The future of the mainframe

Gary Barnett

October 2005
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THE FUTURE OF THE MAINFRAME

The future of the mainframe

In 1991 the technology writer Stewart Alsop wrote, ‘I predict that

the last mainframe will be unplugged on 15 March 1996’. However,
despite the predictions of client-server gurus throughout the
1990s the mainframe didn’t disappear. In 2004, the IBM
mainframe celebrated its 40th birthday, and in July 2005 IBM
unveiled its latest offering, the z9, the result of over $1 billion of
investment in R&D. The mainframe isn’t going to disappear at any
time in the next decade at least. However, the mainframe
environment is set to change significantly over the next five years,
with the number of small mainframes seeing a significant decline,
while the number of larger mainframes grows slowly, but steadily.

This report presents our predictions for the mainframe; in which

we forecast that over the next five years the number of individual
machines will fall, but the total number of deployed MIPS will
continue to rise.

Key messages
The mainframe is alive and well as a platform for very
large workloads
The mainframe is alive and well at the high end. IBM is keeping the
promises that it made in its mainframe charter and continues to deliver
steady improvements in price/performance. At the very high end (in the
‘more than 2,000 MIPS’ category) IBM’s new mainframe, the z9, has done
a lot to secure the future of the zSeries.

Mainframe price/performance continues to improve –

but not at the same pace as x86
The z9 delivers a huge improvement in total cost of ownership, providing
nearly double the performance for a similar price. However, IBM’s
challenge is that, while it is steadily delivering price/performance
improvements in the order of 15–20% a year, x86 (Intel and AMD)
price/performance improvements are running at almost double that pace.

Despite the improvements, the cost viability of the

mainframe at the lower end is threatened
The dramatic and continued improvements in the price and performance of
non- mainframe technologies mean that the alternatives are becoming

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increasingly attractive. IBM will find it increasingly difficult to justify the

huge price differential between a 1,000-MIPS mainframe and the
equivalent computing power delivered on an x86. IBM needs to address
this urgently, as the vast majority of mainframes belong in the sub-1,000
MIPS category.

Migration is an excellent option for some

Migration away from the mainframe will be an excellent opportunity for a
significant number of small mainframe users. But it won’t be the ‘cure-all’
approach that some migration enthusiasts claim. Migration needs to be
considered as part of an overall approach to legacy modernisation and
renewal – many large companies will do a range of things, migrating some
applications, replacing some, and leaving others where they are. The goal
is to ensure that you deliver the functionality that the business needs
today, are capable of delivering the changes that the business will ask for
tomorrow, and are able to do so while keeping cost and risk at bay.

‘Drag and drop’ migration technology is available today,

and it works
Several companies offer migration technology that makes it possible to
take mainframe applications off the mainframe and move them to another
platform. Companies like Micro Focus and Sun offer middleware that
natively emulates the mainframe env ironment, making it possible to
perform the migration without having to undertake a complete rewrite.

‘Rip and rewrite’ is a high-risk, low-reward approach

There are two approaches to the often talked about ‘rip and replace’
approach. Both involve effectively switching one application off and
replacing it with another. However, the way in which you choose to
‘replace’ the old application has a huge impact on risk. If you opt to
replace an old application with an off-the-shelf alternative then the risks
that you encounter will be relatively well bounded. However, if you elect to
completely rewrite your old application the risk profile changes
dramatically. We would regard ‘rip and rewrite’ as a last resort when it
comes to legacy renewal – We’ve seen far too many projects of this nature
flounder to regard it as an ‘obvious’ choice.

Application replacement will drive many migrations at

the low end
At the lower end of the spectrum, we expect many of the migrations that
occur to be driven by the acquisition of new applications. In some cases
the ‘new application’ will be a ported version from the same application
that runs on the legacy platform. Here migration will be driven by

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independent software vendors and their desire to lower the total cost of
acquiring their solution. In other cases, migration will be driven by the
selection of a brand new application that runs on a lower-cost hardware
platform.

Messages for users

Don’t panic!

The mainframe is fit and well

There is no ‘crisis’ (although with ongoing budget pressure it may feel like
that at times). The mainframe is not going to disappear any time soon, nor
is IBM’s commitment to it.

