Preface:
Thank you for joining us for this 10-part series to discuss the Top 10 Ways You can Save on your Mainframe Costs in 2023.
- Nearly all Clients are Clamoring for Savings in 2023. This is largely due to (a) rising input costs, (b) softening business forecasts, and (c) continued economic uncertainty and headwinds. This has caused many clients to re-evaluate spending plans and implement new cost-cutting targets.
- IT is the Number One Cost Savings Category of the Modern Enterprise. IT is typically the highest indirect spend area for modern enterprises and is also the cost category with the highest potential savings yield (we average about 33% savings on addressable IT spend). In addition, since 2020, clients have largely exhausted conventional cost savings countermeasures such as canceled projects, delayed spending plans, and cuts in discretionary spending, and many have even gone through Reductions In Forces (RIFs), and/or even facility closures. As a result, clients are at risk of cutting muscle and bone this year as cost reduction demands persist, but desperate measures are not necessary when we can help you harvest considerable value from your mainframe supply chain, do so with minimal risk, and perhaps even get additional value including modernization and digital transformation among other benefits.
- NET(net) is the Number One IT Cost and Value Optimization Provider. In the last 20 years, we have shaped over $2 Trillion of technology investment, captured well over $400 Billion of incremental value for our clients and partners, and have an 85% probability of achieving savings ranging between 13-53%.
Introduction:
When it comes to Mainframes, NET(net) sees incredible savings opportunities in 2023. Not since 2008 has there been as much downward pricing pressure on technology incumbents, and we believe meaningful savings targets can be achieved, but due to the market conditions, technology incumbent suppliers are seeking to increase prices and will be highly disruptive to any cost savings agenda, so it will require a commitment to do the hard work to realize meaningful reductions.
With that as a backdrop, we give you our Top 10 Ways You can Save on your Mainframe Costs in 2023.
In case you missed our previous installments, take a look back at our previous posts:
- Part 0 (Feb 1): Price Benchmark Your Mainframe Costs
- Part 1 (Mar 1): Optimize Mainframe Licensing
- Part 2 (Apr 1): Minimizing MIPS (Millions of Instructions Per Second)
- Part 3 (May 1): Optimizing MLCs (Monthly License Charges)
- Part 4 (Jun 1): Upgrading Your Operating Environment
- Part 5 (July 31): Optimizing Mainframe Maintenance and Support Services
Way #6 of 10: Outsourcing Mainframe Support
Outsourcing mainframe support can help client organizations save money on their mainframe costs:
- Reduced labor costs: Outsourcing mainframe support can help client organizations reduce their labor costs by offloading the responsibility of mainframe administration and maintenance to a third-party provider. This can free up internal resources to focus on other priorities, such as developing new products or services.
- Economies of scale: Outsourcing mainframe support providers typically have economies of scale that can help client organizations save money. This is because they can leverage their expertise and resources to support multiple customers, which can help them reduce their costs per customer.
- Access to specialized expertise: Outsourcing mainframe support providers typically have access to specialized expertise that can help client organizations save money. This is because they have teams of experienced mainframe professionals who are up to date on the latest technologies and best practices.
- Improved uptime: Outsourcing mainframe support can help client organizations improve their uptime by providing 24/7 support and monitoring. This can help to reduce the risk of downtime, which can save client organizations money in terms of lost productivity and revenue.
In addition to these direct savings, outsourcing mainframe support can also lead to indirect savings by making it easier to:
- Migrate to the cloud: Outsourcing mainframe support providers can help enterprises migrate their mainframe applications to the cloud, which can save money on hardware and software costs.
- Modernize applications: Outsourcing mainframe support providers can help enterprises modernize their mainframe applications, which can save money on maintenance and support costs.
- Reduce risk: Outsourcing mainframe support can help enterprises reduce their risk of security breaches and other incidents, which can save money in terms of fines and remediation costs.
Overall, outsourcing mainframe support can be a cost-effective way to improve the reliability, security, and efficiency of a client organization’s mainframe environment. This can help client organizations save money in many ways, including reduced labor costs, economies of scale, access to specialized expertise, improved uptime, and reduced risk.
Here are some specific examples of how outsourcing mainframe support can save money:
- A large bank saved $1 million per year by outsourcing mainframe support. The bank was able to achieve these savings by offloading the responsibility of mainframe administration and maintenance to a third-party provider. This freed up internal resources to focus on other priorities, such as developing new products and services.
- A manufacturing company saved $500,000 per year by outsourcing mainframe support. The company was able to achieve these savings by leveraging the economies of scale of the outsourcing provider. The provider was able to provide the company with 24/7 support and monitoring, which helped to improve the company's uptime and reduce the risk of downtime.
- A healthcare organization saved $250,000 per year by outsourcing mainframe support. The organization was able to achieve these savings by accessing the specialized expertise of the outsourcing provider. The provider was able to help the organization modernize its mainframe applications, which saved the organization money on maintenance and support costs.
These are just a few examples of how outsourcing mainframe support can save money. By outsourcing mainframe support, client organizations can free up internal resources, leverage economies of scale, access specialized expertise, and improve uptime. This can lead to significant savings in many areas.
While outsourcing mainframe support can provide access to a pool of highly skilled mainframe professionals at a lower cost than maintaining an in-house team and also provide access to the latest tools, technologies, and best practices, that can improve the efficiency and reliability of mainframe operations, it is also important to carefully evaluate the advantages and disadvantages of outsourcing mainframe support, as it can also come with risks such as loss of control and knowledge transfer. Additionally, it's important to find a reputable and reliable outsourcing provider with a track record of delivering high-quality mainframe support services.
When choosing a mainframe support outsourcing provider, it is important to consider the following factors:
- The size and complexity of your mainframe environment: The supplier should have the experience and expertise to support your specific environment.
