You are on page 1of 44

Modernising Legacy Systems

Pragmatic savings during the economic downturn

Herman Eggink September 17th, 2009

2009 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice

Agenda
Why

modernise MFs NOW Modernisations options


Offloading standard applications Rehosting custom code
Identify

migration targets Migrating Successfully


Building the business case Understand & Manage critical success factors Mitigating risks

Why Modernise Mainframes NOW

Pressures on IT budgets
Higher than ever

The world is in one of the biggest financial crises in history


Banks are falling over People losing their jobs Financing close to impossible (unless you bring the money with you)

We all know the Americans did it but In the mean time, it still impacts all of us and forces us to focus on:
Lowering cost Increase efficiency and effectiveness Generating revenue

Can IT help?
Mainframe

Modernising Legacy technologies:


Vast majority of the systems (>70%) still based on, legacy technologies: PL/1, Fortran, Assembler, IDMS, ADS, IMS, DL1, CICS, JCL, Natural, TIP/HVTIP, DPS, Adabas, WebFocus, Ideal, Datacom, ADSO, CA Gen, RPG, GCOS, DMS/SFS, ECL/SSG)
Mainframe

workforce:

Average age of the Mainframe workforce

is well above 50 for most Mainframe owners

Instead of being optimised, commoditised, open and virtualised, these environments are highly specialised.

The impact of being special


As a user, special means: You are unique, there is no-one like you Its difficult to integrate with modern technologies Its difficult to change: limited innovation due to unavailability of new technologies and slow adoption of open standards: 20yo development paradigms You need specialised skills No negotiating position Migrating off takes time, is complex (often seems impossible)

and costs money. And has resulted: High cost: MF environments are typically 50-70% more expensive than open systems Shortage of skills: many people retiring so fast that training is virtually undoable Inflexible and inefficient systems where changes typically take 9-12 months whilst having a backlog of many changes to complete

So do you really need Special?


What does a MF do that open systems cannot do better and cheaper? Many people believe the MF is:

More reliable and resilient More optimised More secure More scalable

More flexible Better manageable and serviceable

In reality..

Major Life Insurance Company Korea


Large insurer in Korea 40,000 insurance agents 800 branch offices in Korea Subsidiaries in Thailand and China US$100 billion in Assets, Annual Revenues of $25 billion
Solution
Use

Challenge
Migrate

Result
12

our core processing system from IBM mainframe to a lower cost and more flexible platform IT cost reduction mandates Difficulty in recruiting COBOL programmers Integration/Interoperability issues
Data

mainframe rehosting tools to migrate the entire 7500 MIPS mainframe environment Keep existing COBOL applications and DB schemas Production environment 3 x 64P Itanium 2 based HP Superdomes, Oracle 10g in a 3 node RAC cluster, Tmaxsofts Openframe and TJES
Technology

center staff divided into Mainframe vs Open Systems (UNIX and MS)

partners actively engaged in performance tuning, bug fixes, and testing

Months, US$25million, roughly 1000 man months 16,000 online application source files, 15,000 batch application source files 99% automatic conversion rate Over 2000 DB tables, 53,000 SAM files, 40,000 tapes US$22million cost savings over 4 years Project cost break even point at 18 months

What they now say: Sangho Yoon, CTO, June 17


Was it worth it? In our case, clearly the answer is YES Original saving estimation was $22M, Expected saving now is $31M In our experience, UNIX based systems are as reliable as mainframes: Reliability (over a period of 18 months)
Mainframe system had 1 outage lasting 35 minutes, HP UX based rehosted system had 2 outages lasting 34 minutes The old platform would peak at 100% CPU utilization during heavy transaction loads. The current system rarely exceeds 60% with similar application response times. 3 x 64cpu HP Integrity > 7500 mainframe MIPS

Application developers:
tools are much more user friendly Transaction processing speeds seem faster overall Batch and sort performance is better

The combination of Tmaxsoft, HP, and Oracle yielded a powerful, 25 September reliable and cost effective solution. 2009

RURAL Servicios Informticos

RSI Spain
The Caja Rural Group is the merge of the Spanish rural banks to create a privately owned banking group, with a cooperative base, enabling common financial stability and solid development.
About 14,800 employees. 80 entities and 4,100 branch offices. More than 6.4 million final customers. More than 4.5 million transactions per day. 3,080 ATMs. 2.7 million credit and debit cards. 55,000 POS.

RSI is IT outsourcing company, 100% owned by Caja Rural Group.

