IBM on EC2

Last night (4-23), I saw that Amazon is now offering IBM applications by the hour. I thought “Cool!” Then I took a look at the pricing for these things. This pricing doesn’t take effect if you already own IBM licenses for the products and just want to host on EC2. If you own licenses, IBM has a table up to show you how to convert from Processor Value Units (PVUs) to EC2. These prices are for preconfigured Amazon Machine Instances (AMIs) with the IBM software ready to rock-no extra salesmen need to get involved.

All that said, I have no idea how much a PVU costs for an application, but my guess is it costs “a lot”. A project I was on in 2007 required an IBM C Compiler to run on Z/OS (it was needed to interpret SQL statements into C programs that could run as stored procedures on DB2-how this even made sense any longer in 2007 is beyond me). IIRC, the cost there was over $18,000/year (note-this number is from memory and is likely low). I would guess that the services IBM is offering are more expensive. Looking at the charts and factoring out the cost for just renting an AMI by the hour, it appears that a PVU is worth about ~$0.004/hour for most products (discounting the base cost of an AMI and using the simple math of the High CPU Medium Instance that is 100 PVUs). The hourly PVU cost is a 5-15 times higher for Content Management Server ($0.021) and a WebSphere + Content Management Server Combo (~$0.06/PVU).

The numbers above are approximate and were done on a piece of paper so I could get a feel for costs. Before you make any decisions, make sure to do your homework. I am curious if the pricing differences seem about right for IBM products. I have nothing against their pricing model-they do great work for companies that consume software but where having the latest software and tools isn’t seen by management as a competitive advantage.

Finally, a note about Processor Value Units for those who have not worked with IBM packages in the past: a Processor Value Unit (PVU) is IBM’s way to work around per CPU and per user licensing. CPU manufacturers are busy adding cores and speeding up their chips. While this goes on, IBM looks at these new chips and states how much workload the CPU can handle in units called PVUs. When you buy a product such as DB2 and you need to allow 100 users access to the product, IBM can know how many PVUs you need for that many users. It’s sales team then makes sure you have the right hardware for this new workload with your current workload, and sends you a bill. Because IBM’s sales model is high touch, the PVU is one tool among many that enables their sales people to make sure the hardware and software needs are correctly matched. (Feel free to correct me if I’m mistaken-but this is how things appear after reading the literature on IBM’s site.) I could not find a standard price for a PVU (but I attempted to derive one). Again, because IBM is high touch, my guess is that the price of a PVU is negotiable depending on a number of factors including:

  • Size of account
  • If the account represents a conversion to IBM (competitive pricing)
  • Gut feel from the sales team

Understand that a high touch sales model allows both parties to come out ahead. This sales practice involves a lot of unpaid research and preparation by the sales team and support staff in an effort to match customer needs with what the sales organization can provide. This sales practice also minimizes the amount of money left “on the table” because the sales team gains a lot of inside knowledge about the client’s needs and wants.

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