The skills crisis is a decade away

The ‘skills crisis’ that some commentators claim will bring the world of
Cobol to a halt is at least a decade away, so there is no need for urgent
action. However, employers need to consider the changing needs of a
developer population that is undoubtedly getting older.

You have plenty of choices

You have choices, and the smart suppliers will be the ones that can help
you take different approaches. Beware of the supplier that only talks about
migration as opposed to legacy renewal.

Do the analysis carefully

You need to begin by being absolutely clear about ‘why’ you need to look
at legacy renewal and migration in particular. Are you looking for cost
savings? Do you need more flexibility? What would the impact of migration
be – to the migrated applications and the applications that stay where
they are?

Take a systematic approach

We strongly advise our clients to take a methodical and systematic
approach – It should start with a clear statement of needs, and then be
followed by a detailed analysis of the alternatives. When examining the
potential cost benefits, it is essential that you look at all the costs that
each option will incur.

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Messages for vendors

Focus on choice: ‘one size fits all’ won’t work
There is no single answer to the question of legacy renewal and
modernisation. If you can only address one element (if you’re a code
analysis specialist or a migration specialist) then don’t pretend that you
have the answer – because you don’t. It’s ok to play in a niche, but if you
do so you need to be very careful that you develop the right partnerships
to ensure that you can offer clients a range of options and help them to
choose the most appropriate. If you’re only going to tell your clients to
migrate then both you and they are likely to be disappointed.

Create a broader legacy renewal process to help clients

select an approach
Ultimately the ‘doing it’ question is relatively easy to answer – the hardest
task is determining what the ‘it’ should be. Vendors that have a
methodology or process to help in this initial phase will benefit in two ways
– firstly they’ll become part of the client’s internal process, and secondly
they’ll be in a great position to bid for the ‘doing it’ component.

We would encourage vendors to go further – and promote a standard

approach to legacy renewal and modernisation.

Mainframe application vendors need to take on the

challenge of mainframe pricing
One of the biggest motivators among end-user organisations for migration
is the licensing cost of mainframe software. Application vendors have to
play a role in protecting their mainframe revenues over the long term by
embracing more flexible licensing models. At a minimum, vendors need to
support sub-capacity pricing; ideally, they should support licence scale-up
and down on demand.

Mainframe application vendors need to broaden their

platform support
If you’re a mainframe applic ation vendor you should be looking at ways to
broaden your platform support. If you currently have a large and loyal
mainframe-based installed base then it won’t make any sense to desert it,
but you should look at the cost of porting your application so that it runs
on non- mainframe platforms as well. One approach is certainly a ‘drag and
drop’ migration, using middleware to natively emulate the mainframe
environment on non- mainframe platforms. This allows you to continue
developing your mainframe code without having to dramatically re-tool
and re-skill. A second option might be to make a move to Linux – this

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would allow you to continue selling for the mainframe (using the
mainframe’s Linux support), as well as the wide range of hardware
platforms on which Linux runs.

Messages for IBM

This is happening now, do something…
The number of enquiries that we’re getting from our clients about the
viability of the mainframe platform, mainframe migration and the future of
Cobol has grown significantly in the past twelve months. Our clients, and
yours, need to know what their options are.

Currently, the choice that many see is, ‘stay with IBM on the mainframe,
or move to non-IBM hardware’. Plainly this doesn’t make sense – IBM has
a wide range of non- mainframe hardware offerings in the form of pSeries,
iSeries and xSeries. Surely if people are going to move off the mainframe
platform – and a growing number will – it makes sense for IBM to help
them move to one of its non-mainframe platforms rather than to a
competitor’s?

In essence we’re saying, ‘make sure that as many of the defections as

possible are to other IBM technologies and not to a competitor’s.

Talk about the mainframe charter more

Over the past 18 months there have been a host of minor announcements,
and some fairly major ones, that all contribute to IBM’s delivery on the
promises set out in the mainframe charter.

In isolation these announcements often seem fairly insignificant to

customers and analysts, but taken as a whole they can be used to
demonstrate the significant progress (and investment) that IBM is making.

Give your clients options and explain the differences

between them
IBM is finding it increasingly difficult to explain the differences between the
mainframe and its non- mainframe hardware portfolio. The traditional
differences (reliability, availability, scalability and security) are being
eroded very quickly. For most sub-1,000 MIPS deployments the quality-of-
service differentiation simply no longer applies.

