Outdated mainframes putting businesses in debt

A study from Micro Focus shows that the cost to update mainframe applications has risen by 48 percent since May 2012 to AU$9.78 million.
Written by Aimee Chanthadavong, Contributor

Research from Micro Focus shows the cost to update outdated mainframe applications across Australia and New Zealand businesses is one source of a growing IT debt problem, which is expected to worsen and increase by 8 percent over the next five years.

The study (PDF), which was undertaken by Vanson Bourne, indicated that Australian and New Zealand CIOs and IT directors have estimated it would take an average of AU$9.78 million to bring outdated mainframe applications up to date — a 48 percent increase from May 2012 when the figure stood at AU$6.6 million.

Micro Focus CTO Stuart McGill said while updating the mainframe application can be a costly task, it's a core part of the business that is worth the inherent costs.

"It's important for businesses to understand that these systems actually run the company; they don't just facilitate staff to do their daily work," he said.

The study also showed, on average, respondents across Australia and New Zealand expect their organisations to continue relying on mainframe applications for another ten years, with almost half (48 percent) believing it to be longer than this. However, despite the perceived longevity of mainframe applications and mounting IT debt, the majority (80 percent) find it difficult justifying the expense of maintaining core applications.

As a result, 68 percent of CIOs admit they are exposing their business to compliance and risk issues.

McGill said businesses cannot afford to not make the change because it would hinder how their business grows, including not being able to bring new products to market or obtain new customers.

"The challenge for CIOs is keeping up with the accelerating pace of business and so they do need to actually introduce a lot more capabilities into the core system," he said.

"For example, places like Korea uses mobiles to make touch payments via credit cards without any pin and in order for that to happen, core systems had to be changed. The modernisation of these things is more important at this point than just looking at the pure cost."

Another key research finding was that 31 percent of current mainframe applications are accessible via the cloud, with this figure expected to rise to 41 percent in two years.

McGill said the benefit of cloud is it increases network capacities while costs are reduced.

"Normally if you take an application off the mainframe and drop it into a distributed system, the actual cost of the hardware itself falls by 90 percent," he said.

"If you move it into a cloud environment the cost would fall by another 60 percent."

Although the Micro Focus research shows 80 percent of IT decision makers believe it's still too difficult to develop mainframe applications for the cloud.

"The challenge is as you transition to a different environment – quite often an alternative world like cloud – it is completely different to the way you use mainframe," McGill said.

"Mainframe is just one big system that can process data faster than anything else. A cloud-based environment mainly is about thousands of different system processing a small piece of data and if you like those conceptual and architectural challenges that people have to move to from one platform to the next, it's actually not that daunting as they typically think."

The study also showed that 34 percent of organisations' mainframe applications are accessible on mobile devices and in two years' time this number is expected to rise by 41 percent. However, 72 percent of respondents said they find it difficult to develop mainframe applications for mobile devices, and according to McGill, it's because it adds more platforms that companies need to address.

"The plethora of smartphones, tablets, and other devices are all accessing core systems, which means these mainframes need to be all customised for those systems. For example, if you're a customer working on an iPhone you'd naturally expect the system to look and work right for you; it has to have all the right functions," he said.

"So if you've got consumers using different applications, in a way it's forcing a lot of change that needs to be implemented."

At the same time, 76 percent of IT decision makers said it is difficult to find staff or new recruits with mainframe application skills and predict that an average of 14 percent of staff members currently responsible for maintaining mainframe applications will retire in the next five years.

To address this, 31 percent of respondents said they are rewriting their apps in more modern languages, and a quarter of respondents are replacing legacy apps with off-the-shelf solutions.

McGill also notes the widening skills gap is an anomaly because while it's feasible to bring in a new generation of programmers, businesses have started to outsource the skills overseas.

"We're actually see as the employees of the companies are moving to higher value jobs or are post-retirement, the new generation are not within Australia, they're actually coming from outside," he said.

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