Mainframe Migration Alliance Helps Businesses Transition Their IT Environment to the Microsoft Windows Platform

REDMOND, Wash., Sept. 28, 2004 — The German media company Bertelsmann found itself at a crossroads in 2002: Its COBOL-based mainframe system, which since 1984 had supported the operations of five of the publishing giant’s book clubs, had become outdated. To upgrade the system so that it could adequately support the company’s 3.5 million book-club members, and to make it flexible enough to meet the needs of the clubs’ growing businesses, Bertelsmann’s IT costs would have doubled. So the publisher opted to migrate its mainframe system to a client-server solution based on Microsoft Windows 2000 Server. When the implementation was completed 18 months later, Bertelsmann’s operational IT costs decreased 67 percent. Performance also improved, and the productivity of the company’s software developers increased tenfold.

Premera Blue Cross, an independent regional health plan based in Mountlake Terrace, Wash., with 1.2 million members, faced a similar dilemma. In 2000, the company began looking at new technologies that could help control health care costs, enhance collaboration with health care providers, and empower consumers. But many of these technologies were out of reach because the company’s aging mainframe system couldn’t easily or cost-effectively be modified and consolidated to accommodate them. So Premera migrated its mainframe system to a Windows 2000 Datacenter Server environment running SQL Server 2000 and consolidated its various claims-processing applications. With the implementation now complete, the Windows platform is much more agile than the mainframe system, allowing the company to deliver on its new business strategy and respond more quickly to changing market demands.

Like Bertelsmann and Premera, many companies are scrutinizing their IT costs while trying to improve the flexibility of their IT systems. For those using mainframe technology, this often involves deciding whether to continue investing in legacy systems or migrate to another platform. The Mainframe Migration Alliance (MMA), a community of software vendors and service providers that includes CGI, Cognizant, EDS, Fujitsu, Micro Focus, Microsoft, NetManage and Tata Infotech, was formed in April tohelp customers gather the information they need to make this decision. The goal of the MMA is to help companies reduce the cost of maintaining and updating their mainframe environment by migrating to the Windows Server System.

The MMA today announced the expansion of the alliance from 9 to 21 members, the launch of the organizations community Web site (, which provides resources and information for businesses wanting to explore their options for migrating from the mainframe. A complete alliance partner directory can be found on the alliance’s Web site.

Micro Focus Helps Bertelsmann Make the Move

The IT team at the ICS Competence Center, Bertelsmann’s mail-order and book-club software development center in Vienna, Austria, started thinking about the idea of migrating its IT system in 1995. They contacted Micro Focus, now an MMA member, to discuss the possibility of running the mainframe-based software on a Windows platform. There were plenty of warning signs that the company’s mainframe infrastructure might be in need of an overhaul. Increased CPU performance and added disk capacity came at a high price, so the software that supported the daily business practices of the book-club companies in Austria, Canada, Poland and Switzerland was increasingly expensive. And developers experienced on the mainframe were getting harder to find, according to Manfred Zillinger, chief development officer of Bertelsmann’s ICS Competence Center.

“We didn’t believe our mainframe environment was open enough to accommodate emerging technologies that would let us adapt our business processes to meet the evolving demands of the business, and Micro Focus helped us confirm that,”
says Zillinger.

The company looked at several alternatives: It could upgrade and invest in its current IBM mainframe system, which would cost approximately 3.6 million euros (US$4.4 million). It could migrate to a midrange system such as an IBM AS/400 for 3 million euros (US$3.7 million). It could rewrite the application on a Java-based system for 5 million euros (US$6.1 million). Or it could migrate to the Windows platform. Together with Micro Focus, Bertelsmann conducted a feasibility study and proof of concept late in 2001 to evaluate the possibility of migrating to Windows. The estimate for the Windows implementation was approximately 1.2 million euros (US$1.5 million).

One of the main advantages of migrating to the Windows Server platform, in addition to the dramatically lower cost and improved flexibility, was that the COBOL source code the company used to develop all its applications would require minimal modification compared to the alternatives.

“We’ve invested significantly in the software that has supported our business processes for the past 20 years, and we wanted to preserve that. We also wanted to preserve the knowledge of our developers, who had been working with COBOL all these years,”
Zillinger says.

The IT team at Bertelsmann agreed in April 2002 that Windows Server System was the platform most likely to provide a stable, efficient and scalable solution that wouldn’t squander the company’s investment in its current software. The migration began in May the same year.

Decreased Costs, Increased Performance

Because the book-club business depends so heavily on IT systems, Bertelsmann migrated to the Windows Server platform one location at a time. The mainframes were replaced with Compaq ML530 servers running Windows 2000 Advanced Server and the COBOL-based applications were migrated first in Lausanne, Switzerland and then at the other book-club companies in; Berne and Lausanne, Switzerland; Warsaw, Poland; Vienna, Austria, and Montreal, Canada. The migration for all five companies was complete by October 2003, 18 months after it began.

The entire migration process, including rollout, was very smooth, and downtime very brief, according to Zillinger. His team was able to migrate 95 percent of the source code with no alterations.

Although the book clubs across five Bertelsmann companies daily generate between 500,000 and 700,000 screen requests and up to 100,000 invoices, the IT team has noticed no difference in the stability of the Windows platform compared to the mainframe, and performance is vastly improved.

“One of our mainframes in Montreal took about two and one-half hours to perform some standard batch processing. Once we migrated to Windows Server, we did the same processing with the same data in seven to nine minutes. While this might be an extreme example, performance is clearly better that it was on the mainframe,”
says Zillinger.

