Strategies to implement to protect your budget
How we can protect our budgets from the expected price increases from 2024 for several products in IBM's software and cloud services portfolio.
All organizations that have invested in IBM products and cloud services over the past few years to keep abreast of the latest trends in security, cloud, AIOps and automation will have to allocate more budget to meet their operational needs, starting from January 1st2024.
In fact, there will be an upward harmonization of prices worldwide in several products of the software and cloud services portfolio. Let’s briefly summarize them:
Regarding cloud services, the rental of architectures and infrastructure could have major budget consequences. This includes PaaS services such as Kubernetes, RedHatOpenShift, cloud database offers but also to servers and instances on the IaaS front
We have seen that international database costs will remain constant for U.S. customers but will penalize customers in other regions: London and European customers, for example, will see a 5.6 percent increase in their IaaS spending.
Of even greater concern is the 25-26% cost increase for IBM's unstructured data storage offers: many organizations derive business insights from their processing, and storage is essential for their retention.
To give a concrete idea of the increases, take Red Hat Ansible Software's announcement letter of Oct. 16th as a reference. This is a suite of software tools that enables infrastructure as code.
In the letter, IBM gives a table where the increases in percentage terms are visible: Ansible Automation has an immediate price increase of 35% for the 1-year subscription option and 185% for the 3-year subscription.
Similar increases could also affect companies' rate of innovation, as companies may be forced to reduce research and development due to limited budgets.The application of the increases in relation to existing contracts will not be uniform: for some categories of IT products and services it will be IBM that will apply them unilaterally, in other cases you will have to consult the specific contract clauses stipulated from time to time or contact your IBM Partner.
Given the wide range of IT software and services affected by the increases and the fact that the application of the increases derives from several factors (primarily the region in which the company is located), the first step is to re-evaluate one's IBM technology landscape , its usage patterns , and the relevant contractual framework.
This allows us to ask some important questions:
Do I exploit the available resources, features, functionality, and support to their full potential? If the answer is no and I am unable to guarantee the return on investment, I may consider strategies to optimize usage (e.g., check subcapacity deployments in ILMT to license consumption in an optimized manner) or seek alternative solutions from other vendors consistent with my needs.
If I do not have knowledge of them, I may have last-minute surprises and find myself having to justify drastic transitions to the new pricing structure. Understanding contracts allows you to plan for renewals well in advance and enter into direct negotiations with IBM to ensure more favorable contract terms, including by applying for price protection.
In fact, IBM offers several contracts, including ESSO, ELA, UELA and Subscription and Cloud Agreement. Each of them responds to specific business needs, and knowing what they provide helps organizations make informed decisions in line with their operational and financial goals.
Since increases will also affect IBM support resources and options, including training programs, online forums and dedicated support teams, you may also consider using third-party maintenance providers for less critical products which do not require timely updates and innovations that only the IBM vendor can offer.
Third-party support is generally more flexible and cost - effective, but you should always evaluate the original software license terms to be aware of any legal and operational risks.
With increased costs also come more strict compliance verification measures: we discussed this in our last webinar (in italian language only).
According to the latest changes to the Passport Advantage Agreement, IBM reserves the right to request distribution data once a year, with 30 days' notice, and customers will have to provide this data in a format approved by IBM.
If such declaration reveals a shortfall, the Excess Use Resolution as specified in Section 10.3 of the agreement must be met. In addition to the purchase of excess licenses, there is also the purchase of S&S services and support and additional charges.
Thus, the final count would also be enriched by the percentage cost increases announced by IBM, so it is essential to have control of your environments and current license fees in order to be able to remediate, BEFORE IBM's request, any overages.
At WEGG we have decades of experience with IBM licensing and contracts so we can help you identify the best solutions for your organization to reduce the impact of upcoming price increases.
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