IBM needs to develop a clear approach to determining which platform suits

a particular client given their situation. IBM must accept that ‘mainframe’
won’t always be the right answer.

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Support your ISVs by helping them port/migrate

IBM has been doing a great job of persuading ISVs to adopt a more
sensible and long-term view of software pricing, but IBM is still only part of
the way there.

IBM needs to help ISVs in two ways:

• it should provide assistance to help them support more flexible pricing
models
• it should be willing to help ISVs migrate their applications.

Once again, the message here is that if IBM doesn’t, then someone else
will.

Putting the mainframe in context

Many legacy applications and systems are IT assets that have a particular
combination of attributes: they manage resources that are crucial to the
operation of the business, and they are seen as inflexible or brittle in the
face of technological and business change.

Increasing numbers of large businesses (and these are the ones which
tend to host legacy systems) are looking to make significant adjustments
to their IT portfolios in order to align IT expenditure and operations with
business priorities. It is clear from this that if these grand IT
transformation projects fail to properly address legacy applications and
systems, they themselves may well fail to deliver value.

Analysis
In general terms, the mainframe is fit and well. Brand-new mainframe
MIPS shipments (as opposed to replacement MIPS) continue to grow by
around 15% a year, and the number of lines of Cobol code in production
continues to grow by between 3% and 5%. The mainframe isn’t going to
disappear tomorrow; indeed, we expect mainframes to be in production
well into the next decade at least.

While the number of deployed MIPS is set to grow, the number of

deployed mainframes will decline. Essentially, at the high-end, mainframes
are getting bigger while at the low-end a significant number of smaller
mainframes will be switched off.

Over the next five years smaller mainframes will come under intense
pressure from x86-based (Intel and AMD) platforms as their
price/performance improvements out-pace the mainframes by a significant
margin. The price/performance gap is still widening, despite the excellent
progress that IBM has made with the mainframe.

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Mainframes run the world

Despite the excitement that has surrounded the Web and new
programming models like Java and J2EE (as well as Microsoft’s .NET),
older, less ‘trendy’ technologies account for the vast bulk of computer
processing today.

For example, Cobol remains the most widely deployed programming

language in big business, accounting for 75% of all computer transactions
– and it is not going to go away. Cobol is pervasive in the financial sector
(accounting for 90% of all financial transactions), in defence, as well as
within established manufacturing and insurance sectors. We estimate that
there are over 200 billion lines of Cobol in production today, and this
number continues to grow by between three and five percent a year.

IBM and the mainframe

IBM is the leading mainframe vendor, with over 70% market share.
Therefore, while this report covers the global mainframe market – it is
largely dominated by IBM.
• IBM is committed to its mainframe technology: the recent release
of the z9 (IBM’s latest generation of the zSeries platform)
demonstrated the fact that IBM is committed to supporting its existing
clients and sees a long-term future in the platform. IBM has invested
well over $1 billion in developing the z9, and has committed to
continue investing heavily in mainframe R&D.
• IBM is improving the economics of the platform: IBM’s mainframe
charter represents a commitment on IBM’s part to its mainframe using
clients. To drive down the total cost of the mainframe platform (that is,
the cost of the hardware, software and administration) and to make it
a first-class citizen in the (comparatively) new world of distributed
computing.

Concerns about the mainframe

In spite of IBM’s pretty impressive record of keeping the promises it made
when it launched the mainframe charter, there are still serious concerns
among our mainframe-using clients about the viability of the mainframe.

Price

The cost of mainframe hardware is still very high; in many cases

Intel/AMD-based hardware is ten-times less expensive.

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Cost of integration

Although much has been done to make it easier to integrate mainframe-

based applications with distributed applications, the integration of these
two worlds is perceived by many as costly and complex.

This perception would be partially addressed if IBM and other vendors in

the mainframe integration space did a better job of explaining their
capabilities today. However, even with the significant improvements of
mainframe connectivity and in the platform itself (the latest release of
CICS, for example, allows Cobol applications to publish and consume web
services) the integration of legacy applications is still expensive and
difficult.

