A Better Way To Skin The IBM i Cloud Cat

June 25, 2018 Timothy Prickett Morgan

It may come as a surprise, but many IBM i resellers and distributors with aspirations of providing true cloud-style Power Systems iron running IBM i and its predecessor operating systems are just as disappointed in Big Blue’s pricing and packaging practices as customers themselves. More than a few IBM i customers, and indeed some OS/400 V5R3 and i5/OS V5R4 customers, sorely wish there was a way to buy capacity on Power Systems that looked and smelled and tasted more like what Amazon Web Services and a zillion other service providers offer for X86 iron running Windows Server or Linux.

Jim Kandrac, founder and president of UCG Technologies, thinks he has finally come up with a deal that customers will like and business partners will want to help peddle.

“If customers want utility pricing on the cloud, IBM has never come up with a program that makes financial sense for the business partner or the client,” explains Kandrac. “It makes financial sense for IBM, maybe. When you are told that you can only have one client per serial number on a machine, what good does that do you? If you have a P10-class machine with 100,000 CPWs of performance, it is reasonable to want to put ten customers on it with 10,000 CPWs each, but the pricing on the software doesn’t make sense. We came up with a better scenario.”

UCG is a reseller and could simply take a P05 class system that may cost on the order of $30,000 to $40,000 and that has a reasonable amount of memory and disk plus unlimited IBM i user licenses and gives access to it on a monthly basis at a set price under financing – something on the order of $3,500 per month. But the customer has to house the machine, maintain the machine, and probably in the long run will convert the three year lease into ownership to keep the box around for longer than three years. This is not cloud.

With the UCG IBM i Hosting deal, which offers a monthly price for a turnkey Power8 or Power9 system, Kandrac says he has “come up with a better way to skin the cat.” Under the IBM i Hosting offering, Kandrac doesn’t care if customers own or lease or finance the machine. UCG can provide 0 percent financing for 24 months or normal 36 month financing through IBM Global Financing – whatever it takes for customers to get possession of the machine and that converts it into a flat monthly fee. The value add that UCG brings to the table is that it will house the machine in one of its co-location datacenters in the United States or Canada, providing it with space in a rack and power, cooling, and networking. UCG will add in VAULT400 backups and disaster recovery to another datacenter, and include 40 hours of PTF update services per year on the box. The financing and co-lo services together come to $2,890 per month, with just under $1,000 of that being the machine and $1,900 of it being all of co-location and other value added services.

“The bottom line is that this deal saves customers somewhere around $500 to $700 per month compared to a straight leasing deal on a P10 box, and they own that machine at the end of three years and they can just pay Software Maintenance and co-lo fees after that,” says Kandrac. “And this is a much easier sell and a much better deal for us and for customers than trying to put ten customers on a P10 box. That is challenging to say the least.”

In the base deal for IBM i Hosting, the base machine is a Power8 system with four cores that has one core fired IBM running IBM i 7.3 and that is rated at 10,000 CPWs. It has 32 GB of main memory and eight 283 GB disk drives spinning at 15K RPM for a total of 2.2 TB of disk capacity.

You can do RAID 5 on the disks if you want, which knocks the capacity down a bit. The system also includes a 1 TB RDX drive for archiving and a four port Ethernet card running at 1 Gb/sec, and it costs $17,440. Add in IBM i license transfers, 24×7 Software Maintenance from IBM plus some UCG support services and the base system costs $31,735 with three years of coverage, which works out to $1,322 for a 24 month 0 percent financing or $960 for regular 36 month financing through IBM Global Financing. Adding all of those co-lo and management services from UCG on top of that brings the price up to $2,890 per month. This is a much better deal, to be sure, than spending $3,500 per month on a P10 box that is overkill and that does not have all of those additional services.

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