Forrester Consulting Weighs Costs, Benefits of IBM i
June 7, 2021 Alex Woodie
IBM i supporters often cite the low cost of ownership, integrate nature, and self-management features of the platform as key advantages over competing systems. To try to put some actual data behind those assertions, IBM commissioned Forrester Consulting, which recently presented its findings in a report titled “The Total Economic Impact of IBM i.”
To get an understanding of the IBM i server’s unique financial characteristics, Forrester Consulting, which is an offshoot of the main tech analyst firm called Forrester Research based in Cambridge, Massachusetts, interviewed four current users of the system. It collected data about the relative costs and benefits of using IBM i versus the computer systems that came before it at each of those companies, as well as data about the flexibility and risks inherent in those systems. It then combined the data into a single composite view. Forrester Consulting refers to this as its Total Economic Impact, or TEI, methodology.
The study participants included a European Union-based transportation and logistics management company with 150,000 full-time equivalent employees (FTEs) and $24 billion in annual revenue; a US-based manufacturer/retailer with 5,000 FTEs and revenues of $2 billion per year; a county government in the US with 1,400 FTEs and $500 million in annual revenue; and a UK-based manufacturer with 100 FTEs and $20 million in annual revenue.
Before adopting the IBM i platform, the organizations struggled with their computer systems, and experienced operations disruptions due to unplanned downtime, Forrester Consulting wrote in its report. They had to employ additional workers to get the various siloed systems to communicate with each other. And their employees spent thousands of hours handling manual tasks, such as invoicing, backing up data, and imaging documents.
Forrester Consulting gathered data pertaining to these variables from the IBM i customers, and then constructed a composite company as part of its TEI framework. This composite company is a U.S.-based manufacturer that sells its products direct to consumers, and also manages its own customer support and service/warranty business. It has $100 million in annual sales, two factories, two distribution centers, 15 retail stores (split between the US and EU), an online storefront, and 5 million customers, according to the report.
As you might expect, this composite company runs an integrated ERP system, as well as other department applications. The applications run on an imaginary eight-core Power Systems S924, which carries the non-imaginary price tag of about $74,000, along with license fees of $295,000 for the system and application software and a monthly maintenance fee of $168. All told, the costs over three years for the imaginary company add up to $348,000, Forrester Consulting says in its report.
Now for the benefits. Because of the integrated nature of IBM i and its relative stability, some costs that companies would incur on other platforms are less on IBM i. According to Forrester Consulting, reduced system downtime leads to a savings of about $530,000, reduced technical support costs save the composite company $255,000, and improved productivity of employees adds about $158,000 to the IBM i side of the virtual ledger. These figures are totals over a three-year timespan.
All told, when you add up the savings, the composite IBM i shop experienced benefits of $943,000 compared to costs of $348,000 over three years, leading to a net present value (NPV) of $595,000. The return on investment (ROI), meanwhile, comes out to 171 percent, with a payback period of eight months (see figure 1).
“IBM i is an environment that integrates an operating system with the database, virtualization layer, application server, and transactional system,” the Forrester Consulting authors wrote in the executive summary of the report. “The reliability and security of this environment makes it possible for businesses to reduce system downtime and admin support costs, as well as improve frontline task workers’ productivity.”
In addition to the quantitative analysis of the composite customer using the TEI approach (which Forrester Consulting spells out in great detail at the end of the 18-page report), the consulting group also provided some qualitative statements from the IT managers and executives that they interviewed at the actual IBM i shops. If you’ve been around the platform for any length of time, these will likely strike a familiar chord.
“I would say the biggest advantage of IBM i is basically that it does not crash,” said a principal systems specialist with the EU-based logistics firm. “That is the biggest real ability that business colleagues on other platforms appreciate the most. What we’ve seen is that these systems are very stable. For critical operations which need very high availability, we go with IBM i.”
“If we can do it on this system, we need to do it on this system and not look to others, period,” said a vice president of operations for a retail company. “And there is not much. I mean we do imaging on this system. We do print serving on this system.”
“With the database being integrated into the operating system, it allows the admin to manage the database with reorgs and table size,” said the IT engineering supervisor with the U.S.-based manufacturer/retailer. “The admin really works with the developers to develop a strategy on how things are maintained with data. On the other systems’ side, it seems like you are buying licenses individually. It starts to get out of hand and hard to manage in those environments where licensing is all over the place and you are charged in this and that. In our company, we do not have DBAs so, the admin manages the database.”
This isn’t the first time that IBM has attempted to quantify the benefits of IBM i. Every few years, IBM commissions reports like this. But this one is interesting because it’s the first time that it’s used Forrester Consulting and its innovative TEI framework, which helps to bring clarity to the calculation of technological benefits, which is not always an easy thing to do.
You can access the Forrester Consulting report at www.ibm.com/downloads/cas/1ZLRK39P.