Maximize the Business Value of Mainframe App Modernization: A Guide to Uncovering ROI Potential
- Sharon Glenn
- Dec 20, 2023
- 6 min read
Mainframe systems have provided robust computing power and have been the backbone of critical industries since the 1960s.
Digital transformation is driving the shift to the cloud. However, many companies still rely on mainframe systems. By modernizing mainframe applications and offloading some processes to the cloud, the return on investment of modernization can be greater than ripping and replacing already-paid-for mainframes.
Let’s look at who is using mainframe systems, why, and the benefits of mainframe application modernization. Then, we’ll cover sourcing mainframe engineers as the critical challenge of retaining and modernizing mainframes and, thus, why hiring CRSS could be your mission-critical mainframe solution.
Mainframe is Here to Stay - Here’s Why
Some might think that cloud computing, virtualization, and distributed systems would have made mainframes defunct by now. Instead, mainframes continue to be the workhorse of industries like finance and banking and are proven reliable and secure, with substantial processing power.
Deloitte declares that mainframe modernization “hits its stride” as businesses seek ways to extend the functionality of mainframe systems and integrate them with emerging technologies.
Which industries still use mainframes?
In 2022, it was estimated that 70% of Fortune 500 companies still used mainframe systems. Mainframes are the backbone of financial systems, storing consumer data and powering transactions; 44 of the top 50 banks use IBM Z mainframes.
It’s not just the financial sector that relies on mainframes. The insurance industry, global governments, utilities, and the healthcare and transportation sectors run much of their operations with these machines. Even 23 of the 25 largest retailers in the US were still using mainframes just a few years ago.
Why are mainframes still popular?
The resilience of mainframe systems is a testament to the benefits of this “big iron,” which still hosts much of the world’s mission-critical applications. Let’s briefly overview the advantages of mainframes before considering the future of these technology stalwarts.
Reliability, Downtime Aversion, and Security
Mainframe computers can cope with many situations, including magnitude 8.0 earthquakes. They offer unrivaled uptime and fault tolerance and support complex encryption, access controls, and auditing capabilities, which makes them especially suited for sensitive data and government and finance applications. Visa uses mainframe systems to process every transaction, and it hasn’t once had a failure in 20 years.
Power, Speed, and Scalability
It’s estimated that mainframes process 90% of all credit card transactions and handle 30 billion daily transactions. They did hold over 80% of all business data, but as we move to a data, cloud, and AI-driven technology stack, this statistic is likely to be somewhat in decline. Regardless, mainframes have historically delivered high performance under massive workloads, and they are built to house and process large volumes of data.
Legacy Application Support - Continuing Compatibility
There are still a substantial number of organizations relying on critical legacy applications. Mainframe systems are essential to run these applications because they cannot be moved to the cloud or because refactoring these applications is too cost-prohibitive. The risk of breaking system dependencies may be too high. As mainframe infrastructure is already in place, it makes sense for these organizations to leverage their prior investment through modernization.
Mainframes for Big Data, AI, and ML
The immense capability of mainframes to handle large volumes of data makes these machines attractive as a solution to power big data analytics. Modernized mainframe systems could be the resilient and reliable answer to house massive data sets for analytics, artificial intelligence (AI), and machine learning (ML) models. An Allied Market Research report found the mainframe market is expanding, partly because of Internet of Things (IoT) systems that produce amounts of data cost-prohibitive for the cloud.
A survey by Forrester Consulting for Deloitte revealed that 74% of leaders with authority or influence over mainframe strategy saw mainframes as a long-term strategy. As a result, most are upgrading their mainframe environments despite the challenge of finding the right staff and skills to do so.
Hybrid Cloud Adoption Lowers Costs
Moving some applications to the cloud and adopting a hybrid or containerized approach can enable mainframe-committed organizations to become more agile but continue to rely on the security and stability of on-premise mainframe systems. IBM states that a hybrid cloud approach using IBM Z mainframes can return more than 2.5x the value of utilizing the cloud alone.
Mainframe legacy application modernization combined with cloud agility can be much more cost-effective than a complete migration, rebuild, or rip-and-replace strategy whilst also allowing organizations to embrace new methodologies such as DevOps or AIOps and emerging technologies.