Migration Results

We wanted to reduce operating cost We obtained:


Reduction of 800 Mips in batch period Reduction of 400 Mips in teleprocess period Reduction of cost from 5 to 1 if we do not extend Reduction of cost from 9 to 1 for each ampliation of 800 Mips
Luis Martnez Gmez-Lobo
CIO R.S.I S.C

Worlds Most Expensive Servers have become more expensive


Cost of IBM Mainframe vs. HP Superdome > 2001
5.00
4.50 4.00

Cost per High-end Server

3.50
3.00

$M

2.50

HP Unix IBM z/OS

In 2001: Consent Decree forcing IBM to share patents for mainframe expires. Amdahl and Hitachi exit mainframe market.

2.00
1.50 1.00

0.50
0.00

When HP Superdome delivers similar levels qualities of service, is the IBM Mainframe worth price?
12 25 September 2009

Source: IDC Tracker 1Q09

How many consecutive days could you and 3 friends golf at St. Andrew Old Course with TCO savings achieved by moving from an IBM mainframe to HP Integrity Superdome?

Hint: 120/person Green Fee

How many consecutive days could you and 3 friends golf at St. Andrew Old Course with TCO savings achieved by moving from an IBM mainframe to HP Integrity Superdome?

Answer: 115 Years,11 Months, & a couple days (includes weekends)

Business case is doable


Trading off Risk and Reward
Risks

can be managed

There are many references and success stories: those who have done it all saved money and do not want to go back Established and mature industry best practice
A lot of experience available

Reward

is high:

Lots of cost, stuck in MFs, can be freed up

Fast results are possible: projects can take 4 12 months Positive ROI normally within 1 to 2 years
Stick

to a proven, factory type repeatable approach

HP MF Modernization Quick Facts


In EMEA to date, engaged in over 250 mainframe related modernisation projects Over 12.300 consultants with MF (Cobol/CICS/..) background EMEA Modernisation Factory (MM CoE) based in Spain Created 10 years ago Over 42 HP primed and delivered MF rehost
mostly IBM and Unisys MF but also NCR, ICL, Bull, Siemens average customer saving of $25M in 4 years ie $1B overall saving In fact, no delivery to date where TCO reduction was less that 50% Positive return usually in 1.5 2 years

100% delivery to date, no failed projects.

Modernisation Options

Pros and Cons of the Modernization Alternatives

Replatforming Standard Applications

Offloading Standard Applications


Replatforming SAP
1

MIPS = 7 SAPS Single HP Superdome certified for 153K SAPS, equivalent to 22K MIPS One blade is already 25K SAPS SAP ECC 6.0 Unicode upgrade will require 3050% more CPU and memory Even the biggest SAP migrations typically take no more than 9 months (e.g. BASF: 270K SAPS, 7TB BWH, 48 systems)

Migration Stages
4 Stages will be followed for each SAP system
Preparation Migration Preparation Cut Over
Final Prod. Preparation

Discovery

Test Migration

Production Migration

Primary Objectives Identify migration requirements Identify risks Develop contingency strategy Validate overall timetable Prepare Prepare Prepare Prepare Prepare plans migration test scripts cut over plans test plans contingency Migration export Migration import Test and Validate Approve Migration export Migration import Test and Validate Approve Go-live

Duration of a Migration Project


Estimate 2 weeks to 2 months per landscape, depending on DB size of production system SAP system landscape (2-tier / 3-tier) Availability of downtimes (weekends) Oracle to Oracle: 1TB/h means less than 2 hrs downtime DB2 to Oracle: 200GB/hr means less than 1 day

downtime

Middleware: backup, monitoring, interfacing, general infrastructure Interfaces: Fax communication / job scheduling / plug-ins /other systems

(New Dimension products / ALE / RFC / NFS / ftp / ...)

Overall duration can be shortened by migrating more than one landscape at a

time

Standardised process, 1000 migrations done of which < 150 from Legacy (MF,

AS400). In only 1 case 1 day delay due to Java bug.

IBM Mainframe migration References


Austrian Government (BRZ), Air Products, Asiana Airlines,
Audi, Bang & Olufsen, Banco Bilbao Vizcaya Argentaria, Carl Zeiss (former SAP on Mainframe lighthouse), China Light & Power, CMS Energy, Continental, Danish Steel, Electricidade de Portugal, Enso, General Mills, Israeli Army, Kaufland, Levi Strauss, NORDAC, OMV, (former SAP on Linux Mainframe lighthouse), Reemtsma Cigarettes, Roland Rechtschutz, Royal Vendex, Saudi Electricity Company, Schott Glas, Shin Caterpillar Mitsubishi, Sodexho, Drewag, Telekom Austria, Valero Energy, Vergoelst

2006: complete migration to Linux on HP SAP R/3 on zSeries Integrity

Several R/3 and BW instances consolidated to only 4 rx4640 Montecito servers & 2 HP EVA, 20 TB each. Dramatically drop in TCO compared to Mainframe

Better response times compared to Mainframe


Better availability compared to Mainframe

OMV SNO-ITS 05/2003

25

Re-Hosting Custom code

Rehosting, what is it?


