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Micro Focus sees growth in mainframe migration business

Lifting and shifting Cobol code from mainframes to public cloud has been a growth driver for Micro Focus in the Asia-Pacific region, even as the software supplier continues to diversify its business

The migration of mainframe applications to public cloud and private cloud datacentres has been a boon to Micro Focus, which merged with Hewlett Packard Enterprise’s software business in September 2017 to create the seventh-largest pure-play enterprise software company in the world at the time.

In fact, all the work that Micro Focus is putting into helping enterprises modernise their mainframe applications is enough to generate a business pipeline that could last 20 years, according to Stephen McNulty, its president for Asia-Pacific and Japan.

In an interview with Computer Weekly, McNulty talked up how the company’s business is shaping up in the region, the competition with niche players and efforts to diversify its offerings, from IT operations and hybrid cloud management to DevOps and big data analytics.

Can you share more about your business momentum in Asia-Pacific and some observations about the market, particularly the differences in priorities between organisations in mature and developing economies?

Stephen McNulty: We’re over 40 years old as a global company and we’re profitable in Asia-Pacific. Our business has been doing quite well over the years, with offices in major countries such as Japan, China, India, Australia, as well as Indonesia, the Philippines, Malaysia and Singapore, our regional headquarters.

We’re quite diversified in terms of the industries we serve – though almost 50% of our customers are in financial services. With what’s going on in the world now, most of our customers are still doing quite well and spending money.

As for market differences, organisations in less developed economies have been slower than those in mature markets in adopting hybrid cloud. Those in less developed markets are adopting more public cloud infrastructure, but that also creates massive opportunities for us to help them manage the complexity of operating a hybrid cloud environment. They’ve got to make sure their environment is secure, along with high uptime.

Rather than spend hundreds of millions of dollars rewriting an application into Java, we give people the ability to lift-and-shift code for a core business function that can’t be improved
Stephen McNulty, Micro Focus

The other area is DevOps and the whole concept of integrating your processes from idea to delivery and beyond. In less mature markets in ASEAN, there are a lot more companies wanting to adopt best practices in DevOps.

Finally, there are some mainframes in ASEAN, but not as many as you’d find in Japan and Australia. Big data analytics is another area. As organisations in developing markets mature, they start realising that they can capitalise on big data to reduce customer churn and optimise pricing, for example.

Enterprises such as DBS Bank that embarked on digital transformation early on are now reaping the benefits amid the ongoing pandemic. What are your observations about those that have been slower to transform? How are they coping right now?

McNulty: I think it’s fair to say that we’re still learning at the moment. I don’t think the world has settled down yet, so the new normal today could be different from the new normal in a month’s time. So, we’re still learning as we go, as I’m sure every company out there is.

For us, we’re definitely seeing some trends that are beneficial to our company. I think one of the key things about Micro Focus is that the vast majority of our software are a need, rather than a nice-to-have. People are doubling down on what is needed to empower key initiatives.

You mentioned digital transformation – obviously the major shift in the last two months, and everywhere in the world, is more and more contactless communication with customers. We’re seeing that everywhere in every country, and it’s affecting every single industry. That brings lots of opportunities for companies, but also lots of challenges.

You’ve got people working from home across many industries, including government, which are trying to provide services to the people by employees working from home. That creates challenges in security, document management and scalability. But they’ve still got to service their customers as much as, if not more than, before.

Take Australia, where unemployment and demand for social services are increasing. With less people available in government because of work-from-home arrangements or quarantines, there is a need to digitise as much as possible and go online. It’s fair to say that every company had a timetable to put things online, but over the last couple of months, it’s been accelerating.

In Singapore, interest in digital transformation in healthcare in the last four weeks has been quite spectacular. Three weeks ago, I needed a prescription and I called up the doctor and he suggested a Zoom call. I didn’t have to go to the doctor and that’s a new experience for healthcare.

That said, there are still opportunities to digitise even more. If you want to do something as simple as changing your bank account to pay for electricity and gas using Giro [Singapore’s interbank electronic payment service], you’d still have to complete a paper form and mail it.

I was looking at your portfolio of products – part of which came from the merger with HPE’s software business – and I noticed that there’s a large spectrum of applications. If you were to explain what Micro Focus is to enterprises, what would that be?

McNulty: That’s a very good question. If you look at the vast majority of what we do, you could simplify it down to something as basic as providing technology solutions that customers need to run their business.

