Are IBM Price Increases Creating Shock Waves In Your Budget?

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.

What can you do about an IBM cost increase?

First, keep in mind that in many cases, you may not need to accept a cost increase just to keep using the software you already own. For Passport Advantage (PPA) products on open systems, a third-party software maintenance (TPSM) provider can deliver effective IBM® support services that secure and sustain legacy systems—without forcing you into costly upgrades or vendor-driven price escalations.

In other cases, the issue may not be the immediate IBM cost increase as much as what comes next, including:

• Being unable to run a system the way you want under current service standards, despite paying more to support it.
• Facing pending price hikes or License Information changes on a system approaching PPA renewal.
• Experiencing service gaps you’re not confident the OEM will resolve, even if you renew the agreement.

All these factors can complicate your decision-making as you weigh the impact of rising cloud and software maintenance costs.

The challenge, as Gartner research points out, is that many companies are unsure of their next steps—even when they know they want to move away from the vendor. Whether an organization is reconsidering a move to public cloud, returning workloads to on-premises, or simply trying to avoid unnecessary lock-ins, there are many scenarios where continuing to run the software you’ve already invested in is the smarter, more strategic option.

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 factors six to nine months before a contract expires. Involving a TPSM provider early in this process helps enterprises sidestep vendor-driven pricing changes and regain budget predictability, while ensuring the long-term stability of mission-critical systems.

Enterprises often find that the majority of their IT budgets go toward simply maintaining, securing, and supporting existing software. By working with a capable TPSM provider, businesses can redirect more of that spend toward innovation and transformation—while still getting the performance, security, and lifecycle support they require.

When these services prevent unnecessary updates, forced migrations, and extended contracts, the value is immediate. The ability to free resources for innovation or other strategic priorities is even more important in an environment where every IT investment is scrutinised.

If you’re dissatisfied with IBM price increases or worried about where cloud and software pricing could take your organisation next, it may be time to explore a model that keeps your crucial software running optimally, for as long as you need, without the financial uncertainty attached.

Keep cost increases and support setbacks at bay with the independent IBM® software experts. Reach out today.