ISG Provider Lens™ Mainframes - Services and Solutions - Mainframe Application Modernization Software - U.S. 2022

Enterprises are eager to unleash their mainframe data.

The mainframe service market continues to grow as per ISG’s expectations for both conventional mainframe outsourcing and consulting services to migrate mainframes to the cloud. With clients under pressure to reduce their mainframe costs, several service providers are addressing the increasing demand to free business data that resides in mainframe systems. From a high-level perspective, all companies are moving their data from on-premises to the cloud for leveraging advanced analytics, AI, machine learning and data lakes. However, when their data sits on a mainframe, companies find that the need for data access drives modernization.

Data access, business agility and cost reduction are the main reasons for mainframe modernization. In a client case study, a company had critical business information on the mainframe, which was not accessible to cloudbased AI tools. It decided to migrate more than 150 terabytes of data to a new, globally accessible cloud platform. With the increase in cloud innovations, service providers that master mainframe migration had experienced more than 20 percent revenue growth for this service line as of 2021.

Mainframe cost pressure: Mainframe costs continue to rise, driven by independent software vendors (ISVs). After Broadcom acquired CA Technologies in 2018, it changed the product pricing strategy. Faced with elevated software maintenance fees, clients are now asking how to replace tools from CA Technologies. Mainframe license optimization requires expert consulting that most study participants can provide. From a hardware perspective, IBM has been pushing clients to upgrade their mainframes to the IBM z15 system without much success. In its annual report, the company cited “an elongated z15 adoption cycle as a result of the challenging environment.”

Slow adoption of new mainframe tools: Clients are skeptical about the benefits of investing to modernize COBOL. From a small survey sample representing nine providers and approximately 1,000 enterprise clients, only 7 percent use Java on z/OS, 12 percent have adopted mainframe DevOps, and 15 percent use COBOL APIs.

Cloud providers showing increased interest in mainframes: AWS is investing in partners’ training and acquired Blu Age in 2021. Google had acquired Cornerstone Technology in 2020. Both acquired vendors offer automated mainframe application modernization to reengineer and rewrite COBOL (and other legacy languages) to Java, .Net or C#, while automating the delivery of cloud-native applications. AWS established the AWS Competency Program to help customers identify AWS partners with deep industry experience and expertise. Microsoft also offers mainframe migration to Azure with partner companies.

Slow growth of mainframe migration capacity: This study identifies 26 companies that offer mainframe migration to the cloud and 17 vendors of mainframe migration tools. These services grew more than 20 percent in revenue last year, but they may not be adequate to cover mainframe MIPS growth. Each provider reports 15 to 30 projects per year, with average project length of more than 18 months and large transformations taking five years. The market is slow in project execution and small in the number of projects. At the current pace, mainframe to cloud migrations will need 10 years to complete.

Competing modernization methods to continue to co-exist: Although the market refers to 7Rs (rehost, refactor, reengineer, rearchitect, rewrite, replace or retire), clients use three modernization methods to run their legacy mainframe applications in the cloud – rehost, compile and rewrite. Rehost platforms emulate mainframes in the cloud without any changes to application code, with the option to migrate mainframe data to other databases. Compile methods interpret the legacy code to generate runtime code to run the application in the cloud without application logic changes. In these two methods, clients continue to develop and maintain COBOL applications. Rewriting applications involves reverse engineering to create specifications and write new applications with the same logic or with innovations. In these three methods, all processes are automated and involve several testing cycles to ensure equal functionality and performance. Some vendors mix these methods, but they all enable clients to decommission their mainframes.

Rehosting fits well for legacy applications that are stable, not requiring updates and changes. It is fast, secure and helps lower cost. Compiling can be more suitable for stable applications that can be decomposed into microservices to facilitate data access. In both methods, companies retain their COBOL expertise. Rewriting can fix applications that require constant bug fixes, improvements and support. Clients should evaluate the best mix of vendor technologies case by case.

Numerous partners for leading modernization providers: The top providers can migrate mainframes to the cloud partner with many tool vendors and can deliver consulting, planning and project management to ensure project success. They also partner with public cloud providers and can run proof of concepts (PoCs).

Scaling mainframes – not as fast as cloud: Many clients believe that their mainframes are scalable. However, most mainframes run at 90 percent CPU utilization and more than 70 percent of disk capacity. For rapid changes in demand, mainframes do not have available resources. This requires negotiating with IBM to release more computing power, which is called vertical scaling. The public cloud offers instant scaling by replicating the applications on more virtual machines, which is called horizontal scaling. In the cloud, scaling is automatic and infinite. The new trend is to include containers and Kubernetes to automate and accelerate horizontal scaling even further.

In 2020 and 2021 the limits of mainframes became evident for government agencies that were not able to scale and respond to citizens’ demand. The increase in mainframe utilization has caused small system disruptions in the U.S. and some European countries. These events also contributed to the growing interest in migrating mainframe applications to the cloud.

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