Technology

Mainframe Deficiencies Burden Big Companies

It would cost the typical large company many millions to fully modernize its mainframe applications.
David McCannMarch 14, 2014

The business world’s burgeoning zeal for the cloud remains the hottest technology story of the day. And why not? There’s lots of news: new vendors, new services, new software, newfound uses for existing cloud software, new ways to integrate cloud applications.

Mainframes aren’t as sexy. In fact, most people without a direct view into IT departments don’t hear much talk about them anymore.

Drive Business Strategy and Growth

Drive Business Strategy and Growth

Learn how NetSuite Financial Management allows you to quickly and easily model what-if scenarios and generate reports.

But their installed footprint is massive, and they can’t be unplugged just because they’re full of old programs that leave a lot of potential functionality on the table. Often, upgrading the programs doesn’t get assigned high priority, for two reasons: because they still work, even if they don’t perform optimally; and because of IT’s expanding to-do list. Over time, though, such complacence can cause trouble.

IBM mainframe System 360That’s plenty relevant to plenty of companies, especially big ones. A July 2013 article on technology site ZDNet noted that 96 of the world’s top 100 banks, 71 percent of global Fortune 500 companies and 9 of the 10 largest global life and health insurance providers run IBM’s System z mainframes. Most credit-card transactions, stock trades, money transfers, manufacturing processes and ERP systems depend on mainframes.

How much would it cost to get these machines to where they could take full advantage of today’s technology? For most large companies, the answer is many millions of dollars.

Some research released on March 4 speaks to that point, even if it may be of the “consider-the-source” type. It was conducted by research firm Vanson Bourne under commission from Micro Focus, which helps companies upgrade their mainframes. But the data seems to be directionally plausible.

At 590 companies with more than 500 employees across nine countries, the average “IT debt” is $11 million, according to survey respondents, who were those companies’ chief information officers and IT directors. That was 29 percent higher than the $8.5 million reported in a similar May 2012 research report. Of course, in general, the larger the company, the larger the tab.

(The research used a Gartner definition of IT debt: “the cost of clearing the backlog of maintenance that would be required to bring the corporate applications portfolio to a fully supported current release state.”)

What’s more, the IT leaders say the problem will only get worse. They expect IT debt will increase by 9 percent more over the next five years.

Why? For one reason, the technology leaders on average expected their organizations to continue relying on mainframe applications for 10 more years (and 32 percent thought it would be longer than that), yet 81 percent of them still found it difficult to justify the expense of maintaining some core applications. As a result, 51 percent admitted that their companies were exposed to compliance and risk issues.

Also, 85 percent of respondents said it’s difficult to find staff or new recruits with mainframe-application skills. At the same time, 14 percent of staff members currently responsible for this task will likely retire in the next five year.

And IT leaders blamed academia. While 90 percent of them said mainframe programming languages should be included in computer-science curricula, the reality is that only 27 percent of universities around the globe do so, according to Micro Focus.

Micro Focus’ take suggests that company decision-makers outside IT, like CFOs, may be partly responsible for mainframe-app deficiencies. “Many non-IT people think IT innovation only means brand-new technology, rather than improving existing, critical applications,” Micro Focus said in a release. “The IT leadership challenge is to find smart ways to blend innovation projects while protecting and evolving their critical systems.”

Photo: Flickr user Erik Pitti, CC BY 2.0