Cobol skills

There is growing concern among our client base about the availability of
Cobol skills. We do not believe that there will be an acute shortage of skills
in the short term, because the fall in the number of Cobol developers will
be offset by a comparable reduction in the amount of Cobol development
that takes place. Over the longer term, we do see a shortfall in Cobol skills
in the 2015–2020 timeframe as the older generation of Cobol developers
(in the 45–55 age range) leaves the workforce.

Viable alternatives to the mainframe are emerging

The price/performance advantage of non-mainframe platforms has

traditionally been offset by the other virtues of the mainframe, particularly
in terms of quality of service (reliability, availability, scalability and
security), as well as manageability. Typical mainframe utilisation levels are
more than double the typical utilisation level of an AMD or Intel-based
machine, thanks to the mainframe’s support for virtualisation.

However, things are changing rapidly. The reliability of non-mainframe

platforms is closing on the mainframe, and technologies that used to be
the preserve of the mainframe (notably virtualisation) are now ‘crossing
over’ to the world of Intel and AMD.

The mainframe and the CIO agenda

While the CIO may use different words, every CIO’s agenda boils down to
three things: cost, innovation and risk, as shown in Figure 1.

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Figure 1 Cost, innovation and risk

Cost

Innovation Risk

Source: Ovum

Ultimately, the CIO wants to support greater innovation, whilst lowering

both cost and risk.

The cost/innovation/risk equation embodies a dilemma

However, this equation contains a built-in dilemma in that any

improvement in one of the three factors is likely to have an adverse
impact on the remaining two.
• Cost: how do you lower cost without reducing the number of things
you can do or by ‘cutting corners’ and exposing yourself to higher
levels of risk?
• Risk: how can you reduce risk without spending more or doing less?
• Innovation: how can you increase the rate at which you innovate
without spending more money or putting up with higher levels of risk?

The most successful IT decisions address all three issues at once

We use these three factors as a tool in helping CIOs to develop a strategy

and make key decisions. CIOs need to identify initiatives that bring
benefits in each of the three factors, while ensuring that one attribute isn’t
over-stressed at the expense of the others.

We also use this approach when talking to vendors about their offerings –
if a salesperson cannot explain how the product will help to address at
least one, but preferably all three, of these issues, then it’s going to be a
tough sell.

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Cost will never come off the agenda

Cost will never cease to be a key priority for IT managers. While the
painful cost reduction targets of 2001/2002 may be behind us, every CIO
that we speak to talks about continued downward pressure on core IT
spend. Many are now reporting that there is new money flowing into IT –
but this new investment is, more often than not, tied to very specific
business programmes and goals.

With cost still taking a high priority, the question then becomes, ‘how do I
lower costs to free-up resources to support innovation?’ Essentially, the
task is to fund the innovation budget by saving costs elsewhere.

The key to this lies in understanding your current cost base, and the
contribution that your key expenses make to the business.

CIOs have to adjust their spending patterns

We have developed a simple approach to investment prioritisation that we

regularly use with clients.

The basic premise of our approach can be summarised as follows:

‘the goal should be to target expenditure and investment at activities
that differentiate the business and to lower the cost of those activities
that – while they may be essential – don’t deliver competitive
advantage.’

We don’t pretend that this is ‘rocket science’ or that it’s a particularly new
idea, but we do use it as a framework when looking at how our clients
need to develop and validate strategy.

We classify the activities (and the applications, processes and systems

that support each class of activity) that a business undertakes according to
three broad types:
• utility activities – necessary for the business to function, but that do
not differentiate the business from its competitors
• process/assembly activities – where the ‘offer’ or ‘product’ that the
business sells is created
• delivery – the point at which the ‘offer’ or ‘product’ is
presented/exposed to clients and partners.

Each class of activity has a different set of priorities:

• utility – lower cost, simplify and stabilise
• assembly – manage cost, integrate and modernise
• delivery – invest, integrate and enhance.

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When we map existing expenditure against these categories, we frequently

find that the investment and spending patterns that are currently in play
are the polar opposite of these goals, as shown in Figure 2.

Figure 2 IT spending is biased towards non-differentiating functions

Differentiation

Delivery Utility

Spend
Assembly Assembly

Utility Delivery

Source: Ovum

Although the balance varies according to the individual client and the
sector that the client operates in, around 60% of IT budget is spent on
delivering and maintaining utility activities, with the assembly and delivery
categories left to fight over the remaining 40%. Once we look at spending
patterns, we notice that the greatest proportion of IT spend is frequently
directed at those activities that differentiate the company the least. Part of
the process of legacy renewal and modernisation is the modification of this
balance – so that, ideally, the bulk of IT spend is directed at differentiating
activities.