Automated

Migration of custom code off MF onto open systems (Windows, Linux, Unix) Business Logic remains untouched Underlying technologies automatically replaced with open systems equivalents No compromises to MF Quality of Services, resulting system as secure, scalable, stable and manageable as the original system was Resulting code as readable as the original so existing staff can maintain with as little retraining as possible

Critical Success Factors

Project feasibility
Proven project with agreed scope can be delivered within timeframe Migration is technically viable Financial business case is met

Project management
Clearly defined roles, responsibilities, deliverables and milestones

Quality management
Test strategy, test coverage, tools, resource

Proven methodology
Mitigate risk and remove unknowns early in the project thorough analysis

Change management
Impact on people, process, environment

Technology to reduce risk


Limit manual changes use automated tools where possible

Knowledgeable, available resources


Plan throughout project

Issues to be aware of
Time to complete the inventory
Need to ensure have full inventory or sources to migrate Factor in time to find the sources Decide on which sources need clear definition between customer and migration partner

Failure to locate all sources early in migration will impact the project costs and timeline

Big bang re-engineering


Need to plan complete retrain of staff on new development technology

Dual environment costs for longer

A roadmap approach limits impact on the business from a people perspective Time to migrate are dual environment costs acceptable

Phased migrations off mainframe


Concrete roadmap steps are low risk, e.g. (1) rehost discrete applications to OpenSystems

Increased Complexity - High risk High cost


(2) innovate on OpenSystems

But - Beware of phased migrations taking a piece at a time off the mainframe these can be high risk Low dependencies Risk to migrate is low BUT we find the interactions back to mainframe can be slow High dependencies High risk and cost as disentangling the mainframe can be extremely complex

Under-estimating the number of resources

Project completion risk

Especially in the analysis and testing phases Need to plan ahead . Early agreement on test coverage essential

Typical Project Lifecycle rehost based


Phases, timeline (7-18 months), best practice
~2 months ~4 months Implementation & Migration

~5 months

~2 months

Analysis & Design

Test

Production Release

Activity

Current System Analysis


Object Inventory Infrastructure

New System Design


Migration Guide Target Architecture

New System Setup Automated tools Configuration Data Migration


Data realignment

Code Migration
Batch, On-Line and Screens

Project and Test Plan Early Risk determination Consolidation of the inventory Detailed Project Plan Detailed Test Plan Detailed technical migration guide

Unit Tests System Tests Integration Tests Performance & Stress Tests High Availability Tests Internal Unit test provide high quality deliverables Ensure correct migration of the application functionality Ensure Interfaces working 100%

Modified Objects migration Final Tests Release to Production Production Assistance & Support

Value

Project Risks reduction by source migration automation Allow early test No Impact on business logic

Reduce Development Code Freeze Risk reduction due to Automated tools Eliminate Defects during conversion

Limiting impact on the business

Automated Tools
Limit manual intervention, limits risk of bug introduction Non intrusive of customer applications

Code Freeze Period


Limiting code freeze period to minimal e.g. Production Release Enables code maintenance throughout migration period

Rehosting
Limited impact to development and operations

No impact on end users No change to business logic so low risk to business

Migration Roadmap Approach


Incremental training and migration Phase impact to development and operations

Limiting impact on the business


Automated

Migration

Enabled by the automated tools usage, code freeze is only needed at the very end of the project. Minimum impact to preventive and corrective application maintenance, less manual errors.
Initial Source code Rule 1

Rule 2

Rules Engine

Maintenance
Rule N Final source code

Test code Test code Test code Test code

Final code

Ensuring overall viability

Economic Viability
Demonstrating economic viability of the system migration and obtainable savings in a 3 to 5 years timeframe.

Technical Viability
Making sure the migration is feasible from a technical point of view, being able to solve and respond appropriately and coherently to each main functional block or area of interest.

Plan Viability
Transmitting confidence on the project plan itself and the migration methodologies to be used.

