How Big Blue Stacks Up IBM i On Premises And On Cloud

June 24, 2019 Timothy Prickett Morgan

Here’s the $64,000 question: How much more does a slice of the IBM Cloud running IBM i cost compared to buying an on-premises machine with the same rough amount of capacity and installing IBM i on it and putting it into production? The answer to that question is: That all depends. But in general, as is the case with all infrastructures available on premises and on the cloud, the cloud is always more expensive.

This is not a surprise if you think about it for a moment. By using cloudy infrastructure, you are offloading the hassle of maintaining hardware and upgrading software to the cloud provider, which is not an insubstantial cost at most IBM i shops. Many programmers do double duty as system administrators, but that also means they are really only doing half duty as a programmer, which represents another opportunity cost that is generally not factored into comparisons. That includes the comparison that Steve Sibley, vice president and offering manager for the Cognitive Systems division at IBM, ginned up to get us thinking about how IBM thinks the disparity between on premises and cloud pricing works for AIX and by extension IBM i.

As you know, IBM revealed its plans for IBM i and AIX on its own public cloud, called the Power Systems Virtual Server on IBM Cloud, back in February at its annual Think conference. Last week, IBM unveiled pricing for these IBM i and AIX slices, which we told you all about and which we are still ruminating upon. As we suspect you are as well. This week, we want to give you some more food for thought and then we will get into analyzing the prices and performance a bit more and try to give you some guidance on how to approach your potential spending on the IBM Cloud.

The example that Sibley sent was based on an AIX configuration, but we can tweak it a little bit to do a reasonable IBM i comparison based on what we know about IBM i pricing on premises and in the cloud. Take a look:

The system on the IBM i cloud is a two-socket Power S922 that has a total of 20 cores and 384 GB of main memory, and only 15 of those cores and 320 GB of that capacity is available after the PowerVM hypervisor and the Virtual I/O Server (VIOS) systems software for virtualizing I/O and storage in Power-based systems is added on top of it. At list price, running AIX and with no Tier 1 flash storage or Tier 3 disk storage on it at, this virtual system on the IBM Cloud costs $5,755 per month at list price, which works out to $69,060 per year and $207,180 over three years. That three-year term is the typical time that a system lease is done, which is significant, and Sibley says that the crossover point – where renting on the cloud costs about the same as owning – is two years. Again: for this particular system, price point, and performance objective. That caveat is very important.

Now, if you went out and bought a Power S922 with 20 cores and 384 GB of main memory, with no storage, and presumably the same overhead for PowerVM and VIOS, it would cost $55,408 to buy the base hardware and AIX operating system, plus another $5,300 for Software Maintenance on AIX, another $2,000 for hardware maintenance, and another $15,000 for floorspace, electricity, cooling, administration costs, and other facilities costs that are bundled into the cloud setup. If you do the math over three years, the on premises costs for the AIX system comes to $122,308. That works out to be 1.7X more expensive to rent the machine on the IBM Cloud than to buy it and install it on premises.

That might sound terrible, but depending on the configuration, it can cost 2X, 4X, or even 9X more to rent capacity on the Amazon Web Services cloud than it does to buy it, when all of the factors are weighed in. (We will get to detailed comparisons in a future story.)

We can basically ignore the AIX component of these prices. At $29 per month, or $1,044 over the three years, it is virtually non-existent. In the P10 software tier that the IBM i Cloud puts the baby slice in, it is not negligible, costing $1,000 per month to rent and $14,995 to license, not counting the user fees at $250 a pop for an on premises license. Remember that IBM i includes a relational database and an application development stack, which is why it costs so much more.

So, if you look at the same exact IBM Cloud slice running IBM i, it costs $6,726 per month, which is $80,712 per year and also $242,136 over three years. To buy that Power S922 and put IBM i on it, the initial first year is more expensive at $69,359, but the total over three years – using the same administrative and operational costs as well as the same hardware maintenance but IBM i Software maintenance costs – yields a price to own of $130,019. That is a ratio of 1.86X more for the cloud than on premises. Again, this is in the normal ballpark of pricing disparity between owned systems and rented cloudy capacity out there on the other public clouds. The gap is not as high as we have seen it on hosted systems with the IBM i stack. And the pricing on the P20 tier is roughly the same for the IBM i stack rented as it is owned with perpetual licenses. It is a little cheaper to buy, but only marginally so – $65,300 to buy and maintain with some users and $72,000 to rent.

We presume, in all of this, that IBM is not charging the $250 per user fee for IBM i, because it is not in its price list. But if it does, that just makes the gap smaller.

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