What we want to do is find a way of lowering the costs associated with

those utility activities in order to release resources so that they c an be
invested in activities and processes that do differentiate the company from
its competition.

What do CIOs think about the mainframe?

Many of our CIO clients make the same criticisms of the mainframe today.
They say:
• it is expensive
• it is inflexible
• it is hard to integrate with the rest of the IT system.

Of course, many of them have good things to say about the mainframe as
well – the mainframe is still regarded as the most reliable and secure
computing platform there is. However, increasingly, the cost and lack of

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flexibility outweigh the demonstrable reliability, availability, scalability and

security attributed that the mainframe boasts.

Interestingly, very few of our CIO clients believe that the mainframe is
going to ‘die’ or ‘disappear’ at any time in the foreseeable future, but the
key challenges remain.
• How do you lower the cost of running legacy applications?
• How do you make it easier and less expensive to modify and enhance
legacy applications?
• How do you make it easier and less expensive to integrate legacy
applications with the rest of the IT system?

There isn’t a simple solution to these challenges – nor is it likely to be the

same for any two clients. Legacy renewal and modernisation combines a
set of techniques and approaches, which – if combined and applied
properly – will deliver lower cost, greater flexibility and increased
integration.

Migration forms part of an overall approach to legacy

renewal
Migration away from the mainframe addresses the issue of hardware cost.
However, bear in mind that hardware costs represent a relatively small
proportion of the cost of owning software. Even if you do migrate an
application away from the mainframe – you still need to maintain it and
integrate it.

Mainframe migration is not an end in itself, it is one approach to the larger

challenge of legacy renewal. We define ‘legacy systems’ thus:
‘legacy systems are those that are designed and built in such a way
that they significantly resist any modifications and evolutions which are
required to support business change and/or those systems that rely on
technology that is no longer cost effective.’

The goal of legacy renewal is to change legacy applications so that they

become:
• easier to integrate
• easier to change
• less expensive to run.

Migration is firmly focused on the last of these (cost), although it is true

that in some cases a migration will make integration and enhancement
easier as well.

We list four broad categories of legacy modernisation:

• access/extension

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• integration
• re-engineering
• platform migration.

In Figure 3, we give an overview of each approach, and its benefits.

It is important to note that, in practice, any legacy renewal or

modernisation initiative is likely to combine two or more of these
approaches.

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Figure 3 Legacy renewal technology categories in overview

Access/ Integration Re- Platform
Extension engineering Migration
Description Middleware Sophisticated Analysis/ Tools and
servers used for middleware that development middleware that
creating new enables peer- tools and support the
user interfaces to-peer associated migration of
for applications relationships middleware, legacy code
on client-server between legacy which help from the
or web systems and users re-factor, mainframe to
platforms. other platforms. re-code and re- another
Includes System host ele ments platform
terminal metadata is of legacy without
emulation exposed to applications requiring the
programmers Cobol code to
through be significantly
advanced tools rewritten
Maturity Mature Established Mature but Mature but
evolving evolving
Benefits A quick way to Sophisticated The only way to Often delivers
extend access offerings deal with some rapid cost
to new capable of legacy systems, savings as a
platforms and enabling particularly result of the
users evolution of where lack of transition to a
legacy systems skills is the lower-cost
in line with main issue or hardware
modern where vendors platform
architectural are ‘burning’
Can make it
approaches & platforms
easier to extend
initiatives
and integrate
applications
once moved
Drawbacks Often based on Analysis and Can be Cost can vary
proprietary, design, and a complex, considerably
inflexible long-term expensive and depending on
technology. evolution plan risky. Systems the original
Integration is are important that are still application.
simplistic and but not always evolving
Can be difficult
focused on the easy to justify. present
to migrate
legacy system Skills may be particular
partial
acting as a an issue problems
workloads
server
because of
inter-application
dependencies

Source: Ovum

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The mainframe population 2005–2010

Over the next five years the number of individual mainframes will decline
by around one third. However, the total number of deployed mainframe
MIPS will rise by at least 10% annually over the same period.