HP Mainframe Modernization
The portfolio
Prove economic viability Address risks, concerns, issues Show high level future architecture Mainframe Migration Awareness Workshop Application Management Handle requirements for a phased modernization approach with the 5 Rs Assessment and Modernization Roadmap
Achieve future state Modernise Approach Methodology Capability

Portfolio Rationalisation

Mitigate the risk

AMS

Pre- Analysis Study

Perform the detailed feasibility study

Application Transition

(with detailed economic analysis, mainframe analysis, future architecture, migration and project plan)

Develop and Implement the solution

Service Details
Awareness Workshop (2 weeks)
first service offered if customer wants to understand the cost benefits of moving off the mainframe (completely or part offload) Used to quickly prove the business case (timeframe, technically, economically) using customer real numbers Typically will be a rehost, but could be used for re-engineer and COTS Output high level migration plan and economics first service offered if customer wants to understand their migration options and the business cases for each Used to provide customers a viable roadmap to evolve and modernize their legacy environments taking into account technical implications, business needs and organization change impact Typically for larger mainframes where several solutions will need to be applied and phased Output a migration roadmap of the various options with business justification for each (not all will be cost related) second service offered to finalize the customer requirements before creating a binding offer to the customer Always offered following the Awareness Workshop if a fixed price proposal required For MRA the scope of this phase will depend what the customer decides on from the proposed roadmap and migration options vital step in the sales process to prove our capabilities Demonstration of the migration methodology and tools + See sample migration output Talk to customers who have been through the migration process

Modernization Roadmap Analysis (MRA) (8 weeks)

Pre-analysis (5 weeks)

CoE & Reference Visit (2 days)

The Mainframe Migration Awareness Workshop

Deliverables

Business Case framework

High level Economic Analysis High level Technical Solution High level Project Plan

Power Point document organizing the Mainframe Migration Business Case structure and documenting the results of the Workshop and the analysis made. Includes: Impact on current processes & organizational impact Risks & Concerns Excel document with input data filled-in, key economic indicators calculated, 4-year benefit projection tabled and graphically represented. Power Point document describing current and proposed environment main building blocks and functionality, as well as functionality mapping. MS Project document with overall plan approach and calendar.

Economic viability
SUMMARY - Initial PURCHASE
Gross Profit Taxes Net Profit Cumulative Net Profit Payback period (PB) in months Return On Investment (ROI) Internal Rate of Return (IRR) Net Present Value (NPV)

The savings real customer case


Initial Expense (2,340,000) (819,000) (1,521,000) (1,521,000) 17 89% 78% 3,699,737 Year 1 1,046,682 366,339 680,343 (840,657) Year 2 2,881,664 1,008,582 1,873,082 1,032,425 Year 3 2,986,431 1,045,251 1,941,180 2,973,605 Year 4 3,095,388 1,083,386 2,012,002 4,985,607 TOTAL 7,670,165 2,684,558 4,985,607 4,985,607

NO Migration Scenario
TOTAL Current Environment TCO Current Environment - Depreciation effect 0 0 0 3,992,327 3,992,327 0 4,152,020 4,152,020 0 4,318,101 4,318,101 0 4,490,825 4,490,825 0 16,953,272

MIGRATION Scenario
TOTAL Proposed Environment TCO Proposed Environment - Initial PURCHASE Proposed Environment - Depreciation effect Current Environment Costs during Migration Project 2,340,000 0 2,340,000 0 0 2,945,645 1,473,900 0 (262,500) 1,734,245 1,270,356 1,532,856 0 (262,500) 0 1,331,670 1,594,170 0 (262,500) 0 1,395,437 1,657,937 0 (262,500) 0 9,283,107

Deliverables Examples (I)


TECHNICAL VIABILITY

BATCH Architecture

- Modelled in layers, where the various mainframe functions and tools are replaced by off-the-shelf products, HPUX tools or ad-hoc MM CoE developed tools.
SBE CONSOLE

TTY

CONTROL M
CONTROL-R

GLANCE/ PERFVIEW

RESTART DISP JOB COND

SBE

STEP COND

NOTIFY CLASS PRIORITY OUTPUTCLASS

GDG DUMMIE DD TEMP DD WORK DD

SHELL SCRIPT

PROCEDURES VARIABLES PARM FLOW CONTROL (IF/THEN/ELSE) DATASETS: VSAM (ESDS,KSDS,RRDS) NON-VSAM(QSAM) PARTIONED

Services library
LOCK SEVER GDG ORACLE UTILITIES TCP/IP Services UNLOAD SORT TOOLS SPOOL PROGRAMS

VXFS

PRM

WLM

HPUX OS

DLKM

SERVICE GUARD

LVM

Deliverables Examples (II)


