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U.S. Enterprises Move Toward Mainframe Modernization to Improve Agility, Lower Costs

ISG Provider Lens™ report sees trend toward mainframe modernization and mainframe-as-a-service gaining traction

Enterprises in the U.S. still running on mainframes are looking to service providers to help modernize their use of the legacy computing platform to improve operating agility and lower costs, according to a new report published today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

The 2021 ISG Provider Lens™ Mainframe Services & Solutions Report for the U.S. finds many enterprises in the country exploring various options, from introducing agility into legacy mainframe applications, to moving all applications off their mainframe to other computing platforms or adopting a mainframe-as-a-service (MFaaS) model with pay-as-you-go pricing.

“The mainframe modernization market has been accelerating in the last two years, driven by the need of organizations to increase agility and lower operating costs,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “Enterprises that do not plan to modernize should consider outsourcing their mainframe operations.”

Service providers are offering several tools that allow enterprises to modernize their mainframes, the report says. Providers of MFaaS and mainframe modernization services can achieve a 10 to 25 percent cost savings by transitioning services. Providers check configurations, software licenses and dead code that may waste mainframe resources.

The report notes 92 of the world’s top 100 banks, 23 of the top 25 U.S. retailers, and nine of the world’s 10 largest insurance companies run IBM Z systems mainframes.

Nevertheless, many U.S. enterprises see hardware decisions as increasingly irrelevant, with more focus on business applications, the report says. They are abandoning legacy programming languages such as COBOL, Assembler and Natural in favor of Java, .NET and C#. In some cases, service providers are helping enterprises covert COBOL to Java.

Some enterprises have resisted mainframe modernization based on the outdated myth that the vast amount of data stored on mainframes cannot be moved to the cloud, the report says. Cloud data lakes have become popular alternatives for storage, flat files and virtual tape backup.

Another myth, according to the report, is that the cloud cannot scale as well as mainframes. Cloud services can simply add more servers and offer the same, or even better, performance.

The report sees the most frequently used method for modernizing the mainframe as encapsulating batch and business functions into microservices that can run directly in the cloud. In some cases, mainframes are decommissioned, with modernization providers moving applications to the cloud or re-platforming them.

In addition, the process of re-engineering applications off the mainframe is gaining traction, the report says. Tools are fast, reliable and produce quality code. Recent advances in methods and technology includes artificial intelligence, programming frameworks, code quality inspection and automated testing.

The 2021 ISG Provider Lens™ Mainframe Services & Solutions Report for the U.S. evaluates the capabilities of 46 providers across five quadrants: Mainframe Modernization Services, Mainframe Transformation Services, MFaaS – Mainframe as a Service, Mainframe Operations, and Mainframe Modernization Software.

The report names Atos as a Leader in four quadrants and Capgemini, Ensono, IBM and Infosys as Leaders in three. HCL and TCS are named Leaders in two quadrants, and Accenture, Advanced, Blu Age, Cognizant, DXC Technology, Fujitsu, Google, Mindtree, Mphasis, Tech Mahindra, TmaxSoft, TSRI and UST are all named Leaders in one.

In addition, HCL, Heirloom Computing, Unisys and UST were named Rising Stars—companies with “promising portfolios” and “high future potential” by ISG’s definition—in one quadrant each.

Customized versions of the report are available from Ensono, Google, Heirloom Computing, Infosys, Mindtree, Mphasis, and TmaxSoft.

The 2021 ISG Provider Lens™ Mainframe Services & Solutions Report for the U.S. is available to subscribers or for one-time purchase on this webpage.

About ISG Provider Lens™ Research

The ISG Provider Lens™ Quadrant research series is the only service provider evaluation of its kind to combine empirical, data-driven research and market analysis with the real-world experience and observations of ISG's global advisory team. Enterprises will find a wealth of detailed data and market analysis to help guide their selection of appropriate sourcing partners, while ISG advisors use the reports to validate their own market knowledge and make recommendations to ISG's enterprise clients. The research currently covers providers offering their services globally, across Europe, as well as in the U.S., Germany, Switzerland, the U.K., France, the Nordics, Brazil and Australia/New Zealand, with additional markets to be added in the future. For more information about ISG Provider Lens research, please visit this webpage.

A companion research series, the ISG Provider Lens Archetype reports, offer a first-of-its-kind evaluation of providers from the perspective of specific buyer types.

About ISG

ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 700 clients, including more than 75 of the world’s top 100 enterprises, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in Stamford, Conn., ISG employs more than 1,300 digital-ready professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry’s most comprehensive marketplace data. For more information, visit www.isg-one.com.

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