System i User-Based Pricing: Part Deux
According to sources within IBM, the company quietly made a critical change last week to the user-based pricing policy for its System i Express models. Before I describe that change, allow me to provide some background information that will make it clear why Big Blue decided to act.
When IBM announced the Express Models 515 and 525 last month, most customers welcomed their user-based prices as a big step in the right direction. However, as quotes for the systems started landing on the desks of CIOs, some customers have found that they could be worse off if they buy System i capacity by the user. These unpleasant discoveries have been most prevalent among companies that support large numbers of users accessing green screen applications on smaller Model 8xx systems. In many cases, these users log on infrequently or work in shifts. Under IBM’s “named user” policy for user-based pricing, however, each user is counted regardless of usage patterns.
As a result of this policy, some companies that could meet their performance needs with a Model 515 have been unable to buy one because they have more than 40 users (the maximum allowed on the system). Some of these companies have also found that their large user bases make an upgrade to a Model 525 more expensive than an upgrade to a Model 520. This is because the per user charges for the Model 525 inflate its price versus the Model 520. Faced with this dilemma and with the impending withdrawal of the Model 520, some customers have been complaining that IBM has put them in a very difficult position.
In response to these complaints, IBM decided last week to switch from charging for each named user to charging for each concurrent user. Under the new policy, customers should determine the maximum number of concurrent users that their systems support and purchase licenses for that number of users. Other than this change, all prices and terms for the Models 515 and 525 remain the same.
By switching to peak concurrent users, IBM has significantly changed the cost of System i capacity for many customers. Since the Model 515 now supports up to 40 concurrent rather than named users, many customers that would have had to buy a Model 525 will now qualify for the smaller, less expensive system. Those who still need a Model 525 will often get lower quotes because they can pay for fewer users. As a result, most of the companies who found the user-based models unappealing will now see them in a very different light.
While the change in terms is great news for customers, it will make life more difficult for IBM. Under “named user” pricing models, it is relatively easy to determine if customers are complying with user limits. All one has to do is count the number of user profiles. By contrast, determining peak concurrent users is an exercise that the system’s monitoring tools cannot support as easily. This could tempt some customers and IBM Business Partners to try and “game” the new pricing system. Such companies should be aware, however, that IBM reserves the right to audit anyone for compliance. I believe that the IT vendor will increase the number of audits it performs under the new pricing regime.
Great News for WDSc Users!
If you’ve been reading the developer discussion boards lately, you may have heard that IBM has made a crucial decision about how it will package future releases of WebSphere Development Studio Client (WDSc) 7.0. As I reported in an article in March, there was a possibility that IBM would limit its Screen Designer for Remote System Explorer (RSE) to the Advanced Edition of WDSc. As a result, developers in need of an actively supported 5250 screen design tool would be forced to pay $3,480 per seat for WDSc Advanced Edition.
As Joe Pluta reported in his excellent article on the new Screen Designer, IBM’s WDSc team has heard the outcry from developers and responded. The team has pledged that when Screen Designer for RSE becomes generally available, it will be included in the entry-level tools that come with the System i, including WDSc Standard Edition. That eliminates what could have become one of the biggest hurdles to acceptance of WDSc by System i developers. I still hope that IBM will go beyond its current pledge to include Application Diagram Component in WDSc Standard Edition. However, getting the Screen Designer is a huge leap forward.
IBM’s latest moves on user-based pricing and the WDSc Screen Designer show that the computer giant does listen to its customers and can make quick changes based on what it hears. However, has IBM done enough to satisfy you? Please click on the “discuss this article” link below and let me know what you think. Whatever your opinion may be, I’ll take it back to the IBMers who have a say in what the company does next on these fronts.
Lee Kroon is a Senior Industry Analyst for Andrews Consulting Group, a firm that helps mid-sized companies manage business transformation through technology. You can reach him at
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