HP intensifies the mainframe battle

It claims success in convincing mainframe customers to migrate, but analysts say low pricing strategies and new functions will help ensure platform's survival.
Written by Eileen Yu, Senior Contributing Editor

TOKYO--Escalating cost, inability to support business agility and the limited availability of modern software, are some of the key factors driving mainframe customers to migrate from the age-old platform, according to Hewlett-Packard executives.

Herbert Zwenger, Asia-Pacific and Japan vice president and general manager of business critical systems, said mainframe customers spent a large portion of their data center budget in licensing, supporting and maintaining a mainframe environment.

Mainframe migration

HP this week heralded new customer wins in Korea and Japan, having migrated more companies from mainframe environments.

One of South Korea's largest property insurers Meritz, moved to HP Integrity Superdome systems and expects savings of up to US$16 million in software maintenance and hardware upgrade costs over the next five years, HP said.

Nihon Shurui Hanbai, a Japanese wholesale liquor company, also moved from a mainframe environment to HP Integrity. The migration reduced its system operating costs by over 30 percent.

Onishi Kanji, Nihon's assistant general manager of information control department, told ZDNet Asia the company migrated to achieve three objectives: cost reduction, fault tolerance and scalability.

The most challenging component of the migration involved porting software programs to the new system, Kanji said. "We migrated 6,600 programs and had to modify 2,000 of them before porting them over. It wasn't technically challenging to do so, but the amount of effort in terms of communication and coordination between our business partners [involved in the software modification] were most challenging," he explained.

He added that Nihon was able to realize cost savings from the migration as soon as development work was completed. The company now runs HP-UX as the host OS and a mix of Windows, Unix and Linux, across its server farm comprising between 20 and 30 servers.

The Japanese mainframe market is unique because it has more than one dominant player, featuring companies such as Fujitsu, Hitachi and NEC.

Speaking at a conference here Thursday to champion the company's "mainframe alternative" strategy, Zwenger said HP has helped such customers cut operating costs by up to 70 percent and reduce energy consumption by up to 46 percent, by migrating to the vendor's Integrity servers.

HP's aggressive bid for the mainframe market stems from CEO Mark Hurd who has never been coy about the company's plan to target and convince mainframe customers to migrate, having once said that he was "not a big fan of mainframes".

Satoshi Kitamoto, Japan head of mainframe alternative business at HP's technology solutions group, noted that mainframes were first introduced two to three decades ago as the best platform to support mission-critical processes. Today, however, users can no longer accelerate their business effectively because of mainframes, Kitamoto said.

The advent of the Internet has changed the way businesses operate, he noted, and companies today must have the flexibility and agility to react quickly to competitive pressures. The ability to do so is proving to be a challenge for mainframe customers, he said.

Kang Won Moo, HP's Asia-Pacific and Japan sales director for business critical systems, added that mainframe applications and software upgrades are high and costly to maintain.

In addition, new applications developed by independent software vendors (ISVs) are mostly made available on industry-standard platforms, not mainframes, Kang said. As a result, proprietary mainframe users have limited access to modern software, he said.

Still alive and kicking
In a previous report, however, IBM told ZDNet Asia that it is seeing a re-emergence of mainframes in the region as companies look for ways to increase space and power efficiency in their data centers. The company also noted that more ISVs now support their applications on the platform.

In fact, Big Blue said it invested tens of millions of dollars over the past couple of years on programs to train customers, tweak their software and help companies migrate to the platform.

IBM has been aggressively promoting its System z mainframes and specialty engines such as Integrated Facility for Linux, since end-2005, Erica Gadjuli, Gartner's principal research analyst for server markets, said in an e-mail interview.

Such efforts from mainframe vendors, Gadjuli said, were the primary reason why revenues for the Asia-Pacific mainframe market, which has always been niche and project-driven, increased by 42 percent in 2007.

One of the remaining dominant mainframe providers, IBM continues to introduce new features and functions to address legacy and new workloads, added Jennifer Wu, research vice president of server markets at Gartner.

"Many of the new features are aimed at improving the ability to handle workloads that had not been traditional strengths of the mainframe, such as Java, business intelligence (BI) and data warehousing," Wu told ZDNet Asia in an e-mail.

Gadjuli noted that the banking and public sectors were the two mainstay verticals driving the Asia-Pacific mainframe market in the past couple of years.

