The Lead · Product Brief · MIPS Capacity

The capacity unit on the contract is not the unit on the deployment.

Two live MIPS capacity engagements this quarter. Average reduction 47 percent. The renewal quote priced against a definition the paper has carried unchanged through three cycles.

By The Negotiation Desk · 2 live · trailing avg −47% on quote

MIPS capacity contracts are the largest single line item most enterprises carry on their software estate, and the definitions on the paper were written for a generation of z systems that no longer matches how capacity is actually provisioned. The renewal quote arrives priced against the old chunk model. The deployment runs on the new sub capacity model. The gap between the two is where most of the negotiation envelope lives.

The desk treats every MIPS renewal as a reconciliation problem before it is a pricing problem. Three things have to line up before the quote can be honestly evaluated. The capacity definition in the contract. The sub capacity reporting from the current deployment. The growth allowance clause that decides what happens when actual usage diverges from the contracted ceiling. Only after those three are reconciled does the renewal envelope become legible.

"We were paying twice for capacity in two different units, because nobody had renegotiated the cross product definition in three cycles. The reconciliation moved eighteen million dollars onto the right line."Director Platform · Asia Pacific bank

The seller's renewal team is not trying to overcharge. The seller's renewal team is pricing against the paper. The paper is what the buyer signed. The buyer signed paper that has not been refreshed in three capacity reporting cycles. The opening quote follows mechanically. The negotiation begins with the buyer rebuilding the capacity map from scratch and presenting it back, with a request to reprice on the actual current unit rather than the inherited contractual one.

Growth allowance is the second front. The clause typically reads as a ceiling expressed in MIPS, with overage priced at full list. When the deployment grows through normal business expansion, the overage line reprices everything. The desk negotiates a band, a phased uplift, or a soft ceiling with a true up cycle that the buyer can model. Each of those changes the renewal economics by a different amount, and the right pick depends on the buyer's actual capacity trajectory, not the seller's standard template.

An Asia Pacific bank renegotiated eighteen million dollars of mainframe capacity in a single cycle.

The renewal quote priced MIPS capacity on a definition the contract had carried for three cycles without being renegotiated. The sub capacity reporting on current z deployment showed the buyer was paying for capacity in two different units. The reconstruction moved the contract onto a single unit and recovered the difference.

Engagement Lead · Senior Practice · Asia Pacific financial services client

"The double counting was not anyone's fault. Nobody had renegotiated the cross product definition in three cycles. The reconciliation found eighteen million."Director Platform · Asia Pacific bank · Read full case →

#	Contract element	What we change	Typical lift	Difficulty
01	Capacity definition The MIPS unit the contract carries against the unit the deployment actually uses.	Reconciliation is the negotiation. Without it the quote is illegible.	−18 to −34%	High	→
02	Sub capacity reporting Reconstruction of actual deployment against the contractual sub capacity ceiling.	The reconstruction often shows the buyer paying for capacity twice.	−12 to −28%	High	→
03	Growth allowance clause The ceiling, overage and true up logic that decides how growth gets priced.	Bands, phased uplifts and soft ceilings change the renewal economics.	−10 to −22%	Medium	→
04	Term and signature posture Multi year term against the capacity trajectory and the audit cycle.	The right term length depends on the buyer's growth, not the seller's template.	−6 to −14%	Low	→

Contract element

Typical lift

Difficulty

Capacity definition

The MIPS unit the contract carries against the unit the deployment actually uses.

−18 to −34%

High

→

Sub capacity reporting

Reconstruction of actual deployment against the contractual sub capacity ceiling.

−12 to −28%

High

→

Growth allowance clause

The ceiling, overage and true up logic that decides how growth gets priced.

−10 to −22%

Medium

→

Term and signature posture

Multi year term against the capacity trajectory and the audit cycle.

−6 to −14%

Low

→

Write before the quote becomes a position.

Two analyst calls. No pitch. We tell you what we would do, what the leverage actually is, and whether we are the right firm. If we are not, we will say so.

Who we work for. Buyer side only. No reseller relationship with Broadcom. No partnership of any kind. We do not earn anything from products sold or renewed. Only from outcomes delivered against the contract.

The capacity unit on the contract is not the unit on the deployment.

Outcomes on MIPS capacity

An Asia Pacific bank renegotiated eighteen million dollars of mainframe capacity in a single cycle.

What we negotiate

Field notes · MIPS Capacity

The mainframe MIPS capacity squeeze nobody saw coming

The IPLA versus MSU decision that changes your mainframe contract

Why the 2022 mainframe playbook no longer protects you

Write before the quote becomes a position.