Financial services firms are finding a surprising way to improve their business agility at little or no cost. They can move their COBOL legacy applications to Microsoft Windows servers, and they can do it without rewriting the applications. Suddenly they have a choice of vendors rather than purchasing everything from a single supplier.

“Companies have decades of development invested in highly specialized COBOL applications,” said Dennis Maroney, the worldwide director for insurance at Microsoft. “They want to bring some of those applications into a real-time world so agents and brokers can interact with them over the Web. They also want to control costs. By moving them to a Wintel platform with Micro Focus COBOL.NET or Fujitsu NetCOBOL, they can do both.”

Through moving some processing off mainframes, firms can avoid costly licensing, upgrades and support costs. Many vendor mainframe applications have cost factors of 5 or 10:1 vs. running on a Wintel server.

“An eight-way Intel-based server can handle much of the work done previously by all but the most powerful mainframes,” said Spyros Sakellariadis, director of the Mainframe Migration Alliance at Microsoft. “Now firms have vendor choices in this important arena once again. It used to be that they could buy mainframes from IBM, Hitachi, Amdahl, Fujitsu or Burroughs, but now customers are reduced to an almost sole vendor. Firms like choice because they know competition brings higher performance and lower costs.”

Wintel – Speed, Power and Flexibility

Firms are beginning to move applications off mainframes to Intel-based servers because they are faster, more flexible and significantly cheaper. In a Wintel environment, firms can develop and launch new products in days instead of months. Then they can take their savings from maintenance and use it for new development or to enter new markets. If a company is spending 90 percent of its IT budget on maintenance and 10 percent on new development – not an unusual ratio in the mainframe-centric world – reducing maintenance to 80 percent would double the funds available for innovation.

Microsoft and key partners are working with dozens of major firms across North America to identify applications that are suitable for migration. They have formed the Mainframe Migration Alliance (http://www.mainframemigration.org) to provide the tools and support companies need to move applications to Wintel.

“The best initial prospect for migration is a silo application in the company’s portfolio,” said Ian Archbell, vice president of product management at Micro Focus, a key member of the alliance. He recently worked with an insurance carrier that moved a rating engine from a mainframe to an Intel server with the help of Microsoft, Intel and HP.

“We were able to do it in a matter of months. Their time to process new applications was cut in half and they saw a marked increase in their ROI,” he added. (ROI calculator at http://www.microfocus.com/mma.org).

For the insurance industry, said Maroney, a good candidate for migration would be an older legacy claims or rating application written in COBOL.

“When asked for future direction, IBM advises clients to rewrite their COBOL applications for WebSphere. We can reduce the business risk by moving them to COBOL on .NET where users can link them to Web services on their way to rewriting the application completely at the time and place of their choosing.”

Savings add up fast, said Sakellariadis.

“Many of the enterprise-class customers that we’re talking to are paying millions of dollars per year just for operating system licenses,” he explained. “They’re finding that the same COBOL application can be run on a Windows server where the annual budgets are a fraction of this.” While the ongoing costs of running mainframe applications are significant and increasing, those applications can often be moved successfully to a four- or an eight-way Windows box.”

Reducing Costs, Expanding Business Potential

The savings come in several areas. The cost of Intel based servers is now a fraction of the cost of a mainframe yet a recent benchmark shows an eight-way Windows server delivering more than 1,200 MIPS, and a significant maintenance cost reduction compared to a mainframe. One telecommunications company estimated it would save $12 million in three years on software licenses alone after moving some applications off its mainframe.

Even more important than economic savings is the business potential achieved by moving applications to an open operating system. Once the application is re-hosted, it can extend more effectively through Web services to provide real-time reporting, profitability analysis, and customer information.

Another reason companies are looking to migrate is that they have a difficult time coping with old systems that have been maintained for decades, said Sakellariadis. Documentation is often inadequate, the people who wrote the systems retired and few new university grads are versed in COBOL – or have any desire to learn it.

Providing More Choice in Hardware and Software

“Customers are locked into one company for the hardware and software, and they’re indicating that support people are harder to find.”

The challenges are acute in financial services. As one of the first sectors to adopt computers, it now relies heavily on mainframes to operate core business processes. As many business processes move to real-time in response to customer demand, firms are hitting the wall of inflexible mainframes designed for a more leisurely age of batch processing.

New high-end servers from Fujitsu, HP and others can provide real-time processing during the day and meet the needs for big overnight or end-of-quarter batch processing. “Customers have indicated that batch jobs that took hours on their mainframes now take minutes on their Windows systems, and operations that took days now take hours,” said Sakellariadis. “Windows Server 2003 is able to handle mainframe levels of performance, scalability and reliability with five nines of uptime on SQL Server at a small fraction of the price of DB2 on an IBM mainframe.”

“The problem goes beyond the high costs of mainframes,” added Maroney. “Companies need agility and flexibility to respond to new business situations. At Equifax, for example, when financial analysis went online and people needed immediate return of information, their mainframe-based systems were not in a position to respond. It took hours instead of the quick response needed.”

Complex financial models that took days to run on the mainframe now are done in hours and models that took hours are now done in minutes according to Matt Magnotte, senior vice president, direct marketing services at Equifax, “The move saved us millions in annual mainframe costs.”

Mainframe migration can take three forms:

• Recompile the application code for Windows

• Move select applications from the mainframe to a Microsoft platform

• Take an application and move it to .NET so it can run on Windows.

Ready for Web Services

Once an application is running on a Windows version of COBOL, linking it to other .NET applications is relatively simple. The result is very modern-acting technology, with almost its entire original code intact, but running in a highly flexible environment that can support today’s requirements, like real-time Internet connectivity.

“Once a company has a few months of running on a more cost-effective platform, it can begin using the IT savings to extend the platform for business agility and mobility,” said Maroney. “A company can extend that application as far as it desires, moving parts of it into a complete rewrite as time and resources permit. Through the MMA, we provide firms with choices of vendors, system integrators. Enterprises with legacy applications on COBOL no longer are locked into a single supplier. Significantly, this is occurring not only in North America but globally.”

In a case study on the Microsoft.com Web site, Manfred Zillinger, chief development officer, said that when Bertelsmann moved an important application from a mainframe to Micro Focus COBOL on Windows 2000 Server, costs dropped from approximately €115,000 a month to €38,000 a month.

Who wouldn’t want to participate in a world of reduced cost, increased agility, higher performance and quicker response to ever-changing business needs?