Mainframe: Vicinity yet to be Explored in India Date:   Wednesday , October 02, 2013 Micro Focus International plc (LSE: MCRO.L) is a Berkshire headquartered company that develops and sell software products and solutions worldwide. The company has a current market cap of $ 1.16 billion. Mainframe is on the threshold of yet another evolutionary phase with modernization & automation helping organizations to come out of the age old tradition of handling data processing requirements and explore the unexplored. When several big and small companies were facing real-time issues hosting their important and mission critical applications, they started rewriting these applications which usually consumed major chunk of their budget and did not guarantee success. With time, they found shelter in mainframe which provided only acceptable means of handling the data processing requirements of a large organization. Recognizing this opportunity, companies from various verticals including banking, finance, healthcare, insurance, government and several others made a shift to this. Owing to the technological advances, mainframe today is used by these organizations to host their mission critical applications and save a huge chunk of money for innovation. The stable and nearly-unbreakable platform for processing huge amounts of corporate data has made these companies fasten to mainframe. But with the mainframe’s rising cost, corporations want modernization solutions that preserve the investment in their business-critical mainframe applications. However, modernization can mean different thing to different people. You can envisage in using old applications to something that is recent like mobile or cloud. The way Micro Focus uses this term is getting them mission critical business applications that have been running for 20-30 years into a state of readiness for today’s business and for tomorrow’s. In doing this, the company bring them to a place where they need to be at this point in time to deal with business pressures like faster, more accessibility, getting into new markets, mobile and maybe cloud. But the question is, are applications ready for this shift right now? Not many, but it is all about getting ready to do and stay prepared for this shift. However, the shift is pretty tough as it is expensive and takes a long time to implement and integrate. Even then, there is a heavy risk of, have you captured everything that you need and that is how people look to modernize. Also, being a complicated method, people prefer to rewrite but they do not understand that rewriting projects takes a long time, very resource heavy and full of risk. Around 45-60 odd percent of rewrite projects fail. The way Micro Focus looks at it is revamping or reusing it which is currently the fastest and less risky way which will take what you currently have and is active. The company is trying to do this without changing it to fit into those modern arrangements, i.e., moving applications into the cloud or mobile rather than rewriting specifically for much less risk and lesser cost. The Dearth The biggest problem that folks have on the mainframe is the technical depth. There is a gap in terms of time like 2-3 years apart in terms of money to get from where they are to mainframe modernization. The reason being, there is a surmountable work that needs to be done just to keep the lights on. Typically, a mainframe organization invests around 75-80 percent of their existing budget just to keep these applications running, maintain them, enhance them slightly, the regulatory issues that are coming in and leaves a tiny drop of the budget for innovation. This is why people are looking to the stacked up work and try to close the technical gap. We at Micro Focus is trying to free up that balance of budget so that they can spend more on innovation rather than at the backend. Traditional methods are not changing, the gap is widening and the amounts are stacking up. Unless one throws resources at them, nothing will change. We got to think differently about how to break this mould and this is where Micro Focus focuses. But there is a dearth of skilled workforce with niche knowledge in mainframe. The biggest challenge with the mainframe is that the group that has worked on it — the Baby Boomers — is retiring. As the skill plays a vital role in mainframe and even colleges do not train their students in this space, we focus on skills and provide contemporary technology which is inviting and demystifying the mainframe environment for them. India as a Mainframe Market We work with the large System Integrators who use our technology to deliver the projects to their customers which is more focused on the external market. But otherwise the way we do it is also through the same organizations through delivering solutions to the Indian market. However, there are some really old systems here which do not run on mainframes. The mainframe community in India is quite small and there are a large number of old and mid range systems. As the number of mainframes is pretty restricted here, it focuses more on traditional COBOL and most of the mainframes are under the System Integrators which is more on the development and maintenance business that they do with their overseas customers. That is why the bulk of the business in India comes from these old systems which need to be upgraded and somehow they have not been able to move away from the platform of COBOL. India is a major hub of System Integrators for us and we are going to make all efforts to ensure that they are skilled enough on our technology and at the same time able to reduce their own costs in terms of providing better, faster services and have that unique edge. We are trying to close that technical gap so that we can achieve what we can from the business. We turn to the System Integrators and help them to make their bottom line more attractive. As the market in India is at a primary stage, these System Integrators need a lot of people to make the shift happen. We help them to deliver services quicker with more competencies at much cheaper price. The key is cutting up the gap between modernizing the mainframe directly or through alternative ways so that we can free up the cash to be more innovative to get to the mobile. This is what Micro Focus is precisely focused on: equipping the System Integrators and modernizing the mainframe in India.