IBM i Development Is Getting A Fresche Start With Some Ground-Breaking Subscriptions

November 27, 2023 Timothy Prickett Morgan

Cash flows into and out of a business, and capital expenditures are always interrupting those flows. They are yanked out of the revenue streams and depreciated over long periods of time, meant to reflect the value these expenditures deliver. In most cases in the IBM midrange, the machines sit around longer than the depreciation schedule the accountants use, and that is perceived as a kind of free money when it is really a kind of mounting technical debt as machinery and the software that runs upon it fall behind both technically and economically.

Eventually, the technical debt bill always comes due and it always has to be paid, one way or another.

This is why the resurgence in subscription pricing for hardware and software, which is how things were done many decades ago when corporate computing was young, is an important development in the IBM i base. And Fresche Solutions, arguably the biggest application development and modernization tool maker in the IBM i market, is going all in on subscription pricing because it is good for everyone in the long run.

By the end of the year, says Christine McDowell, vice president of sales operations at Fresche, the entire box of IBM i development, modernization, and security tools it sells will be offered through subscriptions. Unlike IBM, which is shifting completely and solely to subscription pricing for the IBM i stack starting in March 2024 and is even offering on-premises hardware under a subscription, Fresche is not going to force customers to move away from the traditional acquisition method of buying a perpetual licensing plus paying annual maintenance on its software. But, it is betting that customers will want to move to subscriptions for a number of reasons, not the least of which is it is a lot more palatable to pay an annual subscription fee than it is to argue for a much bigger ticket perpetual license plus an annual maintenance fee.

We touched on this topic a bit back in August when we had a chat with Joe Zarrehparvar, president and chief executive officer at Fresche, who had been hired a few months earlier to foment change and to take the company up to the next level. And since that time, McDowell and her team have been hard at work repackaging Fresche’s software, tech support, and services into subscription bundles that provide more value than its prior way of engaging with customers at the same time lowering the barrier to entry by shifting from the capital expenses budget to the operational budget at its current and future customers.

“We have committed to making our commercial software accessible through subscription and bringing the same kind of simplified approach to all of our flagship products,” McDowell tells The Four Hundred. “We start by getting rid of the things that are really irritating for customers, such as unforeseen costs for training, license transfer fees, and so on. We want people to be able to download the software, get a trial of the software up and running either on premises or in the cloud, and get moving on their proofs of concept quickly. We have created PoC training sessions for those who want to do it themselves and new service bundles for clients that need a little help. Our training is available to all customers who have a subscription, and they can do it at their own pace.”

But again, it is worth stressing, that Fresche is not going subscription only, but subscription or perpetual. “We’re not forcing customers to go to subscriptions,” says McDowell. “Because the reality of our market is that not everyone wants this right now. But many do, and we think many more will. This is the direction where everybody in the IT market is going. But we’re a customer-first company. We’re all about the client and as long as they want to buy perpetual software, we are going to offer that model.”

This shift to subscription pricing is not just coming from within Fresche, which obviously wants to have predictable revenue streams as well as to increase the attach rate of the various services it offers with its software tools. Customers want subscriptions as well because they want more predictable IT expenses, not lumpy bumpy costs where every four or five or six years there is this big system upgrade and everything has to be refreshed and there is a commensurate big bill to along with it.

At the moment, Fresche is doing annual subscriptions for its IBM i software, but McDowell says that the company is looking at ways it can get the term granularity down to the monthly period that a lot of companies are interested in. (The big clouds might charge by the hour for raw compute capacity, but they end up billing monthly.) We think that companies will want this, but it is hard to go to that model instantly for complex accounting reasons. You can book an annual contract and amortize it over twelve months, but it is harder to bill it each month over twelve months.

Thus far, Fresche has five products that have subscription pricing alternatives. Some of them are based on machine serial number and some are based on logical partition, depending on the situation. The five include the Presto tool for green screen modernization, the WebSmart tool for new IBM i web and mobile development, the Fresche Security Suite of security tools (formerly known as TG Security Suite), the Formtastic tool for spool file modernization and distribution, and the X-Analysis tool for application analysis and management. And unlike with many software companies, whether you are talking about perpetual or subscription pricing, the subscription prices for these four tools are publicly available. The pricing is monthly, but the billing is annually at the moment, as we explained above.

With Presto, Fresche is taking a tiered approach because not every team is the same size or uses LPARs exactly the same way. For small shops with up to 25 users, Presto costs $600 per month; for a medium company, with between 26 and 50 users, it is $950 per month; for a larger company with between 51 and 100 users, it is $1,650 per month; and for enterprise teams with an unlimited number of users on a single partition it is $2,500 per month. Fresche is offering custom pricing for unlimited users running Presto across unlimited LPARs. You can see Presto in action here.
With Fresche Security Suite, a subscription license costs $833 per month per LPAR (that is $9,996 for the year), and it includes everything in the former TG Security Suite for multifactor authentication, encryption, security, and auditing. This pricing is specifically designed to shake up the IBM i security market and to make it so no IBM i shop has any excuse for not having security software on their system. View this securtity workshop to learn more.
With Formtastic, the basic package costs $800 per month per LPAR (which works out to $9,600 per year) and there is another $1,000 annual charge (which works out to $83 per month) additional charge for the corporate tax filing pack add-on. For another $1,800, Formtastic customers can buy a spool file development and modernization services bundle to help them revamp their corporate documents. See Formtastic in action here.
With X-Analysis, a subscription costs $1,250 per month per system ($15,000 per year), and the license has all of the features of X-Analysis Advisor and covers an unlimited number of developers and users. View this technical demo of X-Anlaysis to learn more.

When you add up all of the costs for the subscription and compare it to the costs of perpetual licenses, software maintenance, training, and other services, the new subscription prices are anywhere from 30 percent to 60 percent lower than the full price of similar stuff added to perpetual licenses.

Fresche clearly wants to make it up in volume. Which is a refreshing thing to see in the IBM i market – that’s for sure.

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