Mainframe – a falling star?

London, UK, 12th April 2005 - Mainframe is an industry term for a large computer, typically manufactured by a large company such as IBM. Today, the mainframe is often referred to as large servers instead of a computer.

The Mainframe Market
The mainframe market leader is IBM, with their portfolio of the zSeries. The software giant experienced a strong growth in the world of servers, with zSeries, pSeries and xSeries each increasing its share position in 2004. Other mainframe vendors in the marked include Computer Associates, BEA, Microsoft, Hewlett-Packard, Fuijitsu Siemens, Unisys, Sun and Micro Focus.

Mainframe Migration Alliance
As evidence of the competition amongst the mainframe providers, Microsoft and Micro Focus created a Mainframe Migration Alliance, with the aim of challenging the software giant, IBM. The alliance was going to offer a variety of IT product and services suppliers.

Mike Gilbert, Micro Focus' VP of marketing explained that "This alliance brings together for the first time platform, technology and service partners to provide a comprehensive and effective response to the needs of IT users who face increasing and unacceptable costs and risks simply to run their businesses on legacy platforms". In turn, Microsoft and Micro Focus are aiming to compete against IBM's z/OS operating system, as they are aiming to help IT organisations in the migration of mainframe applications onto Windows-based systems.

MediaDev carried out a Pan-European telemarketing campaign to investigate the usage of mainframe in end-user companies across Europe. Over 1000 companies across France, Germany, Italy and the UK where interviewed in order to identify users within vertical sectors. The results from the telemarketing campaign showed that companies’ using IBM Mainframe or iSeries technology is relatively lower than possibly 10 years ago. A large number of companies were using Windows Server 2003 instead of mainframe.

Mainframe Users
Regardless of the fall in mainframe usage, the report also concluded that specific sectors are still using Mainframes. Vertical sectors like the Financial Sector, Utilities, Airlines, Railways, Armed Forces and Travel Industry are still using mainframe. The mainframe users are all large organisations with 500+ employees.

The Financial Dilemma
Although the mainframe's total cost of ownership (TCO) continues to improve, the cost of software continues to be a major burden. The results from the MediaDev study confirmed this, with 44% of the respondents claiming that the mainframe costs are too high.

Tight IT budget combined with the high mainframe operating costs are the main problem that IT Managers are facing. It is evident that the mainframe is no longer the most cost-effective platform to operate core business services. Fierce competition between platform vendors has driven new server technology to ‘enterprise scale’ with prices the mainframe cannot match.

By moving critical applications to low-cost platforms such as Linux and Windows, reduction of the mainframe costs will be apparent. As MediaDev’s telemarketing campaign illustrated, many users have moved from mainframe to more cost-effective platforms. Linux users often highlight the cost as one of the most important reasons for choosing Linux above Windows. The reason for this is that Linux is normally free. However, previous studies conducted by MediaDev, actually concluded that Windows is cheaper when it comes to overall costs.

All businesses must drive down operational costs to sustain long-term competitive advantage in the market. For IT organisations with large investments in mainframes, this is an increasing challenge. With no real competitors left in the mainframe server business, the cost of the associated hardware and software licenses continue their rapid rate of increase.

Mainframe Challenges
Another challenge is the perceived complexity and inflexibility of the mainframe. Many of the large mainframe vendors will struggle to offer this expected level of flexibility, due in part to large fixed costs and a lack of quickness.

A large number of the mainframe users that participated in MediaDev’s study, claimed that they often experienced integration problems. The problems encountered by the European respondents falls under categories, such as security, performance, connectivity and software incompatibility. Most mainframe users are more likely to try to fix the integration problems themselves instead of contacting a mainframe system integrator.

An old image
For the French participants in the telemarketing campaign, there were strong indications that the mainframe has "an old image". As a result, 53% of the French mainframe users, claimed to be abandoning the mainframe within the next 6 months. The users were instead looking for a solution that was more flexible when it comes to manage the Z/series. It is therefore an opportunity for the mainframe players in the market to respond to the market demands in order to keep their client base.

In conclusion
IBM remains the strong leader within the mainframe market, despite the competition of vendors like Computer Associates, BEA, Microsoft, Hewlett-Packard, Fuijitsu Siemens, Unisys, Sun and Micro Focus. Due to the high mainframe costs, many companies are moving to more cost-effective solutions like Linux or the Windows Server. However, the mainframe is still popular amongst large organisations within vertical sectors such as finance, travel, transport and utilities.

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