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Introduction
Not very long ago, I published a brief summary of the mainframe modernization market. The ink was barely dry before another significant market event transpired: IBM announced their intent to purchase a portion of the modernization services and capabilities of Advanced. It represents a further move by a major market player into the modernization space, with IBM joining Rocket Software (with their OpenText Application Modernization and Connectivity (AMC) business acquisition). Equally notable was the announcement of Amdocs acquiring Astadia, further indicating that continued market investment remains top of mind and more important than ever. And, with many vendors announcing solid revenue results as of late, it's against this backdrop of market buoyancy that I decided to look at what's driving the fresh impetus in the current mainframe modernization domain.
The Five Forces of Modernization
Modernization as a topic seems to have never been more popular than it is today. Why? Here are five possible reasons.
We've crossed the chasm. The early days of the mainframe modernization market saw only limited customer examples to demonstrate the viability of the market. Soon though, early adopters and a later mainstream, high volume of customers—across all commercial and governmental sectors and geographies, supported by dozens of vendors and service organizations. This has cemented a level of credibility that should encourage others down the same path with one report projecting the size of the modernization services market to exceed $50 billion by 2030.
Hybrid is here. The emergence of the hybrid IT enterprise platform strategy—where a best-of-breed approach is taken towards IT service provisioning—means that what might've been a binary "move-or-stay" decision to modernize the mainframe environment need not be the case, thereby removing some of the risk. Nowadays, if some workloads make sense to run on IBM Z, so they should. If other workloads cannot justify the cost, perhaps they're a better candidate to run elsewhere, which they most likely can.
And that’s reflected in the numbers in a recent Gartner webinar indicating, “Expanding cloud computing adoption will push the market beyond $1 trillion in worldwide spending by 2027." Meanwhile, in 2016, 43% of organizations said the mainframe was attracting and growing new workloads; for 2023, this figure rose to 63%, according to a BMC study. With all elements of the hybrid environment continuing to innovate, greater opportunities and choice exist for the customer.
We know what mainframe modernization really means. Modernization covers an expansive range of activity and while its precise definition is debated, customer stories and solution capabilities have solidified in a maturing market. Whether it's a reworking of the user interface, introducing a mobile app on the front end, incorporating third-party functions through APIs, adopting a cloud-based deployment model, converting applications from purely batch to online or user-event-driven, disaggregating application code into discrete objects, extracting business rules, remodeling the data layer, or any number of other options, mainframe modernization is a broad church of both requirements and impressive technological capability. In short, it's a discipline that must be balanced, customer-centric, impartial, and holistic.
AI as the great disruptor. A short decade ago, cloud computing was still a new idea. Today, it's a mainstream technology. AI, the new dawn, may create even greater change, across many fields. As for how AI will impact the modernization market, that’s a fascinating prospect. Will we want AI to cut our new application code? Maybe. Will it help to examine old code? Possibly. Will it help to drive test cases for modernized applications? Good idea. Can it accelerate application understanding? It absolutely can! Will it have other sensible use cases? Almost certainly.
Overall, AI will have its place in removing risk from critical application modernization tasks, and—critically—it could act as a catalyst for those who have yet to look seriously at mainframe modernization.
The skills to succeed. The IT skills challenges in the modernization market are more nuanced than many realize. One element is simple though: Are there enough skills in supply to support modernization projects, technology transitions, application awareness, and even the fundamentals such as COBOL, CICS, or JCL? But the second question is about the institutional application and business knowledge being "lost" with retiring developers: What should we, as an industry, do to solve this conundrum? While I see full classes at universities running COBOL courses—along with COBOL and mainframe training companies rushed off their feet with classes to deliver—whether that supply meets the demand is another question.
As for replacing genuine expertise, I read about those who are implementing robust in-house training courses for COBOL and related technology, in addition to seeing huge strides made in enabling technology to help with understanding highly complex business applications and automating the creation of vital test cases for modernization projects. Again, however, whether this is happening in enough volume is the larger question. Both initiatives will be vital for the accepted wisdom of a skills crisis to be averted. The significant efforts in both training—and in technology—are an important step in the critical task of ensuring sufficient skills to support future mainframe modernization workloads.
Conclusion
2024: The time to modernize
Having spoken personally to leaders across the analyst, vendor, and services landscape recently, I'm not alone in anticipating 2024 to be a hugely significant year for the modernization market. In a recent article, The Futurum Group's mainframe market commentator, Steven Dickens, explained that, “2024 is a defining year in the mainframe technology space,“ referring to a “strategic emphasis on modernization, skills development, hybrid cloud connectivity, AI Ops, and cloud storage reflects a broader trend toward making mainframe technology more adaptable, resilient, and aligned with contemporary enterprise needs."
With the key market ingredients in place, many more organizations will look to explore and invest in modernization solutions, which are at a far greater level of maturity and capability today.
Vive la (r)évolution!
Many mainframe applications were first conceived in the 1960s and 1970s, pre-dating internet, cloud, mobile, and even graphical interfaces. While most have been materially improved over time, it's typical that they are not as up-to-date as their owners would wish—and what’s often referred to as "technical debt." But IT leaders know the value they're looking to retain and renew.
So, while the burgeoning modernization market of 2024 might be undergoing a quiet revolution, its roots, rationale, and the reason for its enduring importance are evolutionary—not revolutionary. These systems have endured for decades and have already been modernized before. With market reports suggesting an annual growth of 16%, the next wave of modernization may, however, be the biggest yet.
