Cloud Migration: Strong ROI for State & Local Governments

Cloud Migration for Government Agencies

Government agencies are under increasing pressure to contain costs and stretch the value of every dollar they spend. At the same time, many are seeking to expand the scope of services they offer to constituents by introducing technological innovations to improve people’s lives and make it easier to interact with government. This has been especially true in the era of COVID-19, where safety concerns have prompted agencies to limit face-to-face interaction. Remote services have taken on a more important role than ever before, and digital technologies have played a key role in that evolution.

Efforts to innovate more and spend less are often constrained, though, by legacy mainframe technology. For years, those systems have enabled governments to deliver mission-critical services to their citizens, but the cost/benefit ratio is becoming less and less attractive, especially in light of new options that have emerged in recent years.

Legacy mainframes are increasingly expensive to operate in many scenarios, and they typically offer poor integration to external applications and platforms. As cloud technologies have matured, many government agencies have concluded that the time is right to modernize their legacy systems.

There are three primary factors driving this trend:

1. ‍The ROI case is stronger than ever. The cost of doing nothing is growing larger with each passing year. IT leaders know that they need to make the move eventually, so many are choosing to begin reaping the financial benefits of cloud migration sooner rather than later. ‍
2. The talent pool of mainframe experts is diminishing. This problem will likely become even more acute over the next few years.‍
3. Public expectations of technology solutions have shifted. Citizens have come to expect interactive websites, online payments and other self-service capabilities, mobile apps, advanced analytics, and more. Legacy systems simply don’t lend themselves as easily to those kinds of innovations.

Let’s look at each of these factors in further detail.

Modernization Reduces Costs

Although a vast amount of information is still processed on mainframe systems, that comes at a cost. In a 2018 survey by the National Association of State Technology Directors, respondents cited increasing operating costs as the number one reason they were considering moving those workloads to another platform.

In many states, agencies run mainframe workloads on a shared services model in which multiple government agencies run their applications on a common platform and are charged for some portion of total costs based on usage. As the number of agencies using a shared mainframe system shrinks, the portion of costs incurred by each remaining agency grows.

At the same time, the cost/benefit ratio of running those workloads in the cloud is looking better and better every day. Competition among the hyper scalers (primarily AWS, Microsoft Azure, and Google Cloud Platform) is driving costs down, while the technology itself keeps improving. Disaster recovery and failover capabilities, managed services, and easier integration with modern data platforms are just a few examples.

The Shrinking Mainframe Talent Pool

It’s no secret that the vast majority of mainframe experts are reaching retirement age. The problem of a diminishing talent pool was only exacerbated by the COVID-19 pandemic, which prompted a new wave of retirements. That could not have happened at a worse time, – as many states were struggling to adjust to new business requirements surrounding unemployment insurance. New Jersey Governor Phil Murphy put out a call for volunteers with COBOL skills. Leaders in Kansas, Connecticut, and other states reported bottlenecks as well, stemming from an acute shortage of qualified mainframe talent.

Although it’s clear that COBOL will be going away any time soon, – there doesn’t appear to be a wave of younger workers stepping in to fill the gap. IT leaders in state and local governments are keenly aware that the clock is ticking, – and that if modernization efforts aren’t initiated well in advance, the talent shortage will eventually re-emerge as a particularly sharp pain point.

The Mandate for Digital Transformation

The world is increasingly going digital. In the realm of private enterprise, customers have come to expect seamless interactions with the companies with whom they do business. They expect to have immediate online access to information 24x7, self-service capabilities and online payments, chatbots, mobile apps, and more. That means integrating business-critical mainframe systems with a myriad of cloud connected technologies, most of which speak a different language.

For state and local government agencies, that presents an opportunity to increase the value they deliver to their citizens; but it also creates cost savings opportunities. Automated processes and self-service capabilities enable agencies to do more with less. That kind of technology results in a win-win situation.

Analytics present another compelling opportunity to create new value. Modern data platforms support the storage of increasingly large amounts of information, at extraordinarily low costs, with powerful analytical capabilities that were unimaginable just a few years ago. Governments are using that kind of information in a myriad of different ways, –from understanding traffic patterns to identifying underserved populations and developing facilities and capabilities to meet those needs.

Modernization Paves the Way

These three trends, – that is, a compelling ROI case, a diminishing pool of mainframe talent, and the mandate for digital transformation, – have prompted a wave of state and local governments to begin their journey toward mainframe modernization, shifting those workloads to the cloud and preparing their organizations to more effectively serve the needs of their citizens.

Jefferson County, Alabama, embarked on that path in 2019. They engaged Astadia to work with them on the project, which was completed ten months ahead of schedule and resulted in a reduction of 88.9% in annual operating costs. That’s within the range of typical savings we see with our clients; most achieve annual cost savings between 70% and 90%.

There’s more to mainframe modernization than simply lifting and shifting workloads to the cloud, though. We work with our clients to build agile DevOps pipelines, incorporating tools and processes that help IT teams to work smarter, not harder.

The critical first step in the modernization process is to understand your existing mainframe environment and develop a realistic plan that meets your unique needs. Contact us to learn how you can achieve that with Astadia's comprehensive mainframe assessment service.