However, growth for the mainframe market likely slowed in 2008 due to budget delays, revision on major spending during the Beijing Olympics, and the credit crisis, she said.

Gartner expects the annual growth rate for the mainframe market to remain flat over the next five years, as customer deals typically require longer lead times, planning and execution, she noted, adding that lower pricing strategy will also drive revenues down significantly.

Now more affordable
Once seen as the Rolls Royce of computing platforms, mainframe pricing structures were previously rigid and based on assumptions that high ceilings of capacity would be met, said Madan Sheina, principal analyst of software applications group at Ovum.

"That meant companies often overpaid for large CPU capacity, even though it was in excess of their requirements," Sheina said in an e-mail interview. "But that has changed following the introduction of new, granular 'sub-capacity' pricing models that allow customers to pay only for the mainframe CPU capacity they intended to use."

"Sub-capacity pricing reflects the industry's movement toward server consolidation and sub-divides the mainframe's core CPU capacity into logical partitions. It also provides a cost effective way of adding new BI workloads and applications to run on the mainframe."

This has helped "recast" mainframes as a more affordable platform for business applications such as operational BI, the analyst said.

A resurgence of interest in mainframes is also driven by current trends toward server consolidation, virtualization and green IT infrastructures, Sheina said.

"Mainframes have sizable capacities and are natural IT consolidation platforms," he explained. "They are also energy- and space-efficient platforms that, if properly configured, can provide the same processor capacity of a distributed server farm while using just a fraction of the amount of electrical, HVAC cooling and floor space requirements, compared to a distributed server farm."

In addition, mainframes now incorporate richer functionalities such as specialized and parallel processors and virtualization, as well as support new technologies such as service-oriented architecture (SOA), Linux and Java, he said.

Gartner's Gadjuli added that the introduction of enhanced features and functions will ensure mainframe's existence in the market, as well as the user mindset that these systems are reliable in supporting critical and non-stop workloads.

Sheina said security and performance are the reasons why mainframe systems remain permanent fixtures in data centers for certain types of applications, in particular, mission-critical, high-volume financial and retail transactional environments.

"Mainframe systems were originally designed to be shared by thousands of users [and] have security built into nearly every level of the computer--from the processor level, to the operating system and the application level," he said.

Mainframe skills issues
However, Sheina said, the mainframe market faces challenges related to integration, availability of skillsets and user mindset.

Noting that wall-to-wall mainframe architectures are rare today, he said mainframes will have to co-exist and integrate smoothly within distributed client-server environments and newer SOA, software-as-a-service (SaaS) and cloud computing models.

Finding the right skills is also a challenge that needs to be resolved, he added.

"Mainframe professionals come at a premium over trendier and more abundant Java, PHP, skills," he said. "As mainframe specialists become a rare commodity the cost of their skills rises to a premium. Simply put, there are not enough young bright people wanting to learn mainframe skills over PHP, Java, Flash, and other 'hip' Web 2.0 technologies."

According to HP's Kitamoto, this lack of skilled resources was so severe that it was dubbed the "2007 problem". Mainframe skillsets are retiring from the industry and younger engineers prefer to learn newer technologies, he noted.

It is increasingly tough to identify experts who want to teach Cobol, he said, adding that mainframes are proprietary legacy systems that are no longer relevant in the market.

One of the industry's oldest programming languages, Cobol is used on mainframe systems.

However, Sheina noted that mainframe vendors have started to address the skills shortage. IBM, for instance, has been introducing mainframe courses into academic IT curriculums and currently works with some 400 education institutions worldwide to introduce its System z into academic programs.

In addition, he said, mainframe vendors are making efforts to reduce the complexity of managing such environments, They are also looking to narrow the skills gap by introducing newer and more mainstream development and programming techniques such as Java and PERL, into the mainframe environments.

Sheina said: "Opening up the environment in this way transfers existing IT skills to mainframe environments and helps break the perception that mainframes require a highly specialist breed of skills and training.

"And perhaps the biggest obstacle for moving BI onto the mainframe is debunking some of the traditional myths about mainframes," he said. "A generation of IT management educated and brought up on distributed server architectures still believes it is far too costly and difficult to host their BI applications on the mainframe."

The Ovum analyst noted that while this might be true some 10 years ago, mainframes have since been redesigned to match other modern IT platforms.

Eileen Yu of ZDNet Asia reported from Tokyo, Japan.

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