The Challenge
A global financial institution operating across multiple regions engaged Redress Compliance to conduct a comprehensive IBM licensing review, with a specific focus on its mainframe environment. The institution's core banking operations depended heavily on IBM mainframe systems, and mainframe software licensing represented one of its largest recurring IT costs.
Escalating MLC Costs
Monthly Licence Charge fees driven by peak MSU utilisation with limited visibility into workload patterns. MLC was the single largest component of IBM spend.
Sub-Capacity Reporting Gaps
Inconsistent SCRT (Sub-Capacity Reporting Tool) practices across partitions and regions created risk of full-capacity billing on multiple products.
Legacy Application Overhead
Mainframe applications no longer required were still running, consuming MSU capacity and generating MLC charges. Unnecessary recurring costs for dormant workloads.
Complex Entitlement History
Mix of MLC and OTC (one-time charge) entitlements accumulated over decades. Gaps between owned licences and deployed software created hidden compliance risk.
The Process
Our four-phase mainframe licensing review and optimisation identified $15 million in compliance exposure and $6.5 million in annual savings opportunities.
Phase 1: Comprehensive Mainframe Licensing Analysis
Reviewed all IBM mainframe licensing agreements including Monthly Licence Charge (MLC) and One-Time Charge (OTC/IPLA) entitlements across all LPARs and regions. Evaluated workload configurations and usage metrics across all partitions, analysing MSU consumption patterns, peak utilisation windows, and SCRT reporting accuracy. Conducted a detailed peak usage assessment mapping rolling 4-hour averages across all MLC products. Built a complete mainframe Effective Licence Position (ELP) reconciling MLC subscriptions, OTC entitlements, and actual deployed software.
Phase 2: Non-Compliance and Optimisation Identification
Identified $15 million in compliance exposure: SCRT reporting inconsistencies across regional partitions risking full-capacity billing, overprovisioned workloads consuming MSU capacity beyond entitlement levels, entitlement mismatches between MLC agreements and deployed software, and underutilised OTC entitlements not credited against compliance gaps. Simultaneously identified $6.5 million in annual savings: processing peaks from suboptimal batch scheduling, legacy mainframe applications still running without business function, unused entitlements available for reallocation, and MLC product tier adjustments through workload rebalancing.
Phase 3: Optimisation and Cost Reduction
Implemented a targeted mainframe optimisation strategy. MLC Peak Reduction ($5M/year): Workload rebalancing to reduce peak MSU utilisation, shifting batch jobs, spreading processing loads, and optimising LPAR configurations to lower rolling 4-hour averages. A 25% reduction in peaks delivered $5M in annual MLC savings without reducing capacity or affecting service levels. Legacy Application Decommissioning ($1.5M/year): Retirement of mainframe applications no longer required, freeing MSU capacity and eliminating associated MLC charges. Entitlement Reallocation: Reassignment of unused mainframe entitlements to close compliance gaps without purchasing additional licences.
Phase 4: Governance and Compliance Framework
Developed a compliance framework with automated tools for real-time monitoring of mainframe MSU usage. Established validated SCRT reporting processes with monthly quality checks. Implemented regular internal audit cycles for mainframe licence reconciliation. Delivered targeted training for IT and operations teams on MLC, OTC, sub-capacity rules, and SCRT requirements. Created internal runbooks for workload management and peak monitoring.
The Outcome
The engagement delivered comprehensive IBM mainframe licence compliance with substantial recurring cost savings.
| Metric | Before Review | After Review |
|---|---|---|
| Non-Compliance Exposure | $15,000,000 | $0 (100% eliminated) |
| MLC Optimisation Savings | — | $5,000,000 / year (peak reduction) |
| Decommissioning Savings | — | $1,500,000 / year (legacy apps retired) |
| Total Annual Savings | — | $6,500,000 recurring annually |
| Mainframe Licensing Costs | Baseline | 30% lower across estate |
| Processing Peaks | Baseline | 25% lower via workload rebalancing |
| Compliance Status | At risk | Fully compliant, SCRT validated, audit-ready |
| IT Governance | Manual / ad hoc | Automated real-time MSU tracking |
Redress Compliance's expertise in IBM mainframe licensing was invaluable. Their recommendations not only ensured compliance but also unlocked significant cost savings. We're now operating more efficiently, with a clear strategy for long-term cost management and scalability.
Chief Information Officer, Global Financial Institution
Key Takeaways
MLC peak reduction is the highest-ROI optimisation lever
Because MLC costs are driven by the single highest rolling 4-hour average in a month, even modest peak reductions deliver disproportionate savings. Batch scheduling, workload spreading, and WLM tuning are the primary tools. In this case, a 25% peak reduction delivered $5 million in annual savings.
SCRT reporting accuracy is non-negotiable
IBM requires monthly Sub-Capacity Reporting Tool submissions. Inconsistent or missed reports can result in full-capacity billing, paying for the entire machine's MSU rating rather than actual partition usage. Automate and validate SCRT before every submission.
Legacy mainframe applications are hidden cost centres
Applications that no longer serve a business function still consume MSU capacity and generate MLC charges. Systematically identifying and retiring these frees capacity and reduces costs simultaneously. This engagement delivered $1.5 million annually from this single optimisation.
MLC and OTC entitlements interact in complex ways
Organisations with long mainframe histories often have a mix of MLC subscriptions and OTC/IPLA perpetual licences accumulated over decades. Understanding how these interact, and where unused OTC entitlements can offset compliance gaps, is critical for accurate position assessment.
Mainframe governance requires specialised monitoring
Generic IT asset management tools do not capture mainframe-specific metrics (MSUs, LPAR configurations, rolling averages). Invest in mainframe-specific monitoring and establish dedicated processes for ongoing cost control.