SUMMARY - Initial PURCHASE
Gross Profit Taxes Net Profit Cumulative Net Profit Payback period (PB) in months Return On Investment (ROI) Internal Rate of Return (IRR) Net Present Value (NPV) Initial Expense (2,340,000) (819,000) (1,521,000) (1,521,000) 17 89% 78% 3,699,737 Year 1 1,046,682 366,339 680,343 (840,657) Year 2 2,881,664 1,008,582 1,873,082 1,032,425 Year 3 2,986,431 1,045,251 1,941,180 2,973,605 Year 4 3,095,388 1,083,386 2,012,002 4,985,607 TOTAL 7,670,165 2,684,558 4,985,607 4,985,607

NO Migration Scenario
TOTAL Current Environment TCO Current Environment - Depreciation effect 0 0 0 3,992,327 3,992,327 0 4,152,020 4,152,020 0 4,318,101 4,318,101 0 4,490,825 4,490,825 0 16,953,272

MIGRATION Scenario
TOTAL Proposed Environment TCO Proposed Environment - Initial PURCHASE Proposed Environment - Depreciation effect Current Environment Costs during Migration Project 2,340,000 0 2,340,000 0 0 2,945,645 1,473,900 0 (262,500) 1,734,245 1,270,356 1,532,856 0 (262,500) 0 1,331,670 1,594,170 0 (262,500) 0 1,395,437 1,657,937 0 (262,500) 0 9,283,107

TCOs and CUMULATIVE PROFIT


SUMMARY - Initial PURCHASE Proposed Environment TCO SUMMARY - CAPITAL LEASE over 4 years Current Environment TCO

6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 (1,000,000) (2,000,000) Initial Expense Year 1 Year 2 Year 3 Year 4

Deliverables Examples (III)

Identifying Migration Targets


Key factors to consider, where to look

Contract allowing cost reduction:


Contract that allows MIPS and thus cost reduction Contract duration that allows migration before it expires

Target applications:
All standard applications like SAS, SAP, Peoplesoft, Oracle, Lotus, that have an open version Bespoke applications where you own the IP rights:
Decide Big Bang vs Phased migration Large installations (15K+ MIPS): MIPS upgrade prevention Everything below: decide on a per case basis

Always good/bad technical components but in essence most is migrateable

From operating expenses into innovation


New IT initiatives New business initiatives
Management transformation

ROI for business and IT IT budget as % of revenue

Operations

Operations
Infrastructure transformation

Infrastructure

Infrastructure

HP EMEA Mainframe Migrations


Key rehost references (CoE deliveries): Other completed rehost through CoE:

Carrefour Italy, Carrefour Spain, Ejie, Portuguese Police, Swedish Tax, RSI Cmara de Comercio de Barcelona Gobierno de Cantabria Bancoval Transportes Metropolitanos de Barcelona Caixa de Manresa Ministerio de Defensa Caja Municipal de Burgos Caja General de Ahorros de Granada Banco Zaragozano Caixa Ontinyent Caja Rural Vasca BBVA

Banca Pueyo Mutua Pelayo Banca Pueyo Caja Terrassa Cajamar Caixa Girona Caixa Gereral do Depositos Banco Portugues de Investimento Caja de Ingenieros Forca Aerea Portuguesa Marinha Portuguesa

Caja Duero Caixa Peneds Caixa Laietana Caixa Manlleu Caja Navarra Ipar Kutxa Exercito Portugues Finanzauto REPSOL Sistema 4B

Other rehost:
Mazda Belgium (Anubex+Sapiens), Hamburg Sud (Twinsoft), Scottish Life (Unisys MSS), CLAL (Unisys MSS), Mashreqbank (UAB, Asysco)

Re-engineering:
Wrttembergische Gemeinde-Versicherung (Oracle), Amadeus (new front-end), CRIF (.Net), PGGM (ICL SOA/.Net GDAS), UK Land Registry (eGov .Net), Danske Bank (SAS->MSFT), Rabo (Neo DWH), SPAR, ATOC, Standard Chartered Bank,

COTS (SAP, SAS, ..):


OMV (SAP), Sodexho (SAP), Carrefour Spain (SAP), Carmel Olefins (SAP), Zeiss (SAP), Nuon (SAP), Festo (SAP), Japan Tabacco International (Geneva, SAP), Enso (SAP), Pirelli (SAP), BBVA (SAP), Informatica Trentina, OP Pohjola (SAS), Audi (SAP), Isenbeck (SAP), Ospedale San Rafaele (SAP), KCM (SAP), Egyptian American Bank (EAB) (IFLEX implementation), DenizBank (IM Windows), BT (Billing), Morrisons (Retek), Kenya Commerical Bank (iFlex), Telecom Egypt, MoF Kuwait,

Questions?

46

25 September 2009

Economic challenges Technology answers