In part one of this series, I presented three “basic rules” relative to licensing the two categories of IBM mainframe software products, namely, MLC (Monthly License Charge) products and zOTC (zSeries One Time Charge) products. In this blog, I'm adding four more “basic rules” for each category.


  1. When a new product is ordered, the billing begins on the first day of the next month. With that in mind, it may make sense to order on the 2nd day of the month rather than the 28th day of the month. A product can be cancelled at any time; there is no penalty. The monthly charge will be dropped at the beginning of the next month; therefore, the product can be used until the last day of a month. So, licenses start on the first day of a month and licenses end at midnight on the last day of a month.
  2. The normal metric used for billing for z/OS and major subsystems (DB2, CICS, IMS, MQ, and compilers) is MSUs (Millions of Service Units per hour); these products are eligible for variable workload charges. For products that have “fixed” charges, the metric is merely a Basic Monthly license per machine. A few other products are based on “tier levels”. More details on variable licensing is planned for a future blog.
  3. There are a small number of MLC products that are No Charge (= free). These can be used on all machines within a data center or an Enterprise.
  4. A few products (less than ten) are printer fonts and incur a onetime charge (OTC). These are therefore purchased, but are in the MLC category.


  1. The license for a zOTC product does NOT include software maintenance. An optional annual S&S license (Subscription & Support) can be ordered. This license allows ordering of new versions of a product at no additional cost (Subscription) and software maintenance for a year (Support). When the license for a new zOTC product is first ordered, clients must either order S&S licenses or tell IBM they decline support.
  2. Since the zOTC licenses are “purchased”, these licenses cannot be cancelled. S&S licenses can be “cancelled” (i.e., not renewed) prior to the next renewal period. In general, S&S support should cover all of the zOTC quantities or none of the zOTC quantities for a product; however, clients can ask IBM for variations of this renewal process as needed for a given product. Even if S&S is cancelled, the client can still run the product “forever” since the licenses were “purchased”. 
  3. The normal metric for zOTC and S&S licenses is Value Units (VUs). Estimated usage requirements for a zOTC product is determined in either MSUs, number of users, number of messages, number of tape drives, number of engines, number of terabytes, or number of gigabytes. These values are then converted to the number of Value Units needed. IBM has a PC Conversion Tool that can be downloaded to make the conversion task easier.
  4. Similar to MLC item 6 above, there are a number of zOTC products that are No Charge (= free) and have corresponding free S&S.

For completeness, MLC and zOTC products have one thing in common. Each product in either category is identified by its PID (Program Identifier) number, which is a 7 character alphanumeric field, starting with a “5”; a hyphen may or may not be included after the 4th character. For example, the PID for CICS Transaction Server V5 is 5655-Y04 or 5655Y04. However, the PID by itself does not, in any way, indicate whether a product is MLC or zOTC.

To summarize, in my two blogs I've described seven “basic rules” for licensing of both MLC and zOTC products. I hope this gives you a base point regarding each category, as well as a comparison between the two categories.

I plan to do a third blog to complete the topic on “basics”. Are there certain aspects of mainframe licensing that you would like to hear about? Or do you have any specific licensing questions? If so, please let me know and I will try to incorporate those topics in my next blog.