In addition, because developers on the company’s IT team are now working in an environment that’s easier to manage and with more efficient development tools from Micro Focus, their productivity has increased tenfold.

With the entire production system now running on Windows 2000 Advanced Server, the system costs the company 38,000 euros ($47,000USD) each month to maintain, far less than the nearly 115,000 euros ($141,000USD) a month the mainframe system cost. With a monthly savings of 77,000 euros (US$95,000), it will take 18 months for Bertelsmann to pay for the entire migration. After that, the company plans to use the savings to pay for the next phase in updating its IT system, which involves restructuring the COBOL-based applications so that they can be integrated via Web services and the Microsoft .NET environment.

Migration and Consolidation Help Premera Meet Market Demand

Premera, like the rest of the health care industry, was emerging in 2000 from three decades of attempts to control health care costs, including changing benefit plans, layered and complicated software implementations, managed care and health maintenance organizations (HMOs), and consolidation among companies. These changes left the company and its competitors with redundant claims and membership systems on which they ran their businesses.

These disparate back-end systems presented many business and technology challenges. Insurance is highly regulated, and the steady flow of mandates required Premera to apply new changes continuously to each of its different systems. In addition, customers of multiple Premera products administered on different systems couldn’t receive seamless, integrated service and reporting, which hindered Premeras ability to serve the market.

Many of these systems were on multiple platforms and were old technologies that couldn’t accommodate Web interfaces. And because they couldn’t integrate with one another, they were difficult to extend. These disparate systems also fragmented Premeras knowledge base because they used different productivity suites, operating systems, databases, and programming languages.

Because of these limitations and inefficiencies, Premera began looking for a cost-effective, flexible, reliable and scalable technology platform to meet market demands. This technology solution would be part of a larger effort to create a more efficient organization that could provide new choices to the market, improve traditional offerings and establish more effective self-service capabilities for its customers and agents.

Premeras IT department has two central functions: to provide the transaction engine that processes membership and claims, and to provide systems for data analysis of trends in health care costs and other vital types of information. Both functions operated predominantly in IMS/DB2 on an IBM mainframe, with some mid-range UNIX components (RS6000 AIX) handling transactions. Premera used the OS/390 operating system and IMS for the transaction system and DB2 for retrospective data warehouse analysis.

The first phase of the project involved migrating the transaction engine that processes membership and claims and consolidating its redundant claims management systems. The company chose a single, packaged claims application — Facets by TriZetto — and began evaluating which platform would support it. In making the decision, Premera wanted to take advantage of the new distributed computing world, as well as regain the advantages of the old centralized mainframe world: stability and ease of management.

Premera chose Microsoft Windows 2000 Datacenter Server with Microsoft Cluster Services and Microsoft SQL Server on Unisys ES7000 enterprise servers to support the Facet application in handling claims processing and to gain the ability to deliver on its new business strategy. The company consulted with Unisys and Microsoft for help in using Windows 2000 Datacenter Server and Microsoft SQL Server 2000 to replace its IMS/DB2-based environment.

“The Microsoft-based alternative had a distinct advantage because it provided a lot of the other components we needed in our technology suite,”
says Al Smit, chief information officer of Premera.
“And Microsofts collaboration with Unisys yielded much more integration of the processing platform.”

Another advantage of the Windows platform was that Premera already had internal staff skilled in developing Microsoft-based solutions for e-mail, file and print services, and other client/server applications tied to Microsoft databases. In addition, licensing the software for the Windows-based systems was less expensive.

Simplified, Scalable Architecture and Faster Application Development

At the same time that Premera was migrating to the Windows platform, it also was deploying a new processing solution that would have the agility, reliability and scalability to support its vision for a new suite of health-coverage products and processes. Called Dimensions, the product suite comprises the Facets claims-processing application and a host of other services.

In the process of implementing the new platform and processing solution, Premera was able to significantly consolidate its infrastructure.
“We anticipate being able to eliminate five or six applications that are running redundant claims and system engines,”
says Smit.
“We expect to move a couple RS6000 platforms and a Hewlett-Packard platform out of the environment and to dramatically downsize our mainframe capacity.”

Scalability is another benefit the Windows platform has delivered, according to Smit. Because Windows 2000 Datacenter Server supports up to 32-way vertical scaling, it provides more than enough scalability for the Dimensions product. This is important because Premera estimates that by 2006, Dimensions will be handling 1.2 million members.

The new platform is also much more agile than the previous one because it integrates easily with other platforms and the Internet and unifies the development environment.

“The Windows 2000 Datacenter Server platform and the tools were using to support it allow us to deliver solutions for our internal business customers and our external customers much more quickly, says Dave Young, vice president of customer service systems at Premera.”
The tools are more integrated, theyre more intuitive to use than our older tools, and we can deliver solutions in a matter of weeks rather than months.

In August, Premera completed the second phase of its migration plan by moving its data analysis and data warehouse components to a Windows Server platform running on ES7000.

Mainframe Migration Alliance

While migrating mainframe applications, data, processes and people from the mainframe can seem like a daunting challenge, the Mainframe Migration Alliance wants to help. The new MMA Web site provides information for businesses that want to understand their options, including tools for calculating the return on investment for migrating from the mainframe to the Windows Server platform, a comprehensive directory of alliance members, case studies, white papers, and upcoming events that provide insight into mainframe migration.

“As businesses worldwide continue their dual focus on reducing costs and increasing agility, the MMA enables customers to unlock the value in their legacy applications,”
says Tony Hill, chief executive officer of Micro Focus, an MMA member.

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