IBM alters price hikes: 'Communication has been appalling. I have customers already deciding what IBM software will be off their shopping lists.'

Big Blue has revised its impending price hikes, again

Last month, CRN reported that customers in the UK, as well Canada, Europe, Japan, Morocco and South Africa, had been told by Big Blue that they faced software rises rises of 24 per cent.

However, this week, IBM has made changes to the announcement whereby the rise in some SaaS products will be smaller than initially announced.

The price increase in pound sterling is now set at 15 per cent.

This marks the second change in policy around price hikes by IBM since September. (At the time, CRN understands that the UK price rise had been set at eight per cent).

However, serious concerns remain over the timing of the rapidly approaching change on all Passport Advantage Perpetual, Subscription License, Monthly License, Fixed Term Licenses, Appliances, and SaaS Products.

All changes will come into effect on 1 January 2023.

One senior IBM Practice lead for a UK consulting services firm Livingstone Group, Niall Eddery, encapsulated the mood of many firms calling the level of communication from IBM "appalling".

"Yes, any reduction in price increases is to be welcomed. However, the biggest problem with this is timing.

"We're pretty close to year-end, and we've ultimately got a week and a half of working time for most people between now and when these prices take place," he said.

Eddery questioned why IBM has waited until mid-December to warn the market of these changes when many companies plan for budgets for the following financial year in September.

He also raised the issue of companies now having a window of less than two weeks to negotiate and agree to new ELAs before the year is out.

"This is incredibly frustrating for IBM customers trying to plan and assess end of year deals or those trying to guess some sort of price protection longer term than just the end of the year.

"They just haven't had the time. And for many customers, IBM won't even have the time to do deals internally.

"For me the worst part of all of this has been the timing."

CRN has heard from other advisory licensing executives such as Rich Gibbons, ITAM services director at independent asset management analyst ITAM Review ,who has said that Big Blue's decision could backfire and send customers elsewhere.

Eddery's view is that customers are already planning to constrict IBM spend next year.

"The earlier 24 per cent price hike that was announced was very high, and not justified by the currency rates, market conditions or inflation, I think. And obviously, that has generated quite a lot of noise within partners and customer," he said.

"I certainly have seen some communications from my customers around effectively reducing their IBM estates to hold their costs constant."

The adage may have been ‘Nobody gets fired for buying IBM'.

However, Eddery believes that IBM's decisions this quarter are eroding this reputation for reliability.

"IBM used to be a very stable vendor. Price increases always came out in September, and it was all fairly standard.

"This year, there's been a couple of things that have surprised many of us in the way they've handled contracts as well as price increases.

"It's an odd choice by them. It's getting harder to predict them."

IBM did not respond when contacted for comment.