Mainframe Transformation: 6 Risks & Rewards you NEED to Know

Mainframe Transformation is not a new concept it has been around in one form or another for years and the set of risks that drive organizations to modernize have also existed for years.  

The three most critical risks facing mainframe users are, and have been, Financial Risk, People Risk and Business Risk. But, while the fundamental risk shave been around as long as modernization, those risks are increasing dramatically while, at the same time, the rewards for modernization are also increasing.  

Today’s risk/reward ratio is significant enough to result in a real tipping point which is resulting in previously unseen levels of mainframe transformation.

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3 Risks of Mainframe Transformation

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1. People Risk

To paraphrase Mark Twain, reports of the death of COBOL have been greatly exaggerated. In fact, there are 220 billion lines of this 60-year-old language in use today including mission-critical applications across many industries.

95% of all ATM applications utilize COBOL, for example!  The big ‘but’ that goes along with the continued use of COBOL is the growing skills gap caused as COBOL experts are leaving the workforce in greater numbers than collective education and training programs are producing replacement COBOL developers.  

As this skills gap accelerates with the retirement of baby boomer COBOL developers, so do organizations’ people risk.

2. Financial Risk

Rapidly escalating costs are what constitute most of the Financial Risk that is associated with ongoing mainframe usage. For many organizations, mainframe maintenance costs are the fastest growing component of their IT spend.  

Or, the annual software and infrastructure fees to mainframe vendors can approach or exceed the billion-dollar level for the largest of mainframe users.  Reducing these costs and financial risks is the primary driver for modernization in many cases.

3. Business Risk

While many mainframe applications still provide excellent performance, security and reliability, they may also provide obstacles that prevent the business from adapting and innovating quickly enough. Monolithic mainframe applications are notoriously difficult to change – think of the interdependencies of a large application, the traditional and lengthy Waterfall approach to development and the onerous tasks of testing any changes or enhancements.  

Meanwhile, ‘born-in-the-cloud’ competitors are emerging in virtually every industry and disrupting those industries with their improved user experience, rapid release of enhancements and utilization of modern and advanced development capabilities.  Even industry leaders can become wannabes due to the constraints on their business that the mainframe imposes.

All of these risks have been around for as long as the mainframe itself has existed, but each one of them is growing more acute, as described above. Fortunately, the ‘reward’ side of the equation is also growing alongside the increased risk profile, so that mainframe customers can benefit more today from modernization than was ever possible in the past.

3 Rewards of Mainframe Transformation

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1. Financial Reward 

The cloud has changed the financial dynamic for organizations willing to embark on mainframe transformation. Instead of paying a mainframe supplier fixed service fees for the maximum amount of capacity a set of applications might require, these organizations can take full advantage of the pay-as-you-go pricing of the cloud model and pay only for the capacity used. We regularly see modernization efforts yielding 60-80% cost savings.

The lower TCOs from the cloud and many other aspects of modernization are dramatically improving the ROI for these efforts and are big parts of the dramatic increase in the number of these projects over the last 18 months.

2. People (Skills) Rewards

One of the modernization dilemmas is how to leverage both the existing investment into mainframe applications and also of modern languages and the current crop of developers. Replatforming approaches to modernization can accomplish just this: while keeping COBOL code largely intact, specific components of an application are changed and updated.

For example, this approach enables migration of that code to a modern IDE (Integrated Development Environment)like Visual Studio or Eclipse.  

As a result, remaining COBOL developers can still maintain their familiar environment while Java and C# developers work in their familiar environment, too. This is an example of how modernization effort can be part of a transition from the traditional mainframe to modern systems.  

These kinds of transitions are far less risky to the organization than the ultimate modernization approach, a total system rewrite, and they allow for better interplay between development teams that start out with very different backgrounds, training and approaches.  

And, these transitions are easier to accomplish today than previously because the strength and capabilities of the modernization toolset have evolved significantly. 

3. Business Rewards

We’ve discussed the business risks represented by monolithic mainframe applications. On the reward side, the possibilities and capabilities enabled by cloud technologies are exploding.  

Most development organizations today are striving to incorporate some variant of Agile development and to utilize DevOps best practices. The cloud has accelerated the rise of MicroServices and of powerful capabilities like Artificial Intelligence and Analytics.

Through modernization, mainframes that stood very separate from all of these advanced capabilities and workloads can now take advantage of them and all of the benefits they bring to the organization. 

The Financial, People and Business Risks of staying on the mainframe are pretty well understood by those associated with those systems – they are very hard to ignore! What a growing number of mainframe users are coming to realize is how dramatically the rewards of modernization are growing. With concurrently growing risk and reward, it is no surprise that mainframe transformation is increasingly viewed as a mandate.

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