Mainframe systems have formed an integral part of many organizations’ IT departments for decades. Their longevity shows the critical role they have served, but it has also resulted in increasing complexity. The information and processes coded into these systems intimately represent how the business operates, and as such are competitive assets. However, today's business environment requires greater flexibility than these systems were originally built to provide.
Mainframe applications must change their interfaces, data and reporting capabilities to meet demand. These changes can come from within an organization; making more efficient use of resources, different reporting requirements, a merger or acquisition; or be driven by external factors – such as infrastructure changes made necessary by the proposed Healthcare Insurance Exchange, or other regulatory mandates. Taking a "future-looking" approach to IT infrastructure and modernizing mainframe applications can help them work smarter, not harder.
Maintenance and staffing costs are the most significant factors to consider when determining whether to modernize. Since mainframes are typically responsible for the core business transactions, it is essential to keep them up and running at all costs. These costs include operations, supporting software, maintenance, and overhead. Any new systems incur additional costs for re-training and hardware installation.
Another factor to keep in mind is the prevalence of acquisitions, consolidations and silos that often exist in the insurance industry. These disruptive events can wreak havoc on IT systems, resulting in long-term effects such as perpetual maintenance costs and an inability to integrate. This perpetuates the segregation of critical information into silos, making it difficult to share that information across applications. Application modernization can alleviate some of these disjunctions and facilitate the creation of a more connected, tightly integrated system.
How to modernize?
There are three main ways to embark on a modernization journey: rewrite your applications, ‘rip and replace’ them with off-the-shelf software, or reuse what you have in a more flexible way.
While the first and second methods are viable, they are riskier and often result in unexpectedly high costs.
A better approach is to gain an increased understanding of your mainframe landscape, optimizing your mainframe MIPS for key applications and understanding where you can redeploy MIPS-heavy workloads (e.g., development and testing) to alternative, more cost-effective platforms without introducing risk. The end result ensures that tens of millions lines of application code and hundreds of million data records can be successfully moved to a new platform without losing business continuity.
Insurers have found that modernizing their mainframe application strategy not only improves system performance, shortens batch application completion time and cuts significant spend from maintenance costs, it also provides access to modern, open platforms that allow for a more agile environment.
As opposed to “rip and replace”, modernizing applications allows insurers to extract more return on investment by updating a mainframe that has already been invested in. The process can improve application delivery and save significantly on operating costs. This allows insurers to improve mainframe capabilities by adding services, such as web enablement, to an existing platform.
[For more on extending the life of legacy assets, see Modernization Choice: Replacement or Future-Proof Environment Leveraging Legacy Assets? .]
Web services are missing from many older mainframes but are important to carrying out simple transactions online. When a mainframe is web enabled, clients are able to access their policies online, submit claims and extract data from the administrative system. In addition to adding services, a modernized application delivery system can eliminate errors, improve cycle times and create a more positive experience for policyholders and advisers.
In the insurance industry, improving operations and providing impeccable customer satisfaction are key. For example, a leading insurance BPO not only increased customer satisfaction, but was also able to save 70% on total cost of ownership and reduce batch times by two-thirds all by undergoing the modernization process. These results and more are possible when you look to the future of your applications and make them work for you.