management: The Second Hand Mainframe Market
It may come as a surprise, but when you need another mainframe, you don't
have to buy a new one. And you don't have to buy from IBM. You don't even have
to use IBM for mainframe hardware support.
For most mainframe customers, buying a mainframe is like buying a car
when you can only buy from one new car dealer. You phone up IBM,
you order your new mainframe, and it is delivered a few weeks later. But
like cars, buying a new model isn't your only option.
Second-hand, refurbished, used, or pre-owned. Second-hand mainframes have many
names. But in essence, they are mainframes that have been used by another owner,
then refurbished and re-sold. Today there is a world wide market for second-hand
mainframe parts and equipment, and many vendors who sell it.
Australian based HAL Data Services was established in 1993 as such a second-hand
mainframe trader. According to HAL Data Services, they will attempt to source
any mainframe hardware: from mainframes to disk subsystems and 3745 communications
controllers. All second-hand mainframe hardware is fully refurbished, and delivered
to the customer's location. HAL also arrange shipping and customs clearances.
Independent vendors such as HAL Data Services aren't the only second-hand mainframe
suppliers. IBM itself sells second-hand equipment through IBM Global Financing.
According to Matthew Stace of IBM Global Financing, IBM has the world's largest
global inventory of second-hand mainframe equipment. This equipment, known as
IBM Certified Pre-owned equipment, can be on a customer's floor within four
weeks if in stock. IBM customers can approach IBM Global Financing directly,
or their IBM Client Executive.
Reasons for Second-Hand Equipment
According to HAL Data Services, second-hand mainframe equipment can be up to
90% cheaper than new equipment. On its website, IBM advertise second-hand z10
EC mainframes from US$390 per MIPS. This alone sounds like a convincing argument.
However older mainframe processors suffer higher software licensing costs. For
most mainframe customers, the savings just aren't there for mainframe processors,
and new processors still win the day. According to an Arcati survey in 2011,
only 22% of respondents were running a pre-z9 processor.
However there are still other reasons to consider second-hand equipment. Some
mainframe users are stuck with old applications or systems that cannot run on
more modern processors or equipment. HAL Data Services report that they've recently
sold two IBM 9672 G5 processors mainframes that are 13 years old.
Second-hand equipment is also a viable option when software licensing costs
are not an issue, such as disk and tape subsystems. Processors required only
for a short period of time, or for a disaster recovery site are other potential
candidates. Even hardware to upgrade existing mainframe subsystems, like an
additional OSA card, can be satisfied from second-hand vendors.
Because of software licensing trends and other factors, the second-hand mainframe
market has shrunk over the past few years. From early peaks of 70-80%, mainframe
hardware today makes up only 5% of HAL Data Service's revenues. Other revenues
are from UNIX, Microsoft and networking hardware. HAL also offer hardware leasing
services, and can dispose of unneeded mainframe hardware.
Second-Hand Equipment Support
Mainframe equipment, even older mainframe equipment, has built a reputation
on reliability. One reason for this is the high quality servicing of mainframe
equipment. New mainframe equipment usually comes with a period of free service
from the vendor.
Second-hand IBM equipment can also be serviced by IBM even if purchased
from another vendor. According to HAL Data Services, their hardware can be supplied
with an IBM Maintenance Service Qualification, or MSQ. This is a certification
supplied by qualified IBM hardware engineers after inspecting IBM hardware.
It is required before IBM will agree to a service agreement. IBM can also supply
an MSQ if required.
However an MSQ is not needed if using an independent company such as Australia
and New-Zealand based Interactive to service your mainframe hardware. Interactive
provide hardware servicing and support for most IBM, Sun midrange/mainframe,
and HP midrange systems. They can also support Oracle/StorageTek equipment.
According to Interactive, they provide equivalent servicing to IBM at a lower
price. A specialist engineer will respond to a call within 10 minutes by phone,
and be onsite within two hours for any major city in Australia. They use genuine
IBM parts when servicing IBM equipment, and keep a large number of spare parts
in the same city as supported hardware.
A major reason for using such an independent servicing company is to service
older equipment no longer supported by their vendors. Until 18 months ago, Interactive
supported an ageing IBM System/36 processor.
Second-hand mainframe equipment is always refurbished before being sent to
a customer site. According to Matthew Stace, IBM Certified Pre-owned equipment
uses intelligence from IBM's global maintenance records to replace any superceded
parts. All hardware is brought up to current firmware levels, and tested using
the same test cells and programs used for new hardware. IBM Certified Pre-owned
equipment comes with at least one year of IBM hardware maintenance.
For most mainframe users, keeping up to date with new IBM mainframe processors
will always be the preferred option, if only to save money. However in some
situations, second-hand mainframe equipment can be a viable option to provide
stable, reliable hardware at a lower cost. Investigating alternative ways to
support your hardware equipment may also improve the bottom line.