The decline in the number of mainframes will be driven by a number of

factors:
• mainframe consolidation – smaller mainframes being consolidated onto
a smaller number of large machines
• application replacement – mainframes being switched off as
applications are replaced with non- mainframe alternatives
• ‘drag and drop’ migrations – where existing mainframe applications are
moved, intact, to a non-mainframe platform.

The vast majority of this decline will come from small mainframes (sub-
100 MIPS machines). Indeed, we expect the number of larger mainframes
(those supporting workloads of 1,000 MIPS and over) to grow.

The mainframe today

Arguably, the mainframe is in better shape today than it has been for
several years. IBM’s recently launched z9 mainframe delivers more or less
double the performance of its predecessor for broadly the same price. IBM
is pushing the use of the mainframe for non-traditional workloads (notably
Linux and Java) and is winning converts.

We’ve divided mainframes into different classes in terms of their size (as
measured in MIPS):
• 0–100 MIPS – tiny
• 101–500 MIPS – small
• 501–1,000 MIPS – medium
• 1,001–4,000 MIPS – larger
• 4,001+ MIPS – super-sized.

We estimate that the distribution of deployed mainframes in 2005,

according to these classes, is as follows:
• more than 4,000 MIPS – 3%
• 1,001–4,000 MIPS – 8%
• 501–1,000 MIPS – 26%
• 101– 500 MIPS – 30%
• less than 100 MIPS – 34%.

In other words, we believe that the vast majority of deployed mainframes

belong in the sub-1,000 MIPS class.

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The small mainframe is an endangered species

We believe that the small mainframe (sub-500 MIPS) is an endangered

species. We expect the number of mainframes in the tiny and small
categories to decline significantly over the next five years.

The number of ‘normal’-sized mainframes is also set to decline at an albeit

smaller rate.

By contrast, we believe that the number of larger mainframes (in the large
and super-sized classes) will grow slowly over the same period. By 2010,
we believe the distribution of mainframes according to our classification
will be:
• more than 4,000 MIPS – 5%
• 1,001–4,000 MIPS – 13%
• 501–1,000 MIPS – 31%
• 101–500 MIPS – 28%
• less than 100 MIPS – 23%.

Forecast mainframe population

Our estimates for the number of mainframes in production over the period
2005–2010 are shown in Figure 4.

Figure 4 Mainframe population 2005–2010

2005 2006 2007 2008 2009 2010
More than 4,000
MIPS 498 503 510 521 534 544
1,001–4,000 MIPS 1,185 1,220 1,257 1,294 1,327 1,353
501–1,000 MIPS 4,025 3,905 3,768 3,617 3,436 3,265
101–500 MIPS 4,633 4,309 3,964 3,607 3,247 2,922
Less than 100
MIPS 5,319 4,787 4,189 3,561 2,937 2,350
Total 15,660 14,724 13,688 12,600 11,481 10,434

Source: Ovum

Mainframe migration

The mainframe migration market will grow gradually over the forecast
period, peaking in 2009 before beginning to fall off.

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Although the mainframe migration market will never represent a

multibillion-dollar revenue opportunity, it should be viewed as a subset of
the much larger legacy renewal/modernisation market.

Figure 5 gives a breakdown of mainframe migrations by type.

Figure 5 Breakdown of migrations by type

Number of off mainframe migrations by platform

2005 2006 2007 2008 2009 2010
>1000 3 5 8 10 16 20
501 - 1000 mips 16 24 27 30 36 34
101 - 500 mips 104 146 155 161 180 162
< 100 mips 173 239 269 283 312 294
Total 295 414 460 483 544 510

Number of replacements/rewrites
2005 2006 2007 2008 2009 2010
> 1000 2 3 4 4 5 5
501 - 1000 mips 4 6 7 8 9 9
101 - 500 mips 89 97 86 89 90 81
< 100 mips 216 239 269 283 280 264
Total 310 346 366 383 385 359

Number of "upward" migrations

2005 2006 2007 2008 2009 2010
>1000 5 6 7 9 11 15
501 - 1000 mips 62 91 102 113 136 129
101 - 500 mips 104 81 103 107 90 81
< 100 mips 43 53 60 63 31 29
Total 213 231 273 292 268 254

Source: Ovum

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