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But Wait, There's More IBM has tweaked a long-running Low Rate Financing server financing deal to try to drum up business and to reflect recent changes in interest rates. The rate for pSeries, iSeries, zSeries, and xSeries servers and their associated storage is now 4.1% (up from 3% in May 2004). (Apr. 2005 IT Jungle) Why packaged software prices will decrease Factors such as competition from new application providers on top of infrastructure services from firms like IBM, Microsoft, and SAP; the increasing availability of open source solutions; the growth of third-party application services providers; and the increased use on offshore labor will combine to reduce costs for packaged software for the first time in over a decade. The end result will be significant consolidation as the sector shrinks 35% by 2008 and another 15% by 2010. (Feb. 2005 IT Manager's Journal) Simple pricing not so easy The cost of upgrades and license fees for software on a mainframe is choking some data centers and because of it, many shops are dumping their mainframes for less expensive platforms. IBM likes to lay the blame on ISVs, but people who live in glasshouses shouldn't throw stones. (Feb. 2005 search390) Reseller stays mum on settlement of IBM mainframe dispute The Australian mainframe dealer had been forbidden to resell IBM mainframes to buyers in the US or the European Common Market. The vendor had also introduced a policy that any second-hand mainframes that competed with its new ones had to be destroyed. (Jun. 2004 IT News) Tell Us Your Vendor Nightmare Vendor relationships today are a battlefield where the maturing of markets and a wilting of IT budgets have pushed vendors into a double bind, and the doubly bound are trying to make up for lost revenues with increasingly bold demands. To a large extent, vendors are encouraged by contracts that were signed in a more innocent time, and by CIOs who failed to push back when they had their chance. (May 2004 CIO) Re-engineer your mainframe applications to get a better deal on IBM zSeries charges The savings apply to mainframes using IBM's Workload Licence Charges on the z/OS at a capacity below 315 MSUs. However, users of entry-level z900 and z990 machines could make the biggest savings. (Sep. 2003 ComputerWeekly) It's All About Perception: Mainframe Software Pricing Often, an IT organization will complain about a $40,000 mainframe performance tool that essentially keeps the entire organization's applications and infrastructure running. Yet, this organization will "gladly" pay $50 each for 1,000 copies of a UNIX systems editor ($50,000). It's all about perception. (Sep. 2003 zJournal) IBM Cuts Prices, Emphasizes Mainframe Viability IBM has made a series of changes to improve the cost of ownership of zSeries. Highlights include: Incremental zSeries memory reduced to $10,000 per Gbyte
Linux engine pricing standardized at $125,000 per engine, regardless of platform. (Aug. 2003 Gartner) Squeeze Now, Pay Later The only leverage vendors have left in a hostile economic environment of cost-cutting, cutbacks and outsourcing is in the service, support and implementation side of the process ledger. If we save 50 percent in purchasing and procurement at the cost of doubling our service and support overheads, what is the net benefit? (Jul. 2003 CIO) IBM Gives Software Discounts to Spur Upgrades to zSeries IBM is greasing the skids a little with discounts on software fees that are associated with the move from 31-bit mainframes from itself and former rivals to its 64-bit zSeries 800, 900, and 990 machines. IBM may be trying to get rid of new zSeries 800 and entry zSeries 900 iron without cutting hardware prices. Cutting related software prices is a crafty way to get the same deal done. (Jul. 2003 CBR Online) Some immodest proposals Payees are not sanguine about the current industry standard of tacking on 20 percent to 29 percent above the cost of the software license for maintenance, bug fixes, support, and upgrades, especially when those upgrades turn into nightmares that threaten to bring their business to a grinding, albeit temporary, halt. (May 2003 InfoWorld) IBM Defends Pricing Model Under the Workload License Charge mainframe software pricing model, IBM z/OS users pay for software based on the average size of their workloads. A mainframe user with less than 1,000 MIPS installed is unlikely to see much of a price benefit and is probably better off with current Parallel Sysplex licensing models. On the other hand, a user with more than 1,000 MIPS running multiple software packages could benefit substantially by moving to WLC. (Mar. 2003 ComputerWorld) Mainframe madness that put company on the path to die It became clear to me at that point that the company was milking the S/390 and that the business was on a path to die. So we made a bet on a dramatic price reduction on the product that produced virtually all of IBM’s profit. The price of a unit of mainframe processing moved from $63,000 to less than $2,500 seven years later, an incredible 96 per cent decline. (Nov. 2002 The Times) CIOs consolidating IT spending on larger vendors With IT budgets tight, most chief information officers are consolidating purchases with larger vendors with strong brands and the ability to provide a wide variety of products and services. The main beneficiary from this trend is IBM. (Oct. 2002 Network Work Fusion) Licensing flap Some say the licensing and pricing is returning to the mainframe days. My Microsoft SQL Server enterprise edition with Software Assurance is $20,000 for one processor -- for a quad, that's $80,000. IBM's program, launched late last year, combines maintenance and support into one package, which users say forces them to buy things they don't need. (Apr. 2002 Network Fusion) Big Blue Bully? What one company views as friendly competition, another views as bullying by a monopoly. IBM has been trying to lower mainframe software pricing, but this is hard to control with third party vendors, which have been disinclined to adopt IBM's pricing models. By entering the mainframe tool space, they will be able to increase revenue. (Mar. 2002 Intelligent Enterprise) How to Choose an IT Vendor IT managers have a lot to learn about the process of choosing an IT vendor. "Vendor buys" account for more than 60% of a typical IT budget outside of personnel costs, but very few are giving the process much thought. (Feb. 2002 ComputerWorld) Users cry foul over IBM bills The first effects of IBM's revamped software licensing model are catching customers off guard and driving up costs for some IT executives by more than 80%. Under the revamped program, IBM, Lotus and Tivoli customers can no longer purchase licenses for software upgrades without also purchasing technical support. (Dec. 2001 Network Fusion) The Great Global Seat Scam A senior executive at one of the Big Five estimates that the typical buyer ends up using about 70 percent of the seats he pays for. Now, seat scams are nothing new, of course; CIOs were paying too much for too many seats back in the days of the IBM 360. But the global seat scam has some special characteristics of its own. (June 2001 CIO)
IBM mainframe price cuts hailed as biggest change in 20 years Anybody who thought that mainframes were too expensive should review their attitude. Users running applications that are new to the mainframe - either bespoke or commercial - only pay 10% of the licensing costs for the IBM software they use. This would mean a user running a DB/2 and Websphere-based application on z/OS would pay 10% of the current list price for their DB/2, Websphere and z/OS software. (Sep. 2003 ComputerWeekly)
Why Good CIOs Make Bad Decisions If you were an economically rational person, what you've spent in the past wouldn't influence your behavior in the present. It's the same if you invest in some legacy system and the payments will last five years, and after three years, you discover it's not really what you need anymore. Are you likely to switch if you're still making payments on the old project? (Apr. 2003 CIO)
The Shifting Sands of Mainframe Software During the past three years, competition has dramatically increased within the OS/390 tool market. Through 2005, customers failing to recognize and negotiate firm contract terms and conditions will pay 20%-30% higher product costs and incur a higher risk of failed support. (Mar. 2002 META Group)