At the recent ISOTech conference New Orleans, I chaired a panel of experts that asked, and tried to answer, an increasingly critical question for insurers: “Mainframes: Keep Them or Dump Them?”
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 the huge amounts of data in insurance systems 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% 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 Boston-based Celent, some 60% to 70% of current insurance systems are still written in legacy code.)
Ironically, those who would continue to utilize their legacy systems 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 (hardware and software), the time required to replace them, and the cost of new equipment, software 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, Stamford, Conn.-based Gartner reported mainframe shipments in 2006 grew 3.9% 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 my ISOTech session revealed a dead-even split between those who would like to melt down the big iron and those who would rather put a shine on it and have it continue.
So, what’s an insurer to do? The situation calls to mind the classic song, “Should I Stay or Should I Go” by The Clash. The singer is a guy looking for a commitment from a girl:
Darling you gotta let me know
Should I stay or should I go?
If you say that you are mine
I’ll be here ’til the end of time
Can’t you just hear those mainframes crooning this tune to IT executives throughout the insurance industry? But the decision isn’t so easy, because as the songster says:
If I go there will be trouble
And if I stay it will be double
Isn’t that what we’re facing here? Ripping and replacing mainframe technology means lost time and great expense to get rid of something that still–for all its problems–works. Keeping the legacy systems, however, means constant updating and the purchase or development of middleware to deal with the old systems, especially since many of those trained to maintain mainframes (COBOL programmers) are retired or have gone to the big IT shop in the sky.
The bottom line, however, is that mainframe technology is still the enterprise heartbeat of many of our largest insurers. As panelist Jamie Bisker of Armonk, N.Y.-based IBM pointed out, big iron, for all of its age, continues to be a powerful and robust computing platform.
There is a solution, however, and it lies in the increasingly modular insurance software being offered by some of the biggest vendor names in our industry. Using this approach, carriers can surgically remove parts of their enterprise and replace them with new parts that still play nicely with the old parts.
In many insurance IT shops, there may eventually be a heart transplant that takes mainframes out of the IT body in favor of newer hardware. That day will not be fast in coming, however. Nor should it be.
I’m raising my hand in favor of keeping the big iron–at least for now. The price of doing so is frequent software updates, but in terms of allowing the flow of business to continue relatively smoothly, this is an approach that makes sense.