If you look at the diversification that we’ve got, we’re very big in IT operations and hybrid cloud management, which is a very big trend in the world. The next thing is security, whether it is single sign-on, using correlation data to check if someone is hacking your systems, or checking source codes for any backdoors. Those are needs, not just a nice-to-have.

And to bring all that together, you adopt DevOps or DevSecOps if you want to bring in the security side of it, especially since many companies are now releasing codes daily. The Covid-19 pandemic has made that more difficult because your developers are now in two or three offices spread around the world or working from home, involved in some kind of DevOps operation.

The last thing, which is somewhat of a nice-to-have, is big data. I’d say it’s nice to have in that it helps improve businesses, but businesses can obviously run without it. Over the years, we have certainly seen a huge increase in customers wanting to capitalise on data, whether it’s structured or unstructured data. That’s becoming increasingly important as companies look to use predictive analytics to give them the agility and insights they need, not just to serve customers, but also react to vastly dynamic market conditions at the moment.

In each of those areas you mentioned, you’re also up against the so-called best-of-breed vendors, such as Puppet in DevOps. How would you convince your customers to go with Micro Focus, as opposed to those other players?

McNulty: If you look at all of our products, we probably have 10 niche competitors with each product. It’s true that some customers will just go for a simple point solution, but the differentiation that Micro Focus has is that we can bring a lot of those products together.

It’s true that some customers will just go for a simple point solution, but the differentiation that Micro Focus has is that we can bring a lot of those products together
Stephen McNulty, Micro Focus

For example, when we talked about DevOps, it’s about software performance and code testing where there are 50 or 100 competitors. But one of the things we do that none of them do is we do source code scanning to make sure your software does what it’s supposed to do and that no one’s built a backdoor to break into it once it’s in production.

We can make those solutions work better together, we can document the process and best practices and we can provide professional services around them. And we can deliver that as a package either ourselves or through companies such as Accenture and TCS.

You mentioned that financial services companies make up most of your customers in the region. Do they come to you for security or application delivery? What’s the typical entry point? Can you talk about your engagements with those major customers?

McNulty: Off the top of my head, I can’t think of one bank that doesn’t use our software, whether it’s the biggest local banks or international financial institutions.

First of all, most of them are already customers, so they buy more of what they need to complement what they have. One of the biggest growth areas for us – and this is an area where we’re number one in the world and have virtually no competitors – is application modernisation around the mainframe.

Almost every single big bank out there is still running Cobol code somewhere in their banking systems. One of the things that mainframes are good at is they run for a very long time. You can plug it back in and it still works. They’re also very secure, but the problem comes when you try to put them with distributed platforms in a DevOps process. It’s extremely difficult to do.

And so, our biggest growth business in Asia-Pacific is taking Cobol code off the mainframe and putting it on cheaper hardware, or on AWS and Azure. We have many financial institution customers in Asia and around the world running mainframe applications on public cloud, so they can run a proper DevOps process all the way through to continual improvement and delivery.

Some of them might take development and testing off the mainframe, put it on Azure or AWS, try that for a year and then start moving production workloads to public cloud or to a private cloud datacentre. That’s a pipeline that could last 20 years for our company.

A US state government recently called for more Cobol programmers to help process unemployment claims through systems that were still running on the mainframe. How do you make sure that you have enough talent to support this growing business?

McNulty: That’s a good point. In general, the people who know Cobol are quite old or close to retirement, but we’ve done a lot of innovation here. One of the key things we’ve done is to provide a Visual Studio IDE, which means we can get kids out of college and polytechnics who are familiar with Visual Studio to look at Cobol code. This makes it simpler for them to program in Cobol.

But one of the things that we do when we take code off the mainframe in the vast majority of cases is that we’re not actually altering the Cobol code. We’re doing lifting and shifting by taking the Cobol code as it is off the mainframe and putting it on public cloud services with very minimal tweaks, rather than reprogramming the code.

So, you’re able to identify the logic in the code itself?

McNulty: Yes, absolutely. We analyse it and get rid of redundant code and redundant logic, so we only lift-and-shift what’s necessary. The thing about a lot of these mainframes and what they do is that although they’re critical to a business, they don’t provide innovation.

So, if you look at something as simple as credit card processing – that’s a process you can’t really improve. Rather than spend hundreds of millions of dollars rewriting an application into Java, we give people the ability to lift-and-shift code for a core business function that can’t be improved. That frees up money for companies to spend in areas that support innovation, such as big data and customer experience.

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