7060 (20 MSUs, 1 processor) • 8 -way p-Series server (with SAP/R 3) • SAP specific scheduling on the IFL (1 processor) and the 8 -way p-Series server 8 processors for the p. Series plus 1 for the IFL 84 MSUs for the z-800 plus 20 for the IFL

Pillar Specifics Security

Before and After Packaging Page 31

Pricing Models Page 32

Additional notes § Risk Manager Ø No separately chargeable options § Identity Manager / Access Mgr for e-Business Ø Per-user licensing (scalable usage) OR per-processor for the managing (infrastructure) server (10 processor minimum initial order qty) § Access Manager products Products are stand-alone offerings Ø No pre-reqs Ø § Access Manager for Operating Systems Ø Per-processor charge/license applies to UNIX systems servers and clients Page 33

Risk Manager Example Customer wants to secure the following systems: Ø 2 ISS Real. Secure UNIX Network Engine (4 -way) Ø 8 NT Web Servers (1 -way) Ø 2 UNIX Check. Point FW-1 Firewalls (2 -way) Ø 4 Host IDS running on AIX Servers (2 -way) Ø 200 Cisco Routers 2 ISS 4 -ways -> 8 8 NT uniprocessor -> 8 2 Check. Point 2 -way -> 4 + 4 Host IDS 2 -way ->

Access Management Family Example Customer wants to do the following: Ø Secure all of their distributed servers with MQSeries installed Ø (20 Uniprocessor, 65 2 -way, 12 4 -way, one 8 -way, one 14 -way, & one 24 way) Secure all systems with UNIX operating systems (one 8 -way, one 14 -way, one 24 -way, and 50 clients (technical workstations, each with 2 processors) ) Ø Secure access for 150, 000 users 20 Uniprocessor 20 65 2 -way 130 12 4 -way 48 1 8 -way 8 -> -> 1 8 -way -> 1 14 -way -> 14 + 1 24 -way 24 -> 8

Pillar Specifics Storage

Before and After Packaging Note: Customers with ONLY the Library feature will be grand fathered into the base offering. Page 37

Vendor-Logo Products not changing Page 38

What you need to know to configure a bid TODAY § Which servers are managing and which are managed? § Which servers and clients are backed up over a lan vs. a san? § Which servers need Disaster Recover? Space Management? § How many servers are sharing a tape library? How big are they? § Which database am I going to backup (Informix, Oracle, SQL)? What if I don’t know yet? § Which ESS or EMC boxes am I backing up for which applications? Page 39

TMP Calculator today Page 40

What to know to configure a bid from APRIL § How many server processors are in the storage network? Clients (technical workstations, desktops, etc. )? § Do I want to do basic backup/recovery over a lan, or do I need an enterprise offering? Ø Enterprise offering includes Disaster Recovery, San Support, Space Management, & large library support § How many Database server processors are there? § How many ESS/EMC server processors are there? Page 41

New Pricing Model Page 42

Additional notes: § No differentiation between managed and managing servers Ø All servers in the storage network require licensing – managed and managing Ø S/390 and distributed per-processor pricing the same § Separate part numbers for clients § No separately charged components Ø Base product includes library support for up to 2 drives/40 slots § Storage Manager or Enterprise Edition are pre-reqs for any of the extensions § Trade up part numbers from TSM to TSM Enterprise § Can't mix and match TSM and TSM Enterprise Page 43

Environment-Managed Model for Storage § Server processors managed Ø Ø Ø Total – 20 Mail – 4 Databases – 4 Hardware - 4 R/3 – 2 § Clients – 7 (Includes technical wkstns) Page 44

Migrations

Migration Principles § KEEP THE CUSTOMER WHOLE! § Customers current on support/maintenance will receive new code when available § Customers with one component will have access to all of the components of the replacement offering Ø There will be a charge for trading up to IBM Tivoli Storage Manager Enterprise Edition for most systems in the storage network § Customers are limited to the use set out in their current (pre-migration) licensing until licenses are migrated. § Non-PA standard support reset to Passport Page 46 Advantage terms and price levels

Migration Principles (Continued) § Entitlements > deployed Example: Customer has 10% more TMPs entitled than deployed Ø In migration, customer would be entitled to migrate to 10% more processors, clients, etc. than deployed Ø If customer chooses to migrate to just what is deployed, growth would require additional purchases Ø § ELAs The fundamental is that we honor our contracts Ø ELA terms often override the standard terms anyway, so holding to contract terms under Enhanced Value-Based pricing isn’t any different than under any other model Ø Customers who are entitled to a fixed price for additional purchases will receive that price under the new metrics via special bid Ø ELAs should NOT be extended under any models other 47 than the Enhanced. Page Value-Based Pricing models. Ø

Migration Process 1. Ensure customer is properly entitled under current model 2. Assess current entitlements (e. g. , servers, MSUs, etc. ) in light of new licensing Note: Migration is for like environment to like environment (e. g. , 10 servers -> 10 servers). 3. Assess the OVERALL financial impact § Steps 1 & 2 look at entitlements, not cost or price Ø Customer will be entitled to their current environment when migrated to the new model Page 48 § If OVERALL maintenance renewal

Migration Aid – Processor estimates These are mathematical averages, and are valid for estimation purposes only. Customers are required to have licensing valid for their actual (Tier 3 servers should be individually identified. ) deployment Page 49

Code shipments prior to license migration § Autoships ONLY when NEW code is available Ø E. g. , not just the existing code in a new package § Emergency code needs will be met using existing infrastructure § We will include a document with all of these autoshipped packages that includes: Ø Ø Use Entitlement A migration table (old offering to new offering) Page 50

Channel Information

Dual pipe - products Note: For Workload Scheduler and Access Manager for Business Integration only the distributed options are available in AAS Page 52

Dual pipe ü Selected products available through AAS to enable system resellers and distributors ü License purchase includes 12 months of Maintenance § Upgrade to 3 years maintenance available at time of purchase for a fee equal to 95% of 2 years of maintenance renewal § 1 - and 3 -year maintenance renewal options § Maintenance Terms & Conditions same as Passport Advantage ü Separate PID numbers for License, 1 -year maintenance options and 3 -year maintenance options § Maintenance PID numbers different for each product ü Reseller margins in AAS will be 25%/28% ü Price parity set so that prices to partners are equal § AAS prices 10% higher than PPA Level A prices so that the price to a distributor (VAD) at Level A in PPA is the same to the VAD in AAS. Page 53

Selective Distribution § Storage remains restricted to Storage Resellers § ALL other products will be open distribution Page 54

Additional Information § Internals access the MOT at: https: //mot. tivoli. com/pricing/index. html § Partners access the info for Partner. World for Software, go to the BPZone and Tivoli Highlights § What will be there Ø Ø Ø Ø This tutorial Pricing Calculator – Updated calculator with part numbers, currency, etc. available by April 9 Old to new product map (pdf file) Cross-brand selling map (pdf file) Definitions (Including metrics, backup licensing rules) Product-family-specific examples RFA PDF file Q’s & A’s Page 55