- The scope of services you need: The supplier should be able to provide the services you need, such as administration, development, and maintenance.
- The level of support you need: The supplier should be able to provide the level of support you need, such as 24/7 support or on-demand support.
- The cost of the services: The supplier's prices should be competitive and transparent.
By considering these factors, you can choose a mainframe support outsourcing provider that can meet your specific needs and budget.
Some of the most well-known suppliers who offer outsourced mainframe support include (note: we do not recommend doing this with Kyndry as most of our client’s doing business with Kyndryl are actively seeking to reduce their exposure):
Accenture
- Founded 1989
- HQ: Dublin, Ireland
- Strengths: Global reach, deep expertise in mainframes, strong track record
- Weaknesses: Expensive
Atos
- Founded 1970
- HQ: Paris, France
- Strengths: Global reach, deep expertise in mainframes, strong track record
- Weaknesses: Expensive
Capgemini
- Founded 1967
- HQ: Paris, France
- Strengths: Global reach, strong track record in retail, strong focus on customer service
- Weaknesses: Can be slow to adapt to new technologies
CGI
- Founded 1976
- HQ: Montreal, Canada
- Strengths: Global reach, strong track record in public sector, strong focus on innovation
- Weaknesses: Expensive
DXC Technology
- Founded 1996
- HQ: Hopkinton, Massachusetts
- Strengths: Global reach, deep expertise in mainframes, strong track record
- Weaknesses: Complex to work with
Ensono
- Founded 2007
- HQ: Plano, Texas
- Strengths: Deep expertise in mainframe modernization, strong track record
- Weaknesses: Can be difficult to find the right resources
Fujitsu
- Founded 1935
- HQ: Tokyo, Japan
- Strengths: Global reach, Deep expertise in telecom, strong focus on sustainability
- Weaknesses: Can be a challenge to work with in the US
HCL Technologies
- Founded 1976
- HQ: Noida, India
- Strengths: Global reach, strong track record in healthcare, strong focus on security
- Weaknesses: Challenging to integrate with existing systems
Infosys
- Founded 1981
- HQ: Bangalore, India
- Strengths: Global reach, deep expertise in technology, strong track record
- Weaknesses: Challenge to Manage
Tata Consultancy Services
- Founded 1968
- HQ: Mumbai, India
- Strengths: Global reach, deep expertise in financial services, strong track record
- Weaknesses: Slow to innovate
TmaxSoft
- Founded 1986
- HQ: Seoul, South Korea
- Strengths: Deep expertise in mainframe modernization, strong track record
- Weaknesses: Challenging to find local resources
Wipro
- Founded 1945
- HQ: Bangalore, India
- Strengths: Global reach, deep expertise in manufacturing, strong track record
- Weaknesses: Difficult to Integrate with existing systems
These suppliers offer a wide range of mainframe support services, including:
- Administration and management: This includes tasks such as managing system resources, monitoring performance, and applying security patches.
- Development and maintenance: This includes tasks such as developing new applications, maintaining existing applications, and migrating applications to new platforms.
- Consulting: This includes tasks such as providing advice on mainframe strategy, designing new mainframe solutions, and implementing mainframe projects.
How Much Can You Save?
By working closely with NET(net) to implement these and other savings strategies as part of our Top 10 Ways to Save on Mainframes, client organizations can reduce their mainframe costs significantly and better align their spending with their actual usage, resulting in a more cost-effective mainframe environment.
- Clients fully committed to mainframe modernization efforts can save 80-90%.
- Clients who are committed to a Mainframe Cost Optimization (MCO) initiative (including workload migrations), but who have limited ability to move applications off the mainframe can still see savings between 32%-60% with full scoped work efforts.
- Clients who are unwilling or unable to consider disruptive strategies, but those that still want to work with NET(net) strategically to optimize mainframe consumption and maintenance costs can see savings that range anywhere from 13%-33%.
- Clients who believe they can do this all on their own and those who believe they have all the skills, toolsets, and market & supply side knowledge to get the best outcomes likely have a savings opportunity of 5-15%, but most get only minor or no savings and unfortunately erode the opportunity to get future savings by unknowingly making subtle yet critical mistakes which is why we always strongly recommend working with us as your trusted advisor.
Stay Tuned
Our next installment (7 of 10) in this 10-part series of the Top 10 Ways You can Save on your Mainframe Costs in 2023 is a detailed look at how client organizations can reduce costs by modernizing mainframe applications by refactoring code, re-platforming, rearchitecting, and potentially re-writing applications.
Summary
In all respects, extracting value from the mainframe supply chain in 2023 is not going to be easy as the big iron cartel will not only be wildly disruptive to any cost savings effort, but they will also be implementing their own cost increase agendas. If you're ready to take on the challenge and are dedicated to the hard work with NET(net), Contact Us today to learn more about how we can help you save on your mainframe as well as all your other technology investments or Sign up now for a Savings Cloud subscription, and we will get started on helping you save money right away.
About NET(net)
Founded in 2002, NET(net) is the world’s leading IT Investment Optimization firm, helping clients find, get, and keep more economic and strategic value in their technology supply chains. Over the last 20 years, NET(net) has influenced trillions of investment, captured hundreds of billions of value, and has helped clients cost and value optimize all major areas of IT Spend, including XaaS, Cloud, Hardware, Software, Services, Healthcare, Outsourcing, Infrastructure, and Telecommunications, among others. NET(net) has the experience you want, demonstrates the expertise that you need, and delivers the performance you demand and deserve. Contact us at info@netnetweb.com, visit us online at www.netnetweb.com, or call us at +1 (616) 546-3100 to see if we can help you capture more value in your IT investments, agreements, deployments, and relationships.
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