Business risks that make mainframe modernisation an imperative

Last-century mainframe applications  patched up over 40 years so they can continue to run the business  are on the Chief Risk Officer’s radar as a fiduciary risk. A triumvirate of problems combine to make mainframe modernisation desirable: an ageing staff puts mainframe skills on the extinction list; the need for core applications to be agile and harness cloud capabilities; and the ongoing pressure to lower costs. Of these three, the inescapable risk of disappearing system admins poses the gravest threat to business security and makes modernization essential. 

Tales of business application failure in the wake of departing mainframe personnel are legion – and are ringing alarm bells all the way to the board. Outages to billing, payroll, core banking and policy admin and other critical services are routinely caused by the great retirement skills void. The US airline that entrusted its core business applications to a septuagenarian systems admin is a familiar scenario – and so is its aftermath: when the admin retired, the airline had to bring him back on a colossal fee to capture his knowledge and rescue the company from the brink. 

Unfortunately, a majority of blue chips find themselves in similar, precarious positions, even though the mainframe skills demographic time bomb has been ticking for well over twenty years. LzLabs’ Mainframe Modernization Survey, 2021, found that 88% of senior IT decision-makers are concerned about the potential skills gap within their mainframe teams. And, for 10%, it’s already having a significant negative impact on operations.  

Disappearing skills pose primary risk  

Clearly, board executives are not immune to the ostrich effect of avoiding unpalatable truths when it comes to modernising legacy IT, an increasingly urgent but complex task. Yet system admins aren’t getting any younger – even a Cobol maestro can’t dodge death. Nor is the scale of the problem diminishing. If anything, according to the 2022 Micro Focus International Cobol Survey, it’s getting bigger: more than 800 billion lines of Cobol code are running daily on production systems, with half the respondents predicting usage to grow.  

The headache of scrambling for mainframe skills in an ever-dwindling pool simply isn’t sustainable, let alone desirable. And outsourcing the problem to a third party won’t fix it either – at this stage in the mainframe skills lifecycle, it can buy three years of comfort.  

Once the contract expires, however, and with all mainframe knowledge drained from the company, the supplier will be handing back something that’s truly broken.  

Against this backdrop of an ageing sys admin population, the likeliest incentive for companies to modernise their mainframe and secure the business is a fiduciary risk. Given the impending liability that accompanies an obsolete workforce, main boards and related finance, audit and risk sub-committees are starting to look into the challenge more carefully.  

Business chiefs have been reluctant to mess with 40-year-old software assets that run the bread-and-butter business. But with regulatory reporting more stringent across all sectors, news of retired or expired mainframe staff is a red flag that’s percolating from the system architect up to the top table. 

Cumbersome legacy slows agility 

The other urgent driver of modernising the mainframe estate is agility. A lack of nimbleness when operating in dynamic and highly competitive markets of banking, insurance, retail and communications stymies a player’s ability to compete. Companies need to spin up new products, fast, in response to changing business circumstances and external shocks. Harnessing tools like machine learning that reside in the cloud enables a smarter engagement with customers. 

Typically, though, mainframe applications were built as systems of record, not of insight and engagement. Without mobile apps on phones and applications that are componentised and easily reconfigurable, it’s impossible to pivot and address change. More than two-thirds (67%) of respondents to LzLabs’ survey said the mainframe is a barrier to innovation: they are frustrated by a lack of capability in domains including data analytics, integration of business services in the cloud and real-time content management. 

Over the past 20 years, organisations have swallowed the pain of running an uncompetitive platform because modernisation seemed too risky without the skills and tools for transformation.  Instead they’ve tried to inject agility into their software and organisations through alternative avenues, while chasing an elusive total cost of ownership figures for mainframe versus cloud-hosted estate.  

Drivers of risk and greater agility act in concert to make a compelling case for mainframe modernisation, and the nagging pain of high overhead costs is always in the background. But it’s the ticking skills time bomb that makes it crunchtime. Coping mechanisms of kicking the can down the road or outsourcing are no longer viable in the medium term. Doing nothing poses an existential threat. And, the collateral benefits of being able to participate in fast-moving business ecosystems with agility and at lower cost are too valuable to ignore.

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