Software Licensing on System z – PassPort Advantage – Part 3

November 2nd, 2020 Software Licensing on System z – PassPort Advantage – Part 3
Jeffrey Broderick
Enterprise Architect

This article is part three of a three-part series on the complicated and confusing topic of software licensing. Earlier this year, we published Software Licensing on IBM Z System: Part 1, Monthly License Charge Software and International Program License Agreement IBM System z – Part 2. In this article, we’ll discuss PassPort Advantage (PPA), the third major category for licensing of IBM software on System z, provide some clarity on how that licensing model is used, and explain the most common licensing approaches making the following assumptions:

  • The hardware is IBM System z hardware.
  • The operating system (for all practical purposes) will be z/OS.

Although there are multiple operating systems that can execute on IBM System z hardware (z/OS, zVSE, zVM, zTPF, Ubuntu, Red Hat, SuSe, etc.), this blog focuses on software for z/OS. As a note, z/OS and zVSE have similar licensing models. Independent Software Vendors (ISVs) tend to have their own approach to licensing.

PassPort Advantage (PPA) Software

The typical licensing of PPA software has two major parts: the initial license charge (aka One-Time Charge, OTC, or Base License) and the recurring software subscription and support (S&S). PPA software traditionally has a larger, upfront license charge and the customer pays a recurring subscription fee (S&S) for continued support, upgrades, maintenance, etc. Although the S&S fee can vary from product to product and between vendors, it is quite common it to fall in the range of 22-24% of the license fee. PPA software licensing typically includes the 1st year S&S with the base license cost. The customer can choose whether to renew the S&S on an annual basis, depending on their licensing agreement.

PPA Sizing and Pricing

The PPA software licensing model was originally developed to provide convenient pricing and purchasing of software for distributed servers and personal computers. PPA software products may have any number of metrics used to measure and determine the licensing requirements. It’s not unusual to have licensing based on Named User, Concurrent/Floating User, Cores, or PVUs.

Named User and Concurrent/Floating User licensing are most frequently found with tools that are installed on each desktop. As the name implies, each Named User must have their own license, whereas a Concurrent/Floating User may share in a pool of licenses, up to the maximum number of licenses that have been purchased. Application development tooling frequently falls into this licensing construct.

As the majority of PPA software is a server or infrastructure installation, PVU-based pricing is frequently used. PVUs (Processor Value Units) are calculated based on the quantity, size, speed, and model of processor cores on the distributed server(s). Virtualized environments can also be factored into the PVU licensing metric. PVUs attempt to provide a level playing field for software licensing across a wide range of processors and servers.
To provide additional insight into how cores, vendors, and various chips factor into PVUs, please see IBM’s “Guide to Identifying Your Processor Technology.”

Virtualization Capacity Licensing

PassPort Advantage software provides the capability for license cost reductions for various virtualized environments. However, the customer site should fully research all aspects of the Virtualization Capacity licensing prior to acquiring and deploying this model. Changes in the amount of resources available to a virtualized environment where the PPA software is installed could require additional licensing.

For additional information on Virtualization Capacity licensing, please see IBM’s Sub-Capacity licensing article.

Committed Term License

Committed Term Licensing (CTL) is a relatively new addition (Fall 2019) to the PassPort Advantage licensing model. CTL was established to better enable customers to license PPA software for various cloud-centric deployments and to level out the licensing and S&S costs over the agreed-to licensing term. CTL requires a minimum twelve-month commitment and the customer is required to pay for the entire commitment term. At the end of the commitment, the customer can either renew the CTL, not renew the software and stop using it, or choose to actually license and pay S&S.

CTL licensing is similar to leasing the software (CTL includes license costs and S&S), with payments spread out over the agreed-upon term.

Container Licensing

Containerized software and its corresponding licensing, although relatively new to z/OS, are rapidly gaining momentum. Multiple IBM software solutions, including CloudPaks, Red Hat OpenShift, and IzODA, leverage containerized deployments within z/OS. Containerized software is licensed on a vCPU Capacity Counting Methodology.

For Eligible Public Cloud deployments and vCPU information, please see:

It is important to be aware that, prior to running Containerized solutions on z/OS, Feature Code 0104 must be purchased and enabled on the z hardware. This feature code then enables any number of containerized applications to be deployed within z/OS. Most of the containerized software for z/OS is deployed leveraging zIIP engines, which can reduce MLC and offload software expenses.


PassPort Advantage software licensing is becoming far more common for Z Systems. Containerized software will also drive an increased adoption of PPA licensing models within the z/OS environment, along with new functionality and capabilities. To optimize costs, it’s imperative that customers have at least a basic understanding of how the various IBM licensing models work and what licensing may work best for their datacenter.

More Information

Having a business partner that is savvy about IBM license protocols can save you time, money, and headaches. For further information about software license information, contact your Mainline support services representative directly, or contact us. As an IBM Platinum Business Partner and a 2020 Beacon Award Winner for “Most Innovative Client Experience on Z,” Mainline has proven expertise to help you solve your business challenges with IBM System z solutions.

You may be interested in:

Blog: Software Licensing on IBM Z System: Part 1, Monthly License Charge Software

Blog: International Program License Agreement IBM System z – Part 2

Submit a Comment

Your email address will not be published. Required fields are marked *