Will the mainframe survive IBM job cuts?

The mainframe survived minicomputers, the client server, the web and Y2K, but its future is under scrutiny as IBM prepares a rethink

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The mainframe survived minicomputers, the client server, the web and Y2K, but its future is under scrutiny as IBM prepares a rethink.

Reports are emerging that IBM is expected to slash its workforce in a bid to fix financial woes.

Last week IBM reported a 12% decline in profits for the fourth quarter of 2014 following the sale of its System x business to Lenovo and cuts in its software operations.

At the time, IBM chairman, president and CEO Ginni Rometty said IBM was shifting its focus to higher value IT, including analytics, mobile and cloud services. "We are making significant progress in our transformation, continuing to shift IBM’s business to higher value, and investing and positioning ourselves for the longer term," she said.

According to Forbes.com, the company will unveil Project Chrome, which could see as many much as a quarter of the company’s workforce being cut.

IBM transformation

The mainframe survived when Lou Gerstner took over as CEO of IBM and transformed the company around IT services. It survived when Sam Palmisano  took over a decade later. Under Palmisano’s leadership, IBM introduced the zIIP and zAPP speciality processors, which opened up a raft of new applications to the mainframe, including encryption and SAP on Linux.

But today, revenues from System z mainframe server products decreased 26% while revenues from System Storage decreased 8%, in spite of IBM pushing analytics, which requires computing and storage infrastructure.

Forbes reported that storage, mainframe and outsourcing business units are likely to be hit, affecting IBM’s ability to provide cloud, analytics and the back-end infrastructure and integration work needed to enable the company to develop its new strategy.

The z13 for cloud and mobile

Earlier this month, the company unveiled its most powerful mainframe computer, the z13 – which has been positioned as a machine for cloud, analytics and mobile workloads.

Tom Rosamilia, senior vice-president of IBM Systems, said: "Every time a consumer makes a purchase or hits refresh on a smartphone, it can create a cascade of events on the back end of the computing environment. The z13 is designed to handle billions of transactions for the mobile economy."

But with the expected cuts in IBM Global Services and IBM’s mainframe and storage teams, it remains to be seen how the z13 will survive Project Chrome.

Managed mobile services disjointed

While analyst Gartner rated IBM’s managed mobility services in the top right of its eponymous Magic Quadrant, it noted: "IBM still has difficulties bringing the value of Big Blue to its clients. Customer references — ad hoc and in formal references — have stated that IBM faces challenges conjoining different capabilities from different business units to provide iterative, lifecycle value to its clients."

Gartner said that feedback from IBM’s reference customers highlighted weakness in IBM’s help desk services for enterprise mobile management software and mobile devices.

With the sale of its x86 server business to Lenovo last year, Rometty is pushing forward her strategy to position IBM on higher value sales. System z is clearly a high-value proposition, in spite of poor hardware sales. But the value chain to link her strategy with the mainframe's future looks all but secure.

One of the first fruits of Rometty's strategy has been the MobileFirst deal in July 2014 with Apple. In December 2014, IBM released MobileFirst iOS apps for banking, retail, insurance, financial services, telecommunications, airlines and government.

These applications are targeted at IBM’s major users, many of whom run mainframe systems. So a major bank or retailer could, in theory, run their mobile back end or analytics engine on the System z. But mainframe MIPS are expensive to license and, as Gartner has noted, IBM faces challenges conjoining different capabilities from different business units.

Most businesses deploy commodity x86 servers for web and mobile back ends for applications such as Hadoop. IBM’s answer to this was the introduction of the BladeCenter HX5 x86 server blade, which can be plugged directly into a System z via the zEnterprise BladeCenter Extension (zBX), to support Linux and Windows server applications.

Yet Lenovo sells the BladeCenter HX5 blade. If a customer needs to go to another hardware provider for a mainframe add-on, why consider the mainframe at all?

Equally IBM has not made the zAAP (Java) speciality processor an option on the z13. According to one Computer Weekly reader, Java workloads can now run on the zIIP speciality processor, that is available on the z13. Given the unpredictable nature of mobile workloads and the cost of mainframe MIPs, the economics of running Linux back ends for mobile apps on the z13 may not stack up.

While the company said it currently has about 15,000 job openings, any job cuts put into question which areas of IBM's vast business will be culled.

In a statement it said: "IBM has already announced the company has just taken a $600 million charge for workforce rebalancing. This equates to several thousand people."

With its customers outsourcing mainframe maintenance and ongoing development to offshore providers, will IBM have the skills to keep the mainframe a relevant force?

Speaking to Computer Weekly, prior to the UK customer launch of the z13  IBM's Rosamilia said: "The mainframe...subject to cuts...this is not what we are here to talk about." He said that in the right environment, the mainframe was the right tool to reduce IT costs."To duplicate your core banking or retail system on another platform would cost a fortune."

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