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annual mainframe operating costs

Can you really save 80% of your annual mainframe operating costs?

Walter Sweat
Dec 21, 2020
5 min

Yes, and no. Every client we work with will not save 80% - some customers achieve nearly 90%, as in the case of this government customer – whereas others may achieve closer to 50-60%.

The bottom line is the savings in annual operating expense that is achievable by migrating your mainframe to a lower cost platform is significant. To understand if pursuing these savings makes sense for your business, a careful and detailed analysis is required. This involves not only the technical considerations but developing a holistic understanding of all the costs involved, from the investment required for the migration to the on-going operational costs associated with your new environment. At Astadia, we work with clients to understand exactly where they are starting, where they want to go, and partner with them to develop a complete roadmap, capturing not only the technical considerations, but the costs and return associated with pursuing a migration.  

To achieve the significant cost savings we discuss, clients are moving their mainframe to a cloud provider such as Azure or AWS. In making a comparison to mainframe costs versus cloud costs, there are several components involved. On-going costs for organizations who stay on the mainframe are related to the hardware and software MSU usage as well as the costs of third-party components.  With the ever-increasing power of the x86 architectures available, fewer cores are required to match the performance of the mainframe.  As an example, Microsoft publishes their opinion that a single x86 core equates to roughly 150 MIPS on the mainframe.  And the cost of those cores, along with the cost of technologies like SSD (solid state drives), means you can accomplish much more in terms of performance now than you could when mainframe migrations first started to occur.

A major consideration for achieving cost savings is the extent to which you utilize 3rd party products. For organizations who license software solutions from companies like Broadcom, being able to completely move away from those technologies can save huge amounts of monthly spend. Similarly, for technologies like job schedulers, where there are comparable offerings that run in the cloud in the same way they run on the mainframe, every one of our customers has spent less on providing that capability when run off of the mainframe.

In general, a company that has a “standard” architecture stack (CICS, JCL, DB2, VSAM) would expect to see savings toward the lower end of what we suggest. For those companies who licenses technologies like Natural and ADABAS, or technologies from companies like Broadcom, they should expect to see savings closer to the higher end of what we discussed.

The other component that comes into play is if a company chooses to re-platform (where there can be continued licensing charges for alternatives to the mainframe (like Micro Focus COBOL), as opposed to a re-factor solution, where there are usually fewer ongoing license components left behind after migration. For technologies such as Natural/ADABAS, an automated transformation to a target such as Java/SQL typically makes the most sense and offers significant cost reductions.

For those clients who pursue a strategy to minimize their mainframe footprint without fully retiring the mainframe, there are still options to achieve significant cost savings. This becomes a more challenging question to answer and relies on a few factors. Depending on your contract with IBM or Unisys, you may or may not be able to see significant savings immediately.  For companies, whose contract allows them to reduce charges for MIPS at any point in time, then absolutely they can see proportionate savings as do those companies who completely eliminate their mainframes.  As an example, if your contract says you can reduce the MIPS charges from 2,000 to 1,000 and actually be charged less, then those savings would be realized when you migrate a portion of your application and data to the cloud or to a distributed environment.  

On the other hand, there are companies whose contracts state they are signed for a period of time and they don’t have the ability to reduce those MIPS charges until the end of term of that contract.  Also, for companies who make extensive use of products from companies like Computer Associates or BMC (which can represent a significant percentage of their yearly mainframe spend), they most often do not see as dramatic a level of savings, since BMC and CA often do not allow a reduction in number of MIPS alter the contractual obligation till end of term of their respective contracts.

Bottom line, the organizations who do see the most savings are the ones who completely turn their mainframe off or the ones who are able to forego an increase in MIPS by moving some application and data off of the mainframe. An example of that is a company who is pressed right against their contractual MIPS allowance and need to subscribe to a higher MIPS usage.  The real challenge is that, again, companies like Broadcom and BMC, will automatically charge more just because of the increased MIPS usage. So by moving 500 MIPS off of a 1,000 MIPS mainframe, it allows the rate paid for the mainframe to at worst case cost no more, and at best case saves a significant amount as opposed to having to purchase more MIPS capacity.

Back to the original question – Can you achieve 80% cost savings in operating expense by migrating away from your mainframe? The answer: it depends. To understand if a mainframe migration makes sense to even explore, we’ve developed a rapid questionnaire process. With a 1-hour investment of time to provide an inventory of your mainframe environment, we can provide you with a roadmap, including the costs of the migration, and estimates for your ongoing operational costs post-migration. We can even provide you with numbers for full operational support from our managed services division. A mainframe migration doesn’t make sense for everyone, and to fully understand if you should consider a migration, this short process can provide you with valuable insights on your options to move forward.

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Walter Sweat

Chief Technology Officer
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