IBM i Licensing Explained
IBM i licensing is tied to the processor tier of the underlying IBM Power hardware, not just to core count or user seats. Understanding software tiers, program license terms, and how licensing carries across a hardware upgrade is essential before budgeting a Power Systems project.
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A two-voice summary of software tiers, upgrade costs, legacy user limits, and the licensing checks to make before buying new IBM Power hardware.
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Speaker 1: Why does everyone seem so stressed out when they talk about IBM i licensing?
Speaker 2: Well, according to this analysis by AS400 IBM Systems, it's because it doesn't work like normal software. You aren't just paying per seat or a flat fee. It's actually tied to the processor capacity of the hardware itself.
Speaker 1: So the hardware and the software are basically locked together? How do they even measure that?
Speaker 2: They use these software tiers, like P05, P10, or P20. It's based on something called a CPW rating, which is basically the system's maximum power level. If you pick a beefier machine, your license cost jumps with it.
Speaker 1: That sounds like a trap if you decide to upgrade. If I move from a Power10 to a Power11, does the license just move with me?
Speaker 2: Not necessarily. If your new configuration crosses into a higher tier, like moving from P10 up to P20, your costs can spike. You have to check if your current entitlement matches the new hardware's tier before you sign anything.
Speaker 1: And what about the actual people using it? I remember hearing about user limits back in the day.
Speaker 2: Right, the old 5250 interactive limits. Most modern setups have moved toward a capacity model, but if you're on a legacy contract, those old per-user rules might still apply. You really have to dig into your specific program license terms.
Speaker 1: Okay, so it's less about counting heads and more about counting the power under the hood.
IBM i licensing does not work like most enterprise software, where cost scales with seats or a flat server fee. It is tied to the processor capacity of the specific IBM Power hardware the OS runs on, which means a hardware sizing decision and a licensing decision are really the same decision. This trips up organizations evaluating an upgrade for the first time in years, since the licensing math looks different than what they remember from their last purchase.
Processor-Based Software Tiers
IBM groups Power Systems hardware into software tiers, commonly referenced as P05, P10, P20, P30, P40, and P50, based on the system's maximum CPW rating. IBM i base OS licensing, and much of the IBM i software ecosystem including many third-party ISV products, is priced against this tier rather than against raw core count. See IBM Power sizing basics for how tier selection interacts with hardware sizing.
Program License Terms
IBM i software, including the base operating system and licensed program products (LPPs) such as additional language compilers or specific feature sets, is delivered under IBM's standard Program License Terms. Some IBM i features and LPPs are included with the base OS at no additional charge, while others are separately orderable. Understanding which features are already entitled under a current license, versus which require a separate order, is a common gap in IBM i licensing reviews.
User-Based Entitlements
Beyond the processor tier, some IBM i software, particularly interactive and 5250-related licensing historically, has involved user or connection-based entitlements. Modern IBM i licensing has moved away from strict per-user interactive limits toward capacity-based models, but organizations with long-running contracts should verify their specific entitlement terms rather than assume current licensing rules apply retroactively to legacy agreements.
Licensing and Hardware Upgrades
Moving IBM i to new Power Systems hardware, such as a Power9 or Power10 to Power11 migration, generally requires evaluating whether the new hardware's software tier matches, exceeds, or falls below the current license entitlement. A processor upgrade that crosses into a higher tier (for example, moving from a P10 to a P20 configuration) increases IBM i licensing cost, sometimes significantly, independent of the hardware price itself. This is why tier boundaries are a standard checkpoint in any Power Systems upgrade proposal, not an afterthought.