Another year, another round of increasing cloud and technology costs.
Cloud deployments can help businesses achieve many goals. But as the last few years have shown, putting the clamps on technology spend is one area where the medium might fall short. Earlier this month, IBM price increases were announced across many of Big Blue’s software, cloud, appliance, and service offerings, including:
A 6% global increase on Passport Advantage services
A 3% global increase on cloud costs, with several large-market countries scheduled for even steeper increases
A 6% increase on many Z-mainframe software offerings
A 25-26% increase on certain Object Storage prices in certain locales
These global changes will come alongside targeted per-region rates in which customers in some markets will pay even higher percentages for their software and cloud services. A handful of IBM price increases, specifically a 1.3% to 5.4% hike on certain currencies, are set to take effect in October of this year, with the rest taking hold on January 1, 2024.
IBM price increases: Trends and B2B software outlook
IBM isn’t the only major vendor to implement price increases to counteract the effects of an uncertain economy, and you can’t fault a company for looking out for its own pocketbook first. For example, Microsoft recently announced similar measures across the entirety of its cloud portfolio, citing a need to bring global prices closer to parity with a hard-hit U.S. dollar .
But regardless of how the prices went up, you can bet buyers are looking for ways to keep their tech spending from going in the same direction.
Attitudes are changing in tech-run businesses, including those historically willing to overspend to stay ahead of the curve. Although Gartner notes that 2023 B2B software spending allocations have seen an approximate 4.3% boost globally, the same research points out that most companies are diverting funds to innovations such as generative AI, which tend to make creative new use of existing IT infrastructure instead of forcing major new investments.
Pair that up with the growing business trend of moving away from the cloud and back to preexisting on-premises infrastructure – also known as “cloud repatriation” or “reverse cloud migration,” – and you see a trend on the horizon that cannot be ignored. Companies are putting more focus on making better use of what they have, in some part because they have fuller control over the pricing and operational circumstances of that software.
Regardless of how the prices went up, you can bet buyers are looking for ways to keep their tech spending from going in the same direction.
What can you do about an IBM cost increase?
First, keep in mind that in most cases, your costs might not need to go up, and you might be able to stay with the software you currently have. For Passport Advantage (PPA) products on open systems, a third-party software maintenance (TPSM) provider can provide effective IBM® software maintenance services that support and secure legacy systems, often at up to 50% less than the OEM’s going rate.
In other cases, the issue might not be the pending IBM cost increase as much as what might come next, including:
Being unable to keep a system that you’re now paying more to support running exactly the way you want under current service standards.
Pending price hikes or License Information changes on a system that will come into PPA renewal soon.
Service issues you aren’t fully sure the OEM will be able to provide resolution for, even if you do renew the agreement.
All these problems can add layers of complication as your company considers its reaction to rising cloud and software maintenance costs.
The problem, as the Gartner research shows, is that most companies aren’t quite as sure what their next steps look like, even if they are certain they want to move away from the vendor.
Whether a company wants to roll back from public cloud to on-premises solutions it has kept around or is weighing how to avoid the downsides of the cloud model, there are plenty of situations in which sticking with the software you’ve already paid for is the smarter move.
Third-party software maintenance: A tool to counteract IBM cost hikes
In the Gartner 2022 Market Guide to Independent Third-Party Support for IBM, Microsoft, Oracle and SAP Software, Gartner recommends reviewing your entitlements, contract terms, and other individualized factors six to nine months before a contract expires. By looping a TPSM into the process, you can often quickly circumvent IBM price increases and other vendor-friendly arrangements that impact your bottom line, innovation budget, and ability to plan your IT roadmap.
Companies spend as much as 90% of their annual IT budget simply maintaining, securing, and achieving ongoing support for the software they’ve already purchased. A competent TPSM provider can put an immediate and significant dent in the amount those same businesses pay to maintain some of their software, which sets the stage for the enhancements in performance, security, and support TPSM providers can offer.
When these services prevent a company from paying for unnecessary software updates and extended service contracts, the savings are already significant before the cost increase. Every other point the company saves is free for reinvestment in innovation or whatever else leadership might desire.
When you’re dealing with such a small portion of the budget left to innovate and make progress, even the smallest savings add up – fast. If you’re unhappy with current IBM price increases or have concerns over where cloud and software pricing could take your company next, it might be time to explore a model that keeps your crucial software running its best, for as long as you want, without the financial uncertainty attached.