3 ms·

What are you licensing that is so expensive? The hardware itself can be purchased, right?

taylodl 6y ago
No. The hardware is leased - you can't buy an IBM mainframe. All the software is priced per MIP per CPU core for your installation - regardless of how much you actually use the software. For all intents and purposes that software is leased as well. There's also retroactive charges - if you bump of the capacity of your mainframe mid-cycle on your license then you have to retroactively pay for the upgrade. We had a situation where that happened with one of our vendors and somehow it got missed for a few years and we ended up owing millions of dollars. So imagine an environment where you can't buy your hardware, you can't buy your software, and when you've made an upgrade to your hardware your software gets even more expensive. That's a mainframe. Our mainframe, which is mostly used for customer billing (electrical utility billing is slightly complex due to all the different tariffs, localities and taxes), and customer relationship & service management, is costing us $15 million - $20 million per year. On the one hand you'd say holy smokes that's expensive! But on the other you could say that's only $3-$4 per customer per year. Thing is you could do the same amount of processing in AWS for under $250,000 per month or $3 million per year, making the mainframe at least 5-7 times more expensive than AWS.
- shrubble 6y ago
  Pretty sure that you can buy an IBM mainframe. I know individuals who own them. So how does saving $17 million per year justify spending $1 billion?
  - taylodl 6y ago
    It's the business risk of not being able to replace resources for a critical system and the fact that projects are exceedingly expensive and very slow because of dealing with an old spaghettilith (I just made that up!) architecture. Frankly, we need solutions to be delivered faster so we can "move at the speed of business" and this platform just isn't cutting it. Is that worth $1 billion? That's above my pay grade and I'm glad I don't have to make that decision. For the record, our CFO doesn't think so - at least not until he's closer to retirement so if he gets canned for it he'll be alright! He's in his mid 50's now so we may have to wait another five years!

No. The hardware is leased - you can't buy an IBM mainframe. All the software is priced per MIP per CPU core for your installation - regardless of how much you actually use the software. For all intents and purposes that software is leased as well. There's also retroactive charges - if you bump of the capacity of your mainframe mid-cycle on your license then you have to retroactively pay for the upgrade. We had a situation where that happened with one of our vendors and somehow it got missed for a few years and we ended up owing millions of dollars. So imagine an environment where you can't buy your hardware, you can't buy your software, and when you've made an upgrade to your hardware your software gets even more expensive. That's a mainframe. Our mainframe, which is mostly used for customer billing (electrical utility billing is slightly complex due to all the different tariffs, localities and taxes), and customer relationship & service management, is costing us $15 million - $20 million per year. On the one hand you'd say holy smokes that's expensive! But on the other you could say that's only $3-$4 per customer per year. Thing is you could do the same amount of processing in AWS for under $250,000 per month or $3 million per year, making the mainframe at least 5-7 times more expensive than AWS.

shrubble 6y ago
Pretty sure that you can buy an IBM mainframe. I know individuals who own them. So how does saving $17 million per year justify spending $1 billion?
- taylodl 6y ago
  It's the business risk of not being able to replace resources for a critical system and the fact that projects are exceedingly expensive and very slow because of dealing with an old spaghettilith (I just made that up!) architecture. Frankly, we need solutions to be delivered faster so we can "move at the speed of business" and this platform just isn't cutting it. Is that worth $1 billion? That's above my pay grade and I'm glad I don't have to make that decision. For the record, our CFO doesn't think so - at least not until he's closer to retirement so if he gets canned for it he'll be alright! He's in his mid 50's now so we may have to wait another five years!