IBM’s shift to subscription model pricing for IBM Power10 is a departure from decades of the traditional model. It’s a big change, but with the right know-how and a trusted partner, you can use this transition to your advantage to save you money.
Like most other technology these days, IBM has switched to a tiered pricing structure that’s subscription-based instead of allowing users to purchase a perpetual license up front. It’s certainly different, and you’re probably wondering what impact it will have on your business.
But before you throw your hands up in frustration, it’s important to understand how subscription pricing works. Because if you want access to the most impressive and innovative features IBM Power Systems has to offer, embracing the change isn’t just ideal—it’s critical for your business’s growth.
What is IBM Power10?
IBM Power10 is the latest generation of IBM’s enterprise server technology. It boosts performance, scalability, and security while keeping the reliability you love about IBM Power. The system includes advanced security measures, such as memory encryption, to protect sensitive data.
The new Power 10 is ideal for modern workloads, including managing and deploying AI, analytics, and cloud computing. Technological progress marches ever onward.
Even if the amount of work required to transition feels daunting, it’s probably nothing new to you at this point either. IT and tech upgrades are inevitable, so let’s break down the financial implications to prepare you for the switch.
The subscription pricing model for IBM Power 10
You’ve grown accustomed to one way of spending on your IBM infrastructure over the decades, and now they’ve thrown a wrench in the whole thing.
How can you better understand and prepare for the effects on your bottom line? What implications does the subscription model have on your accounting?
Resistance is understandable; IBM license purchasing has been so predictable for so long. But once you understand IBM’s subscription pricing model—and how IBM’s conversion pricing makes the switch easier for existing customers like you—you’ll at least have a better idea of how to shift your expenses, your expectations, and your mindset.
Here’s how it all works.
The silver lining of the subscription model: conversion pricing
Big Blue is smoothing out this transition period by providing a discount for customers who switch from a perpetual license to a subscription.
This limited-time conversion pricing means you’re actually going to end up paying less for Power Systems than you do now, especially if you know how to maximize the savings.
For example, if you select an OS licensing subscription at $8,925, your conversion pricing will instead be $7,140. The savings are even bigger for the Unlimited Users tier, with conversion pricing going from $63,600 or $16,000 to $2,000—a much more manageable number!
By selecting a five-year plan, you’ll pay the conversion price for that entire five-year period. You may be tempted to test the waters with a shorter contract, but if you are willing to commit to the platform for another five years, you’ll see substantial savings over that entire period.
General pricing tiers
It’s time to start crunching some numbers. Here’s the annual pricing of subscription-based IBM Power10 according to IT Jungle (as of April 2024):
OS Licensing
- Non-expiring (no expiration for usage or support): $15,895
- Subscription: $8,925
Users (10s)
- Non-expiring: $3,180
- Subscription: $800
Unlimited Users
- Non-expiring: $63,600
- Subscription: $16,000
IBM’s website offers customized quotes, which is likely the easiest way to know exactly what your business will pay. Getting a quote is generally better than relying on average estimates.
Understanding subscription costs and their impact on your financials
IBM’s subscription costs are annual, but here’s a quick monthly estimation of each of these subscriptions to make things more clear:
- OS Licensing: $743.75
- Users (10s): $66.67
- Unlimited: $1,333.33
These are smaller numbers on paper, even when you look at the annual cost. But when does the running cost of licensing break even with the traditional IBM pricing model? Around the 4-year mark—past that, the subscription licensing becomes more expensive than if you were to buy a license outright.
From an accounting perspective, a switch to subscription pricing will shift your IBM-related IT expenses from CAPEX (capital expenditures) to OPEX (operational expenses). When you buy a license outright, it’s recorded as a capital expenditure, impacting your balance sheet and requiring depreciation over time. In contrast, subscription fees are classified as operational expenses, which can be fully deducted in the fiscal year they are incurred.
Subscription pricing often includes ongoing maintenance and support services for IBM Power itself. The IBM Software Maintenance Agreement (SWMA) or Hardware Maintenance Agreement (SHMA) gives you access to upgrades, technical support, and patch updates to keep security-related applications up-to-date.
Yet even though the baseline subscriptions help you maintain your IT systems, they don’t necessarily optimize them.
That’s where services from CloudFirst come in. A cloud-native approach to operations can further lower capital expenditures by moving IT costs—from compute power or storage—from CAPEX to OPEX. If you’re already on the cloud, switching to a subscription model will feel like old hat.
Switching IBM Power 10 and the subscription model: a step-by-step guide
It’s time to make the switch. You want the next-gen benefits of moving to Power10, so you’ll need to better understand the subscription pricing structure. Before you sign on the dotted line, here’s a quick step-by-step guide to succeeding with your new IBM Power10 upgrade and saving money in the process.
Assess your needs
Since there are many tiers, your first step should be to check your business needs and select the one that makes the most sense. This is also an excellent time to review how you’ll manage your IT budget after you switch to the IBM Power subscription model.
Consult with a trusted partner
Chat with a CloudFirst representative about your switch to Power10. We’ll help you decide which subscription tier is suitable for you, find ways to cut costs, and maximize the savings from the conversion discount.
Plan the transition
You’ll also need to develop a comprehensive transition plan. Be specific. Include timelines, resource use, and plans for any downtime.
Migrate data and set up infrastructure using cloud hosting services
Safely migrate your data to the new system. Establish infrastructure and manage the transition seamlessly using a cloud hosting service like CloudFirst, which ensures everything stays secure while you make the switch. Also look at the tools IBM offers to make the process even easier.
Train your team on the new Power10
Train your IT staff on the new system and its new features. To streamline the switch, this training can happen (or at least start) in tandem with data migration.
Review, adjust, and monitor performance
As you continue to use Power10, be realistic about your chosen subscription tier and identify features or functionalities that deliver value. Consider factors like workload demands or budget constraints. The performance should make sense for your environment, so don’t hesitate to reach out to CloudFirst if you have questions or need to make any adjustments.
IBM’s new subscription pricing option and the future of your business
IBM’s decision to change their pricing structure for Power10 might be a financial hurdle for some. But once you understand how it works and how you can save money in the process, it’s much easier to prepare your accounting team and your budget for the upcoming changes.
And with a better understanding of the implications, you can accept the change and acknowledge that the upgrade to Power10 is worth the momentary readjustments needed to bring your IT into the here and now.
Contact us today to learn how you can reduce the cost of your IBM Power Systems IT with our cloud hosting solutions.
