Everyone wants to retire mainframes but 74% of modernization efforts fail

Infrastructure survey finds two big reasons are lack of funding and fear of change even though modernization efforts make companies more nimble.

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The COmmon Business-Oriented Language was invented in 1959, and it has been in use ever since. More efficient programming languages have come and gone since COBOL entered the world, yet it is the one performing over 70 percent of global business transactions in 2016.

Image: National Museum of American History

Business decision makers know that they need to retire mainframes that run on COBOL and modernize legacy systems, but the fear of change is limiting funding and the success of this work.

In the "2020 Mainframe Modernization Business Barometer Report," business software and services company Advanced found that almost 100% of survey respondents plan to move legacy applications to the cloud this year and the motivation to move is clear:

  • 60% strongly agree they will be left behind competitively if they fail to modernize
  • 33% say modernizing has allowed the company to be more reactive to market changes
  • 34% say legacy modernization has accelerated digital transformation projects

About three-quarters of leaders said they have started a modernization program but failed to complete it. The survey of 400 IT leaders suggests two familiar reasons for this—fear of change and lack of funding. The diminishing number of people who know COBOL is part of the problem as well.

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Only 12% of application and infrastructure managers said they have a full commitment from the leadership team when it comes to funding modernization projects. Fifty-six percent of that same group of people said fear of change blocks that funding. People farther up the org chart are more confident with 53% of CIOs and 42% of CFOs stating they receive full commitment to modernization from senior leaders. Here is the percentage of each group that agreed with the idea that fear of change is the key reason that modernization projects fail to get funding:

  • Application and infrastructure managers        56%
  • Enterprise architects                                       39% 
  • CFOs                                                               33% 
  • COOs                                                              27% 
  • CIOs                                                               21%

It's easy to understand the reasons for this fear. The report suggests that "the bespoke applications that organizations have built themselves are much more difficult to modernize, due to their complexity and interdependence with other lines of business systems, which is often why they are left behind in their legacy state." These customized applications are often mission-critical, meaning that there is much more risk associated with maintaining them.

Mainframes are still critical to business operations with 71% of the Fortune 500 depending on these machines, including 92 of the world's 100 largest banks.

The survey found that organizations are running an average of four mainframes with an average age of 17 years. Sixty-four percent are running mainframes between 10 and 20 years old, with 28% running machines that are 20 to 30 years old.

The top three business units that rely on these systems are:

  • Human resources         36%
  • Operations                   29%
  • Finance                        23%

The survey found that operations leaders are more concerned with upgrading the finance department than CFOs are, 33% vs 15%. The report suggests that finance leaders are slower to accept the need to modernize or may be moving more slowly than other departments.

When asked what the ancillary consequences to not modernizing legacy systems would be, a majority of respondents listed difficulty in integrating legacy systems with modern technology and the second most common response was difficulty recruiting the right talent.

The 2020 Mainframe Modernization report was conducted online by Coleman Parkes in March and April of 2020. The survey included 400 people working for large companies in Europe and the US. Survey respondents included enterprise architects, CIOs and heads of IT, COOs and heads of Operations, application and infrastructure managers, and CFOs and heads of finance.

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