In the Wheelhouse: Money for Nothing

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A question for software companies that charge an unreasonable fee when you simply change your hardware: what the heck is wrong with you?


I have two new six-core IBM Power Systems S814 boxes on the way to my data center as I write this. These machines will replace our two existing six-core Power Systems 720s that are getting a little long in the tooth. We put them in place in 2010 and got a good four-plus years out of them. With all six cache batteries having been replaced and about six disk drives replaced, she's starting to show her age. Plus we're about ready to move onto a new vendor-supported ERP, replacing our homegrown systems we've built and customized ourselves for the last 40 years or so. Exciting times and a lot of hard work ahead.


As part of any box swap, you need to ensure that any and all existing software is properly licensed to the new system. We will have a serial number change and stay in the same P10 processor group.


Most vendors are really cool about it. They see no difference in workload because the processor tier, number of users, and active cores don't change. It's just a serial number difference. Many just zip you up a new key you need to load after you do the migration. It's simple, and it's fair.


Other vendors don't seem to operate under the guidelines of simple and fair. We have one third-party software vendor that thinks it's perfectly acceptable to charge a premium for a serial number change. This isn't a $199 "administration fee," which I'd grumble about a little but think it's somewhat reasonable. No. This charge is in the ballpark of $6,000!


That's moving from a P10 to another P10 with absolutely zero value-add from the vendor. And it's not like our maintenance has lapsed. All of our bills are paid. The vendor is not inconvenienced in any way whatsoever. But if we want to run that software on a new machine after we've shut down the old, then we've been asked to pay the bill. Thank goodness it's not a P40 processor tier. I could only imagine the cost that some of the larger IBM i customers have to pay to upgrade their machines if they use this vendor.


Over the years, I've spoken with other customers who have vendors that charge these fees when you change hardware. Some vendors charge you by the user count, regardless of your processor tier or cores in use. That's very fair.


Some vendors will actually try to ding you for the potential amount of processor cores you could use. For example, you get charged for the four physical cores in a box rather than the single core you have activated. If you upgrade to a six-core box, then not only do you pay the processor change cost, but you get charged up a notch because you have the ability to use those six cores. Yet the only reason you wanted to move up to the six-core model was due to disk or memory requirements.


In terms of per-core licensing, what I'd love to see is ISVs start to use Workload Groups for pricing their solutions on IBM i 7.1 and above. As per the DeveloperWorks wiki, "Workload groups provide the ability to restrict a workload to a specified maximum number of processor cores within the partition it is running in.


A workload is defined as a job, subsystem, or product running on the IBM i system. The user or system administrator can define a workload group, assigning a specified number of processing cores to that group. The workload group is then assigned to a job or subsystem. Once the assignment has been done, the workload is limited to the defined number of processing cores. The system enforces this processing core assignment, ensuring that a job or all the jobs running (and threads) under the subsystem are not allowed to run on more processing cores than have been designated. The general concept is if a workload is designated to use a single core, the workload will behave as if it is truly running on a single processor core system."


The concept of workload groups is very cool, but I digress from my original point about being charged unreasonable rates to get a license key when upgrading hardware.


So why do some vendors do it?


First, I think it's simply because they can. The average customer pays the penalty and moves on. How much time will each small customer spend kicking and screaming about a $6,000 charge? Most won't. Only some will. In the end, there may be an agreement on a lower charge for those who do attempt to negotiate but ultimately the vendor will recoup, and I'm just spitballing here, probably 95% of their potential revenue based on hardware change fees. And since we're being totally honest here, I've sent voicemails and emails all the way up to the executive level of this particular vendor asking for it to account for itself with no response as of yet...only a ransom note. Sorry, I mean a "software transfer form." There just isn't any reason other than "we're going to do what we want." This is the only logical conclusion to explain why I haven't yet gotten any response that I would deem respectable.


Second, I think it's indicative of a product that's just treading water in terms of development. They're probably not spending any resources on making that product better. The hardware change fees augment any yearly support fees in order to pay for a team to manage the thing while it's on life support. What does that tell you? It tells me that maybe it's time to look for a new vendor because the software package has been stabilized. The software and customers are getting bare bones attention.


When you purchase a product, always ask about these charges that could hit you come upgrade time. If you don't, your upgrade cost could be more expensive than you think. If you're in a situation like mine, where you've already got a piece of software that's been in your shop twice as long as you have and are now stuck with a hardware change bill, you're going to have to either eat the cost and understand that it's part of the total cost of ownership of that solution or find a new solution. Depending on how deep the software runs in your business, migrating to a new solution may be far more costly than paying the new hardware fee. But it certainly doesn't hurt to play the "I'll take my business elsewhere" card and at least understand what your options are.


By the way, and do I hope someone who works for that vendor is reading this...


If the support costs over three to five years were increased to include the equivalent value of the hardware migration charge, then at least the customers are under the illusion that they're not being gouged; they know the charges up front.


I suppose I could name the vendor in question but fortunately I took business ethics classes in college. Perhaps that's why I believe charging customers extra for absolutely nothing in return is just a ghastly, dishonest business practice.


Who knows? Maybe vendors who charge a ransom for a hardware migration don't see it as unethical.


And I bet those vendors didn't take those kinds of classes in college. Shame on you.