The purpose of this blog is to identify the elements to make up the on premise server total cost of ownership so you can determine your options to upgrade to a new on premise server or move to the cloud to host your IBM I (iSeries/AS400) applications.
Disclaimer: IBM i is an operating system. iSeries and AS400 are servers. I use them interchangeably to make it easier for users to find this information when searching on the web.
Every day I speak to IBM i (iSeries/AS400) users to help them with their needs.
One common topic includes what does an IBM i server really cost?
Straight-Forward Costs For An On Premise Server
Some of the cost line items are straight-forward:
1. Server acquisition cost (hardware and software)
2. IBM hardware and software support
3. IBM Service Extension Fees as applicable
4. Ongoing media for backup
5. Related services (online backup, backup media storage, disaster recovery services, ancillary professional services to help with IBM i issues, etc.)
6. Environmental costs (electricity, air conditioning, real estate, etc.)
“Soft Costs” Associated With On Premise Server Management
Other line item costs of managing the server are more difficult to quantify:
1. Labor and effort spent for any backups (this includes media formatting, mount and unmount tape, document the backup log, offsite media handling, retrieving offsite media, etc.)
2. Responding to console error messages
3. Researching and applying PTFs (software patches)
4. Version upgrades (unless you do these frequently, you should probably outsource this task. You will discover that the documentation to do a version upgrade is generally not current with how one REALLY does the upgrade)
5. Participating with hardware repairs (dispatch call can be lengthy and you generally need to be present when the engineer is fixing your server)
6. Performance limitations due to older technology
7. Cost associated with recruiting IBM i expertise from a shrinking labor pool
When prospective clients compare staying with their current system, upgrading to a new server or moving to the cloud, they commonly just look at the acquisition and IBM support costs compared to their current system. Even in these cases, users sometimes choose to overlook the extra fees and cost they may incur with older hardware.
New IBM POWER Server Can Be Less Expensive To Own Than Current Legacy Server
Having done countless assessments over the years for clients, I can say that today’s new IBM servers are so much more powerful and so affordable, that break-even can range from 30-40 months depending on the server. Said differently, a new server will pay for itself at 30-40 months.
Often, a user with a legacy server in a P10 software tier spends about $10,000 – $14,000 per year. Moving to a $30,000-$40,000 P05 software tier POWER server can be paid for in 3.5 years or less.
Cloud Hosting Is Often Less Expensive Than An On Premise Server
While these examples are common, what is less common is that IBM i cloud hosting can be way more affordable if the user considers their cost of managing the server (backups, responding to console errors, PTFs and version upgrades, etc.). Studies show that the labor costs associated with these tasks range $6,000 – $10,000 per year, depending on the users’ salary ranges.
So, what?
If a $40,000 P05 server is more affordable than a legacy P10 server, the TRUE 3-year cost for the $40,000 server is more like $48,000-$70,000 in 3 years when you add the “soft costs” of server management outlined above.
In my experience, the hosting fees for a comparable $40,000 P05 server range from $700-$1000 per month. Over 36 months, that is $25,000 – $36,000. Compared to the total cost of the on premise sever (including server management) of $48,000 – $70,000, IBM i cloud hosting savings range from $12,000 – $45,000.
When you include the “soft costs” of server management, cloud hosting can be significantly cheaper than an on premise server.
Security, Redundancy, Disaster Resilience – Extras With Cloud Hosting
Hosting clients also get additional benefits of data center security, redundancy and disaster resiliency – these are added benefits from hosting that most businesses cannot justify for their computer room.
Conclusion
If you are still running your business on an older IBM server, the price performance of a new on premise server is very compelling to move to newer, faster and affordable technology.
If you feel comfortable with cloud hosting and accessing your system with VPN (Virtual Private Network), then cloud hosting may be an even more affordable option to consider.
Need Help?
Call me at 714-593-0387 or email me at blosey@source-data.com. Let us know how we can help!
To learn more about us, and view our customer testimonials, please visit our website: www.Source-Data.com and see our other links:
1) IBM I on POWER (iSeries/AS400)
https://www.source-data.com/ibm-i-on-power-server/
2) IBM I (iSeries/AS400) Cloud Hosting
https://www.source-data.com/cloud-400/
3) IBM I (iSeries/AS400) Disaster Recovery Options
https://www.source-data.com/cloud400-disaster-recovery/
4) IBM I (iSeries/AS400) Version Upgrade
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