Why Mainframe Modernization Has Become So Urgent

Today, mainframe computers still play an essential role in the daily operations of most of the world's largest enterprises. Sure, many organizations would like to move off the mainframe – and many have started to do so with the cloud – but the complexities, costs and talent challenges involved in moving off of a mainframe can make it an arduous and slow process. If a company has a mainframe modernization strategy at all, it typically spans a period of about five to eight years. Today, new pressures are forcing organizations to accelerate that schedule by at least 50%.

So, why is mainframe modernization so urgent? The answer comes down to money. Previously, mainframe costs were, while large, relatively stable. Today, the market has consolidated down to just a handful of providers, and these providers are squeezing their clients with huge price increases. In many ways, enterprise clients are being held hostage to software price increases.

"In my previous IT shops, I used to forget we had a mainframe as the costs were reasonable and it never went down. Today, the headwinds from mainframes alone are a budgetary call out."
- John Repko, former Global CIO at AIG, Johnson Controls and Tyco

But the reason these providers can get away with this misbehavior is not just their market grip – it’s also the deep complexity of mainframe work. There are five main reasons this situation is so complex:

1. The workloads are business-critical: Mainframes perform some of the most essential tasks of an enterprise, including complex financial management, retail inventory management, claims management and customer transaction systems that require high processing and transactional capabilities. There’s no quick migration or replacement of these systems – and most businesses can’t afford the tremendous investment it would take to recode and re-platform them. Plus, they can’t afford the risk of these systems being anything but bulletproof.
2. There’s a real, ongoing talent problem: Mapping and recoding mainframe apps to run in the cloud is complex – and it requires documentation that in many cases doesn’t exist. The talent that built the original systems is often no longer in the workforce, and the skills required are specific and scarce, leaving companies in a talent bind that is difficult to fill.  
3. Security issues: Mainframes are one of the most secure platforms in the world. They have very strong control capabilities for access management and data encryption and are the first platform to provide enterprise-level Quantum-resilient encryption capabilities. Obtaining the same level of protections on other platforms requires an extensive understanding of individual controls at the data element level; this is extremely difficult to do and not directly portable to open platforms unless organizations have fully adopted zero trust architectures throughout the enterprise. 
4. Spiraling costs: In addition to dramatically rising costs for the mainframe itself, providers are also tacking on additional software as part of renewal deals. For an increasing number of enterprises, software that runs on the mainframe is the leading cost issue in their P&L – and is the cause of some of the most contentious provider negotiations we’ve seen. Organizations are paying as much as $200 million for a set of tools that do mainframe monitoring and batch processing. And the mainframe software is often part of an ELA that includes both mainframe and non-mainframe SKUs. Divesting of the ELA SKUs requires removal of 100% of the SKUs, not just the mainframe-related SKUs. This is a difficult and lengthy process.
5. Lack of leverage: When an enterprise contracts with a provider that claims to have a “kill switch” on its workloads, it faces the possibility of being hours away from having its business shut down. Enterprises are in a bind, overpaying with no clear alternative.

5 Ways Companies Can Address Mainframe Modernization

In this scenario, CIOs are feeling overwhelmed. It’s too complex to handle on their own – and the rules of the game are changing under their feet. ISG’s approach to mainframe modernization has five steps:

1. Assess and document the current mainframe environment, including the system software, business applications and operation functions by business criticality, quantity and ongoing operational costs by application/business function. Understand the dependencies and relationships between applications and document any support or documentation gaps. This includes fully documenting the mainframe app code functionality and mapping it to potential modern cloud solutions and/or alternative lower-cost mainframe hosting providers.
2. Build a strategy with an accelerated roadmap – condense a potential 10-year plan into five years – with clear steps for responsibly moving off the mainframe, replacing high-priced system software, or transforming applications in a way that allows you to stay on the mainframe. The strategy needs to find the right balance between migration and redesign on the same platform.
3. Integrate security measures throughout.
4. Source a systems integrator to migrate what you decide to migrate; keep continuity as a top goal.
5. Negotiate with software providers and/or transform existing service provider relationships so the terms are sustainable.

ISG understands the current mainframe environment and the provider ecosystem better than anyone. We can help you reclaim the leverage you need to negotiate the terms that work for your organization and build a plan for the future. Contact us to get started.

This article was written with contributions from John Repko, former Global CIO at AIG, Johnson Controls and Tyco