z/OS is IBM’s flagship operating system for its mission critical z System enterprise servers. Earlier this week IBM lifted the veil on the upcoming z/OS 2.3 release, with general availability planned for September, 2017. IBM’s Early Support Program is potentially available to those z/OS licensees who can’t wait that long. (Ask “your friendly IBM representative” if you’d like to join the ESP.) The preview announcement is chock full of interesting new features. I am particularly interested in these items:

  • z/OS 2.3 will require an IBM zEC12, zBC12, or higher model machine. That’s a fairly aggressive leap forward, but in my view it’s a sensible one. Setting a higher baseline means that z/OS can do more to exploit newer instructions and other newer model features.
  • z/OS and its predecessor, OS/390, have included encryption services for decades, but this release makes encryption of data sets, zFS, and CF structures much easier to implement because there’s no need to change applications.
  • Communications Server will incorporate a network security “sanity check” (my term) feature, to warn administrators if they’re not being at least reasonably careful to encrypt network connections. (Philip Young might appreciate this new feature.)
  • z/OSMF will support a standard software installation package for z/OS, based on some recent vendor consensus. Consequently z/OSMF will support both SMP/E and non-SMP/E (but also standard) software installation.
  • z/OSMF will integrate the z/OS incident log with IBM’s support database to find likely APARs (fixes or documented workarounds) automatically.
  • XML System Services will use 64-bit address spaces, to handle larger XML documents.
  • Eight character TSO/E user IDs!
  • IBM Knowledge Center for z/OS will include a message lookup feature.
  • The Sub-Capacity Reporting Tool (SCRT) is moving into the base operating system, and IBM is opening it up to software vendors.
  • Workload Manager will have a “maximum zIIP” control (my term) that can be applied to particular service classes. WLM will require all zIIP-eligible work within these controlled service classes to execute only on zIIPs, never on general purpose engines.
  • Online migration of HFS to zFS, and online repair of zFS. (IBM expects that the z/OS release after Version 2.3 will be the last to support HFS.)
  • RACF user ID to e-mail conversion and mapping.
  • JES2 job notifications and z/OSMF event notifications via e-mail.
  • Although z/OS 2.3 will still be available on tape media, IBM says it’ll discontinue tape media deliveries of z/OS and related products in the future. Electronic delivery (Internet downloads) and DVD media will continue to be available.

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IBM’s latest earnings report contains some great news: IBM z Systems had yet another strong quarter. I love to see that result, and (in my view) so should everyone in the industry who cares about systems innovation. Mainframes are where the future begins, and the future continues to look bright based on these results.

Please note that one must not give too much weight to this single financial result. The mainframe ecosystem is much larger and more complex than the revenue number that IBM reports for their IBM z System (and LinuxONE) machines suggests. The ecosystem includes IBM and non-IBM operating systems, middleware, tools, applications, services (including education and training), and financing, as examples. Also, the IBM z Systems revenue number is cyclical. A single quarter does not make a trend, much less an arc of history.

As background, IBM started shipping the IBM z13 model in March, 2015 (1Q2015) and the IBM z13s model in March, 2016 (1Q2016). Their LinuxONE Emperor and Rockhopper cousins started shipping in the same quarters, with the Emperor maybe one month earlier. The 4Q2016 revenue number is compared to the year ago quarter, to 4Q2015. It should have been a relatively “tough compare.” Yet IBM reported a +4% z System revenue increase. Outstanding.

IBM’s CFO provided a bit of “color” to explain that result: margins were up, and “new workloads” figured prominently in the win column. Margin improvement is predictable to some degree. When IBM starts shipping a new model, its assembly plants ship lots of physical machines with processors and other components. Physical goods always have real costs. Later on, the emphasis shifts to machine upgrades that involve shipping fewer physical components. In many cases mainframe customers at least tentatively committed to those upgrades back when they purchased their original machines (new or as hardware model upgrades), but IBM cannot book upgrade revenue until an upgrade is in place. Thus it’s reasonable to expect cyclical variation in profit margins. The 4Q2016 margin contribution was at least potent enough that it lifted the whole IBM Systems division’s profitability. (IBM Power Servers and Storage had a tough revenue quarter, unfortunately. Probably for cyclical reasons, though.)

“New workloads” is even better news. Although variable and cyclical, it’s reasonable to expect that mainframe customers’ existing applications and databases will grow at some pace along with digitization of the global economy. As a notable example, when the world is inexorably moving from paper and coin cash transactions to plastic and smartphone electronic transactions, the world’s electronic payment systems (heavily mainframe-based for entirely sensible reasons) will rise to meet the demand. That’s terrific, and what’s even more terrific is the addition of new applications and new information systems to those machines, and brand new customers joining the mainframe community. “New workloads” is shorthand for this phenomenon, the “horizontal” growth. Examples include blockchain technologies. IBM is betting heavily on blockchain, and in 2016 IBM introduced its High Security Business Network for Blockchain, publicly available through the IBM Bluemix cloud and run on IBM LinuxONE Emperor servers. LinuxONE and z System customers can also run blockchain technologies on their own machines, and many are. IBM is a member of the Linux Foundation promoting Hyperledger blockchain technologies, and the Hyperledger code is available as open source to everyone, including to mainframe customers. There is widespread industry agreement that blockchain technology solutions will not succeed unless they have the best security controls. The cryptographic math is well proven, but protecting the “rear flanks” of those blockchain solutions is the key (pun intended). IBM LinuxONE and z System servers handle that defensive part of the equation brilliantly, and that’s one part of the “new workload” story.

So, to sum up, mainframes keep expanding and growing, multidimensionally. Bravo.

Turning to IBM’s overall results for a moment, IBM is clearly a profitable, going concern. A couple decades ago there were some doubts about that, but not since, and not now. However, overall revenue was down 1%. IBM is still correcting course to change that minus sign to a plus sign. IBM’s investments in cognitive solutions, security, cloud (especially in hybrid clouds), and other areas are looking good so far. They’re all highly mainframe relevant, by the way.

Welcome to 2017.

Posted in IBM.