According to SHARE, mainframes only account for 6.2% of IT spending but run 68% of production workloads. Single mainframe investments can cost between $250,000 and $4 million. Retiring this capital would be a significant write-off. Moreover, rewriting the millions of lines of COBOL code that power Fortune 500 companies on mainframes would be incredibly difficult and expensive.
The Forrester/Deloitte report further discovered that 40% of leaders voted mainframes as “mature technology that provides good value.” with less than 5% believing that mainframes should be retired. The report describes mainframes as the “linchpin” to the hybrid cloud and explains that leaders seek external sources of mainframe skills to “fill critical gaps.”
CRSS mainframe expertise can help fill your critical maintenance or modernization gap.
The success of a hybrid cloud approach relies on the modernization of existing legacy mainframes and applications to ensure seamless future compatibility and optimized performance. Modernizing legacy applications fuels business growth. From Deloitte’s Insights. 70% of mainframe decision-makers expect mainframe computing performance to grow.
Further Benefits of Mainframe Application Modernization
Mainframe application modernization may migrate some systems and improve others with consideration for usability, code, cost, performance, and maintainability.
Upgrading and adapting has many benefits, including lower capital investment and greater ROI, versus retiring already-paid-for technology infrastructure.
Realignment with Business Goals
Digital transformation, including modernization, is an opportunity to analyze existing technology and workflows to realign them with today’s business goals. Realignment could include adopting a data-driven strategy with robust data insights, removing technology siloed across departments, and adopting AI to power business growth.
Optimized Performance
Modernization provides the opportunity to fine-tune the performance of systems and applications, improving code, integrations, and user interfaces.
Improved User Experience
Legacy systems and applications will have outdated user interfaces and processes, and modernization strategies such as rearchitecting and refactoring will deliver cutting-edge UX/UI improvements without needing to rebuild from the ground up.
Seamless Integration, Agility and Scalability
Mainframe application modernization and a hybrid cloud approach ensure seamless integration between business applications and systems today and enable the seamless integration of new technologies tomorrow.
Organizations can take advantage of increased agility to respond to fast-changing technological and business landscapes and new markets. A hybrid approach allows companies to scale rapidly, using cloud options for immediate additional capacity.
Deloitte says that organizations are “redoubling” core system modernization approaches, going beyond API integration and embracing middleware solutions, microservices applications, and user interfaces that harness the power of data. The consultancy firm adds that:
“The result is a powerful pairing: the trusted functionality of core legacy systems with the expansive capabilities of emerging technologies.”
Answering the Challenge of Mainframe Operation and Modernization - Finding Mainframe Skills
There are several challenges with utilizing mainframe systems. Legacy mainframes can be less agile than the cloud, and integrating legacy applications with new tools can be difficult. Upfront costs and maintenance of mainframes can be expensive, and the competition from exciting emerging technologies immediately accessible via the cloud is great.
A cost-benefit approach is critical before business and IT leaders solidify a strategy. However, it's worth reiterating that utilizing already-paid-for upgradeable mainframe systems in a hybrid cloud strategy has the potential to reduce outlay and ongoing subscription and hosting costs.
Effective legacy application modernization can mitigate the drawbacks, but the critical perceived disadvantage of mainframe systems and a constraint on modernization is the shortage of mainframe experts. Mainframe engineer and systems administrator roles that program in older languages such as Cobol, JCL, or C++ are perceived as outdated and are now much less followed career paths.
The skill set required to leverage the power of new and existing mainframe systems and achieve mainframe modernization is undeniably in decline.
However, there are mainframe experts who continue to offer and replenish mainframe skills. CRSS is an IBM Redhat partner with extensive experience in IBM and other mainframes and in serving the banking and fintech space to support and upgrade mission-critical legacy infrastructure. Learn more about the approach to your digital transformation with CRSS and let us know if you have any questions.
Ready to elevate your business with cutting-edge digital solutions? Discover the transformative power of CRSS's digital solutions, including Software Design and development, Cloud Engineering, and DevOps. Partner with us to leverage these services for enhanced innovation and business growth. Contact CRSS today and take the first step towards a digitally empowered future.
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