IT Case Study
 

Practice - Strategic Sourcing
Sector - Banking
Category - Mainframe Computing
Geography - Europe
Baseline - € 32m
Savings - € 7m (22%) recurring + € 10m one off (hardware and software management)

Mainframe Computing represents an almost unique Sourcing challenge for a variety of reasons:

• The incumbent vendor is usually for all intents and purposes not substitutable. Mainframes use proprietary Operating Systems, and usually have been continuously present on Client premises for decades. This has given Vendors the opportunity, which they have exploited to the hilt, of building a plethora of hooks and anchors that make migrating off of the mainframe a challenge of Herculean stature
• Pricing of Mainframe computing is a study in opacity, with a mind-bending range of restrictive terms and conditions, allowances, selective discounts, price bands, wrap-around agreements, etc.
• The Client IT organisation is effectively wrapped around the technology, with numerous skills and qualifications that are not easily transportable. This, plus natural organisational inertia, make the organisation a powerful drag on any attempts to fundamentally change the technology platform
   

Faced with this challenge, Triton embarked on a two-pronged strategy, aimed at maximising the transparency of the existing pricing scheme from the Mainframe vendor, as well as, for the first time exposing them to a genuine competitive threat.

This threat came in the form of the rapidly-evolving technique of large-scale “porting” of mainframe applications into an open-systems environment. Indeed, the rapid evolution of Open Systems computing capacity (now approaching the level of a midrange Mainframe), as well as the development of new “porting tools” that automate large chunks of the translation process, as well as the emergence of “Porting Factories” in such low-cost countries as India, have transformed the possibility of Porting from an idle dream to reality.

In consequence, the second thread of Triton's strategy was to “source the port”, giving a package of Mainframe applications to be ported to open systems to a panel of specialised Porting vendors, and putting together a comprehensive long-term programme for the migration of the entire suite of applications residing on the Mainframe.

Faced with this threat, the Mainframe vendor agreed to a variety of concessions and discounts that reduced the Total Cost of Ownership of the Mainframe by over 30%. As a longer-range benefit, the Client also decided, as a strategic decision, to embark on a process of disentangling themselves from the Mainframe over a ten-year horizon, thereby ensuring dramatically-lower computing costs in this timeframe.