M E T I S MANAGEMENT CONSULTING

Re-Hosting Mainframe Applications

Munich, July 2012

NOTICE: Proprietary & Confidential This material is proprietary to METIS Management Consulting GmbH (METIS). It contains trade secrets and confidential information, which is solely the property of METIS. This material is solely for the internal use of METIS clients or business partners. This material shall not be used, reproduced, copied, disclosed, transmitted, in whole or in part, without the express consent of METIS. METIS 2012. All rights reserved

CONTENTS

1. 2.

Re-Hosting Mainframe Applications Case Study NYSE Euronext

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1. RE-HOSTING MAINFRAME APPLICATIONS

In comparison to North America and Asia, European financial service industrys maintenance share of total IT budget is the highest
IT Expenditure in Financial Services
Maintenance share of total IT budget in percentage:1) 71% 69% 77%

30

36

44
26 30

35

28

27

29

60 85 88 91

66

74

94

95

98

2009

2011
North America

2013

2009

2011
Asia

2013

2009

2011
Europe

2013

Significant new development

Source: Celent (2011), METIS Analysis

Maintenance1)
1)Absolute

numbers in bn USD

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1. RE-HOSTING MAINFRAME APPLICATIONS

Most financial service companies have already utilized traditional IT cost reduction levers
Cost Reduction Levers
Optimization levers
Technology and architecture Lever 1: Architecture complexity & utilization

Time to realize
Quick wins
Life cycle/investment cycle optimization Decommissioning of duplicate/ unused applications Volume adjustments (hard- & software Tiered service levels Service level adjustment Billing optimization Optimization of the project portfolio

Short/medium term
Standardization Virtualization (servers & desktops) Consolidation of storage, WAN Load optimization (server, storage, space)

Long term
Front-to-back complexity reduction Application utilities Architecture optimization

Lever 2: Service level appropriateness Services, processes, and organization Lever 3: IT process effectiveness

Service differentiation Output adjustment Process optimization IT supply-portfolio optimization Optimization demand management/governance Industry utilities

Lever 4: Procurement optimization Lever 5: Sourcing & location

Re-negotiation of procurement contracts Software license & asset management

Strategic procurement

Out-tasking

Site optimization & consolidation Outsourcing, Near shoring/off-shoring Spin-offs, legal organization redesign Joint ventures Shared services

Resources

Lever 6: IT organization effectiveness Lever 7: Staff productivity & utilization Savings potential (% of annual budget) Investment need (% of annual budget)

Reduction of external resources Resource optimization

Wage adjustment Co-sourcing Industrialized capacity management

5%
0% - 2% (self-funding)

10% - 15%
5% - 30% (limited investment)

20% - 30%
50% - 150% (structural changes)

Source: Oliver Wyman, METIS Analysis

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1. RE-HOSTING MAINFRAME APPLICATIONS

Mainframe costs are traditionally controlled by capacity or license management while mainframe alternatives constitute a more fundamental approach
Cost Reduction Approaches

Mainframe cost reduction

Capacity management

License management

Mainframe alternatives

Utilize specialty processors (IFL, ICF, zIIP, zAAP)

Increase virtualization

Use capping methods

Use resource groups

Consolidate software

Manage contracts

OEM/ASL

OIO/ELA/ESSO

...

Optimization of mainframe operations

Source: METIS Analysis

Change of IT architecture

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1. RE-HOSTING MAINFRAME APPLICATIONS

Mainframe environments can be altered by various approaches, which may be also combined with each other
Mainframe Alternatives

1. Retire

Applications become obsolete, critical data is still accessible to allow future use

2. Replace

Replacement of individual mainframe application through standard software

3. Re-Platform

Replacement of mainframe standard software through open system software

4. Re-Host

Migration of the application to an open system platform by re-using the application code

5. Reengineer

Redesign and develop the functionality using a modern architectural framework

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1. RE-HOSTING MAINFRAME APPLICATIONS

Availability of appropriate software products is the basis for migrating code to an open system platform
Software Mapping
Function
Application Development Programming Language Data Services Database Transaction Services Batch Scheduler Report Generator Security
Source: METIS Analysis

Mainframe Vendor
CA Technologies IBM IBM IBM CA Technologies IBM IBM CA Technologies IBM IBM IBM IBM CA Technologies IBM BMC CA Technologies IBM IBM CA Technologies

Open System Vendor

MicroFocus MicroFocus MicroFocus IBM Clerity Solutions, Inc Oracle IBM Microsoft Oracle Clerity Solutions, Inc Clerity Solutions, Inc The Workstation Group

Product
AllFusion Modeling Suite COBOL PL/I VSAM IDMS/DC IMS/DB DB2 IDMS/DB IMS/TM CICS JCL REXX CA-7 Tivoli Workload Scheduler Control-M Easytrieve Plus IBM RMF RACF ACF2

Product
Server Express COBOL Open PL/I C-ISAM UniKix TPE Oracle Database UDB SQL-Server Tuxedo UniKix TPE UniKix BPE JCL Translator Uni-REXX

ORSYP Clerity Solutions, Inc

Mergilent Clerity Solutions, Inc

Dollar Universe UniKix BPE

Easytrieve to COBOL UniKixSecure

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CONTENTS

1. 2.

