The purpose of this blog is to highlight the factors that can save an IBM i (iSeries/AS400) user money compared to an on premises server. Disclaimer: IBM i is an operating system and iSeries and AS400 are server names. I use these terms interchangeably to make it easier for users of these platforms to find information with web-based search engines.
Over the years, I have spoken with hundreds of IBM i users that will evaluate the cost of cloud hosting compared to the cost of an on premises server.
While every situation has its own characteristics, let me highlight some key factors where cloud hosting can be more cost-effective than an on premises server.
1) “Done-For-You” IBM i Administration
Perhaps not surprising, but outsourcing your IBM i administration can be one of the biggest areas of cost savings for many hosting clients.
After all, who wants to manage console error messages…especially when you are not familiar with their meaning and what exactly will need immediate attention.
IBM i expertise can be very expensive, and also hard to find in many locations.
Another major trend I have seen, is more IBM i users have seen their experts (both in-house and outside) retire. Such users find they have limited-to-no IBM i expertise. These users start to gain interest in outsourcing their server maintenance, so they can focus on supporting their users on other technology.
How much can outsourcing IBM i administration save a hosting client?
It varies.
My clients have told me, it can range from about $7,000 to $70,000 or more per year.
Every user has to figure this one out for themselves.
Even so, this is a big potential source of savings and should merit close attention. I often see too many users dismiss the potential savings for a variety of reasons. (They may rationalize that the server has never failed even if we are 5 releases behind on the operating system, our consultant is always there to help even if he is thinking about retirement or a new job, etc.)
2) “Done-For-You” Backups
I am always surprised when I hear how many prospective users do not have a reliable backup and recovery plan in place.
I have been told of backup tape retention and management ranges from weekly backup tossed in the back seat of the car to no offsite tape management. Even some of our biggest clients have not done a complete system save in many years. Backup tapes may never be tested to validate if they are machine readable. Most have never done a disaster recovery test.
Hosting providers provide excellent, reliable backup options to protect your system. These options include backups done offsite and recovery plans set into place as part of the monthly hosting fee.
3) Safe, Reliable, And Redundant Data Centers
Most IBM i users I speak with struggle to keep pace with all the elements needed for a secure, reliable, and redundant on premise server room or data center. These elements go beyond their expertise for support of the IBM i server and the users’ applications.
Some will outsource their server room needs to a local data center, which will host their systems. The prices I have heard for data centers range from around $500 to $1,500 per month or more. Rarely, if ever do these data centers have IBM i expertise.
IBM i hosting providers services include safe, reliable, and redundant data centers as part of the monthly hosting fee as well as IBM i expertise.
4) Affordable Disaster Recovery
I talk to IBM i users who are heavily dependent on their systems and vulnerable to downtime. They want their systems to be up and running 24/7. Only some can cope with next day recovery.
A small percentage already has Disaster Recovery plans in place. Unfortunately many are expensive given the cost of a target server, High Availability (HA) software, and implementation. Even worse, some with backup “hot sites” or replacement servers actually take 2- 3 days to recover.
IBM i hosting providers can include Disaster Recovery in your hosting fee or show you affordable options at a fraction of the cost.
5) No IBM Hardware And Software Maintenance Fees
Most IBM i users buy Hardware (HWMA) and Software (SWMA) Maintenance Support for their on premises servers. They do this to have access to IBM so they can help with hardware failures, software patches (PTFs, Technology Refreshes, etc.), and operating system version upgrades. For entry level IBM users these annual fees range from about $3,500 to $10,000 per year. For midrange to larger users, these fees can range from $20,000 to well over $50,000 more per year or more.
In contrast, most IBM i cloud hosting providers have NO HWMA or SWMA fees. Instead, IBM HWMA and SWMA is included as part of the monthly hosting fee.
6) No Core Activation, User Count Or Entitlement Transfer Fees
When getting a new IBM i on premises server, you will generally have to pay for core activation (a fee to activate each core with IBM i), user count (a fee for the number of concurrent users) or entitlement transfer (a fee to move your IBM i activations and user count from the donor server to the new on premises server).
Pay close attention to these fees. I have found most users do not understand these and I have to explain in detail the reasons why.
These fees can really add up over time. You’ll expect to pay at minimum $5,000 to over $65,000, for entry to mid-sized servers.
Many IBM i hosting providers do not charge core activation, user count or entitlement transfer fees. In such cases, your core activation and user count is included in the monthly hosting fee.
Cost Comparison – IBM i Cloud Hosting vs. On Premises Server
A new on premises IBM i server with 5-years of hardware and software support can generally range anywhere from $35,000 to $80,000, depending on the server, the specified resources, and the server software tier to support your workload. When financed over 5 years, this equals to be about $690 to $1,575 per month.
Based on feedback I get from clients’ assessments, IBM i administration and support ranges from $7,000 to $70,000 per year or, $583 to $5,883 per month.
When the on premises server is hosted at a data center, this can range from $500 to $1,500 per month.
So, if you buy a server, provide your own IBM i administration, and host at a data center, your monthly cost can range anywhere from $1,773 to $8,958 per month.
IBM i hosting providers will generally charge around $700 to $5,500 per month for comparable resources, IBM i administration, and hosting at a reliable, safe, and secure data center.
As you can see, IBM i hosting can be considerably less expensive than an on premise server.
I do not expect all of my readers to accept my pricing estimates. Instead, I encourage you to assess your costs and potential savings based on your circumstances.
Ultimately, you have to determine what is right for your operation.
Conclusion
You’ll save money with IBM i hosting providers because you can:
1. Outsource your IBM i administration (generally less expensively than doing it in-house),
2. Outsource your backup and recovery managed by IBM i experts,
3. Outsource your data center needs for safe, secure, and reliable support,
4. Not be charged for IBM HWMA and SWMA expenses, and
5. Not be charged for IBM core activation, user fees, and entitlement transfer fees
As IBM i users evaluate the purchase of a new server compared to hosting, hosting can offer significant savings overall.
Need help with IBM i Cloud Hosting? Email me at blosey@source-data.com or call me at 714-593-0387.
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