Mainframes were once the digital technology helping organisations save millions of dollars by creating efficiencies and enhancing quality. Fast forward a half a century and this technology continues to support critical business operations in many organisations. However, those that continue to rely on mainframes are putting themselves at risk.

Counterintuitive to the average cost of computing, the cost to support these legacy solutions is rising, but the number of skilled developers to support mainframes are falling. This combination means the enterprise risks associated with running mainframes are growing. At the same time, we are only beginning to realise business value from exponential technologies such as cloud, mobile, robotics, Artificial Intelligence (AI) and advanced analytics (to name a few).

Aging systems and legacy enterprise applications built on languages like COBOL or Natural cannot take full advantage of today’s customer-centric digital technologies. What's more, the time and effort required to integrate mainframe systems with these exponential technologies is increasingly making mainframes an impediment to digital transformation.

As technologies continue to evolve at ever-increasing speeds, incompatible legacy applications and systems are preventing many organisations from taking advantage of new technology-driven business opportunities and, ultimately, digital transformation.

Digital transition vs digital transformation

The teams running these mainframes will argue they are leveraging digital technology. However, instead of creating actual customer-centricity and digital agility, they have created the appearance of a modern, customer-centric solution, and the cost of this is not proportionate to the business value it enables, which is often exacerbated by the need for workarounds to get the mainframe to support the digital technologies.

It also takes more time to get these incompatible technologies to integrate. For example, an organisation might implement a mobile application that can be developed in a few weeks for tens of thousands of dollars, but then take months and hundreds of thousands of dollars to integrate it to the mainframe. Another example can be found in many financial services organisations, which increasingly use customer-centric design to identify new products and services to meet their customers’ needs. Changing the mainframe to support these new products and services can often mean identifying the traditional product (e.g. credit card, table home loan, revolving credit account) that the new product most closely resembles, which can lead to constraints, compromises and delays to the new product/service offering.

For commercial organisations, speed to market is often critical to competitive advantage. Longer product and service development lifecycles can impede spend to market. And for many organisations, both public and private sector, longer product and service development can hinder timely compliance for regulatory enforced changes.

Business strategy being limited by technology is neither desirable nor sustainable. The underlying legacy solution still exists and the risks associated with it only grows as time passes. More technology barriers will be introduced as exponential technology accelerates innovations, making mainframe decommissioning inevitable.

Mainframes as the fish hooks of digital transformation

Most organisations with a mainframe will have explored a transformation with varying levels of success. For those that ultimately succeed, they often find the transformation path plagued with obstacles and the cost and schedule typically increases significantly from what was originally outlined in the business case. However the mainframe is gone, the cost to manage is reduced and the organisation is now part way through a digital transformation.

Other organisations fail and abandon their transformation. The disruption to the organisation is huge, the sunk costs large and the mainframe still exists. This leads back to the business case drawing board.

What is more common, however, is what we refer to as “epic failure”. In these situations, the mainframe and a replacement core solution operate in parallel, neither of which address business needs. The disruption to the organisation is huge, the sunk costs large and the support costs also increase (significantly) as there are now two solutions. Further, the cost, risk and complexity of any future transformation have all risen.

In our experience, the mainframe itself is unlikely to be the problem behind these failures. Rather it is the approach that is impacting the success.

We will explore the steps organisations can take to minimise the chance of failure in a future post - stay tuned.

Find out more about our digital consultancy and capabilities at Deloitte Digital New Zealand

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