Re-Hosting Mainframe Applications Case Study NYSE Euronext

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2. CASE STUDY NYSE EURONEXT

Massively increased performance requirements led NYSE Euronext in 2007 to thoroughly review the mainframe environment of its shared data center
Challenges

Application
400% rise in transaction volume over the past 2 years
Managed service of NYSE for multiple market participants Post trade services, trade monitoring, reconciliation, regulatory compliance Self developed COBOL applications Size of total application >10m LoC1) Data handling >3.5 TB2) per month

Regulatory challenges and algorithmic trading

System Platform
IBM parallel sysplex mainframe complex (2 sites with 5 LPARs)3) Computing power of 1.660 MIPS Server with independent, own power supply Data replication in real time

Mainframe costs are increasingly unattractive in comparison to open systems

Source: NYSE (2008), METIS Analysis

1)LoC

= Lines of Code; 2)TB = Terabyte; 3)LPAR = Logical Partition

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2. CASE STUDY NYSE EURONEXT

NYSE selected re-hosting as the best modernization option available in light of investment, return and project risk
Modernization Options

Business as usual

Re-host Maintain existing applications 1:1 migration of COBOL code Modernization of IT architecture to open system

Applications remain unchanged Possibly upgrade mainframe hardware

Mainframe Environment Outsource segment Mainframe Operations entirely to external service provider

Re-write the entire code of existing applications

Source: NYSE (2008), METIS Analysis

Outsourcing

Redesign

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2. CASE STUDY NYSE EURONEXT

Using open system clustering, the new IT architecture shows similar availability figures as the replaced mainframe environment
Old and New System Architecture
Mainframe Sysplex Complex
SYSPLEX Timers
SITE 1 - Mainframe Complex - 5 LPARs SITE 2 - Mainframe Complex - 5 LPARs

Open System Platform

C2L Polyserve
SITE 1
Connect via SFTI Customer/ User

SITE 2
Connect via SFTI

D CF11

A CF21

F CF22 J E CF12

Linux- Polyserve Cluster

Linux- Polyserve Cluster

FICON

SHARK

EMC DASD

SRDF

EMC DASD

SHARK

- NDM/FTP - Listener FC FC

- NDM/FTP - Listener

Virtual Tape

Virtual Tape

AIX

AIX

UNIKIX TPE UNIKIX BPE UDB CMOD Tidal Agent

SRDF-Sync FC FC

Data

Data

UNIKIX TPE UNIKIX BPE UDB CMOD Tidal Agent

SILO

SILO

Archive

Archive

Source: NYSE (2008), METIS Analysis

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2. CASE STUDY NYSE EURONEXT

NYSE Euronexts expectations on mainframe modernization were successfully fulfilled in all defined categories when going live in 2008
Project Results
Replacement of mainframe with stable open system Robust/accustomed applications maintained Improved performance for less costs

Reduced time efforts

IBM system p 595 server (online- and batch-processing) as replacement for the mainframe PolyServe cluster of HP DL585 servers installed with Linux used as frontend

No change in business logic of applications Of >10m LoC more than 98% remained unchanged and were transferred automatically CICS- and batchtransactions, utilities, and reporting were transferred smoothly

Cost per transaction significantly reduced (>50%) Batch window reduced by 25% Low adaption and (re-) training costs for employees

Planning requirement: 3 months Implementation: 14 months

Source: NYSE (2008), METIS Analysis

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2. CASE STUDY NYSE EURONEXT

Basis for the successful porting was the availability of appropriate mainframe software clones on the open system platform
Software Architecture
Function
Application Development Programming Language Data Services Database Transaction Services Batch Scheduler File Transfer Security OS Bridging
Source: NYSE (2008), METIS Analysis

Old Software Architecture

Syncsort ISPF COBOL Assembler GDG VSAM IAM DB2 CICS JCL JES OPC NDM FTP RACF z/OS

New Software Architecture

Syncsort Uni-SPF COBOL C GDG VSAM IAM UDB UniKix TPE ksh UniKix BPE Tidal Agent NDM FTP UniKixSecure SUSE Linux AIX

MQ

MQ

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