To mainframe or not to mainframe, that is the question. Unfortunately, the answers are not always that simple.
At the recent ISOTech Conference in New Orleans, I chaired a panel of experts that asked, and tried to answer this very same question.
For years, it seems, many of us in the tech community have been telling insurers to retire the Big Iron (their crusty old mainframe computers) and move to some form of server-based computing. On the surface, such a move makes sense, in terms of better interaction with the Web and Web applications, as well as cutting down the number of data "silos" that make dealing with data such a difficult undertaking. In fact, most of us experts believe insurers can gain some measure of competitive advantage, not to mention internal efficiency, by ripping out the old systems and replacing them with new ones.
On the other hand, some estimates say that up to 50 percent of carriers are still running significant portions of their businesses on mainframes that have been patched and updated for up to 30 years (According to panelist Donald Light of Celent, some 60 to 70 percent of current insurance systems are still written in legacy code.). Ironically, they are aided and abetted in keeping the old giants alive by the likes of IBM, and now even Microsoft, thanks to the development of middleware that enables the older systems to operate in the current technology environment. Add to that the tremendous cost of removing old systems, the time required to replace them, and the cost of new equipment and training, and you have a powerful disincentive for companies to move to client-server.
And there's more. IBM says mainframes were the fastest growing segment of the server market in 2006. Indeed, Gartner reports that mainframe shipments in 2006 grew 3.9 percent over 2005. Finally, some even claim that mainframes are more "green" than lesser servers, because they use power more efficiently, require less cooling and take up less space than, say, a rack of blade servers.
Interestingly, a poll of the audience at ISOTech revealed a dead-even split between those who would like to melt down the big iron and those who want the platform to continue.
So what's your two cents? Should mainframes stay, or should they go? Share your views here!
Comments (1)
Ara,
Having worked as a manager, for a number of insurance company executives, and insurance brokerage owners, I can provide my two cents on what the hold back could be.
" If it ain't broke, don't fix it.
If a reliable long term band aid, ie: middleware mentioned in your post, can keep it running a while longer, with sustained results, why not?
While not necessarily front page news by design, there are failed projects out there, even now in 2007, where several million dollars were spent before the plug was pulled. I'm going to be very careful and selective if I do consider something new, on who the vendor is going to be.
Probably the most compelling reason:
Who of my competitors has gone with the new, and is literally running away with the show on loss ratio, growth, retention, and a lower expense ratio?
All very good reasons to be careful and use a well thought out approach, and use deep investigative methods before selecting the vendor I'm going to work with.
There are companies out there that have gone with the new, and have seen 50% savings on their IT operating costs combined with operational efficiencies, with their new enterprise system. Those savings were then redeployed back into service, product & rate enhancements, and risk management & loss control assistance for their clients.
Here's the possible challenge to the above. If I have found a more effective way to make the soup, so it tastes better, and more people want it; why on earth would I advertise that to anyone by talking to someone in a position to tell the world about it?
I'm guessing there's far more success stories on new technology implementations out there that nobody will hear about directly for the simple and logical reason that it's a competitive edge, or a simple matter of policy to keep the company business inside the company.
An organization's financial results are the individual and collective contributions of many people in all kinds of roles and departments. Deploying and using the right technology to lower costs, and increase efficiency, speed, and productivity, happens to be one part of the overall reason for a company's success.
The companies that are growing in volume, while keeping retention high and expense and loss ratios manageable, are doing something right. New technology "may" be a part of the "right." It's those metrics that may be the place to look for the possible additional new technology success stories that are out there in the market.
Posted by Don George | November 8, 2007 2:35 PM
Posted on November 8, 2007 14:35