For many IT managers, “How much will it cost to run IBM i in the cloud?” is one of the first—and most difficult—questions to answer.
Cloud providers may advertise an attractive monthly infrastructure price, but that number rarely represents the total cost of running an IBM i application in the cloud.
The actual cost can include:
- IBM i software licensing
- Compute and processor capacity
- Storage and backups
- Data transfer and egress
- High availability and disaster recovery
- Migration and modernization
- IT staffing and management
- Security and compliance
- Contract terms and future growth
Understanding these costs before signing a cloud agreement is essential. A migration that looks inexpensive based on a monthly hosting quote can become significantly more expensive once the entire environment is operational.
What Does It Cost to Run IBM i in the Cloud?
There is no single answer to the question of IBM i cloud pricing. Costs depend on the size of the IBM i environment, processor requirements, storage, licensing, application architecture, availability requirements, data movement, and the level of management and support required.
The best way to evaluate the investment is to calculate the total cost of ownership (TCO) rather than focusing only on the monthly cloud infrastructure price.
Here are the primary cost considerations.
1. IBM i Licensing and Compute
Two of the largest costs are typically IBM i software licensing and compute capacity.
IBM has been transitioning portions of its IBM i licensing model from non-expiring licenses to subscription-term licensing. Beginning May 7, 2024, new IBM i entitlements for P05 and P10 tier Power systems became available as subscription-term offerings. Existing non-expiring licenses were not simply eliminated, but organizations should account for the applicable licensing model when evaluating a cloud migration.
Subscription licensing can provide flexibility, but it changes the long-term cost calculation. When comparing options, consider:
- IBM i licensing or subscription costs
- Software maintenance
- Processor tier and capacity
- Memory requirements
- Current versus peak CPU utilization
- Expected growth
- Production and DR capacity
Compute is another area where lift-and-shift migrations can become unnecessarily expensive. Simply reproducing the existing on-premises configuration in the cloud may mean paying continuously for capacity that isn’t consistently being used.
The goal shouldn’t be to duplicate your existing hardware in the cloud. It should be to design an environment sized appropriately for your actual workload.
2. Storage, Backup and Data Transfer
Storage is another significant component of IBM i cloud costs.
An IBM i environment may require storage for:
- Production databases
- Journal receivers
- Save files
- Backups
- Development and test environments
- Disaster recovery
- Long-term archives
Cloud providers may price storage separately from compute, with additional charges associated with backup services, snapshots, data retrieval, or other services.
Data transfer—often called egress—can also affect the final bill.
IBM i applications commonly exchange information with:
- On-premises systems
- SaaS applications
- EDI providers
- Reporting platforms
- Data warehouses
- APIs
- Remote users
Depending on the cloud provider and architecture, moving data out of the cloud can result in additional charges.
Before migrating, map the systems that communicate with IBM i and estimate how much data moves between them. High-volume EDI, batch processing, integrations, and analytics can make data transfer an important part of the overall TCO.
3. High Availability and Disaster Recovery
Cloud infrastructure can provide significant advantages for IBM i disaster recovery (DR), but DR needs to be included in the overall cost analysis.
A cloud-based DR strategy can eliminate the need to purchase and maintain a second physical data center with duplicate hardware. However, the savings depend on how the environment is designed.
Consider the costs of:
- Replication
- Backup storage
- Standby compute
- Network connectivity
- Recovery software
- DR testing
- Managed DR services
A critical question is whether the DR environment takes advantage of cloud economics or simply operates as a second production environment 24/7.
The appropriate solution also depends on your recovery time objective (RTO) and recovery point objective (RPO). A lower-cost DR solution isn’t necessarily the right solution if it cannot meet your business requirements.
4. Migration and IBM i Modernization
The cost of moving IBM i to the cloud doesn’t begin with the first cloud invoice.
IBM i cloud migration costs can include:
- Planning and architecture
- Application assessment
- Data migration
- Network configuration
- Security configuration
- Testing
- Cutover planning
- Post-migration support
Organizations may also choose to modernize applications as part of the migration.
For example, an IBM i modernization project might involve:
- Modernizing RPG applications
- Adding APIs
- Connecting IBM i applications to cloud services
- Improving application interfaces
- Automating manual processes
- Integrating analytics
Not every IBM i application needs to be modernized before moving to the cloud. However, organizations should recognize that simply moving an application doesn’t automatically make it cloud-native or ensure that the organization receives the full benefits of cloud infrastructure.
5. Staffing, Security and Compliance
Moving IBM i to the cloud doesn’t eliminate the need for skilled IT professionals. Instead, responsibilities often shift.
Organizations may still need expertise in:
- IBM i administration
- Security
- Performance management
- Backup and recovery
- Cloud infrastructure
- Networking
- Identity and access management
- Monitoring
Some organizations manage these responsibilities internally, while others use a managed services provider.
Security and compliance also need to be included in the IBM i total cost of ownership. Hybrid environments can require additional tools, monitoring, security controls, compliance documentation, and staff time.
The cost isn’t necessarily about adding more security products. It’s about understanding what resources are required to securely manage and monitor the entire environment.
6. Contract Terms and Future Growth
Finally, look beyond the initial cloud quote.
A low monthly price doesn’t necessarily mean a low five-year cost. Review:
- Contract length
- Annual price increases
- Minimum capacity commitments
- Storage growth
- Data transfer charges
- Backup and recovery pricing
- Managed service fees
- Support levels
- Migration fees
- Exit or termination costs
Ask the provider to separate infrastructure, licensing, storage, networking, backup, management, and DR costs so you can see exactly what you’re paying for.
How to Calculate Your IBM i Cloud TCO
The most useful way to compare cloud and on-premises environments is to build a five- to seven-year total cost of ownership model.
At a minimum, include:
Initial costs
- Licensing
- Cloud setup
- Migration services
- Application changes
- Network and security configuration
- Testing
Recurring costs
- IBM i licensing or subscriptions
- Compute
- Storage
- Backup
- Data transfer
- Network connectivity
- Managed services
- Security and monitoring
- Disaster recovery
- IT staffing
Future costs
- Storage and workload growth
- Additional licensing
- Application modernization
- Contract price increases
- Additional integrations
- Potential cloud exit or migration costs
Looking at the entire lifecycle provides a much more accurate picture than comparing monthly hosting prices.
The Bottom Line: Look Beyond the Monthly Cloud Price
The cost of running IBM i in the cloud is about much more than the monthly infrastructure charge.
A realistic IBM i cloud TCO analysis should account for:
- Licensing and compute
- Storage, backup and data transfer
- High availability and disaster recovery
- Migration and modernization
- Staffing, security and compliance
- Contract terms and future growth
Cloud can provide flexibility, scalability, reduced infrastructure management, and new options for business continuity. But those benefits only make financial sense when the environment is properly designed and the full cost of ownership is understood.
Before signing an IBM i cloud agreement, ask the provider to show you the numbers behind each of these categories—not just the advertised monthly hosting price.
Arbor Solutions helps organizations evaluate cloud solutions, plan migrations, and determine the infrastructure approach that fits their technical and business requirements. If you’re considering moving your IBM i environment to the cloud, contact Arbor Solutions to discuss your current environment, requirements, and options.