The Surprising Economics of Mainframe Technology

Dr. Howard Rubin, Rubin Worldwide

Ross Mauri, IBM z Systems

Chris O’Malley, CompuwareMarch 19, 2015

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Dr. Howard RubinFounder and CEORubin Worldwide

Ross MauriGeneral ManagerIBM z Systems

Chris O’MalleyCEOCompuware

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4

5

3.38

15.92

World GDP IT GDP

Growth 2014 vs 1980

2.3%

4.7%

World GDP IT GDP

Average Annual Growth 2014 vs 2010

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World

GDP ($B)

IT

GDP ($B)

World

Population (B)

World GDP

per Person

IT GDP per

Person

1980 $22,195 $333 4.4 $5,044 $76

2014 $75,000 $5,300 7.3 $10,274 $726

Ratio of 2014 to

19803.38 15.92 1.66 2.04 9.6

7

8

-1.5%

1.2%

2.7%

12.6%

13.3%

14.0%

Revenue

Tech Spending

Opex

MIPS

Server Instances

Storage Terabytes

Banking: 2012 - 2014 CAGR

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60,000

120,000

22,500 22,500

2009 2014

Bank A: Mainframe Heavy

MIPS Servers

30,000 30,000 45,000

90,000

2009 2014

Bank B: Commodity Server Heavy

MIPS Servers

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2009 2014

Bank A MF Heavy

Count Unit Cost Total Cost ($M) Count Unit Cost Total Cost ($M)

MIPS 60,000 $1,597 $96 120,000 $1,249 $150

Servers 22,500 $3,448 $78 22,500 $3,448 $ 78

MIPS + Servers $173 MIPS + Servers $228

Total Infrastructure $780 Total Infrastructure $1,024

2009 2014

Bank BCommodity

Server Heavy

Count Unit Cost Total Cost ($M) Count Unit Cost Total Cost ($M)

MIPS 30,000 $2,041 $61 30,000 $2,041 $61

Servers 45,000 $2,973 $134 90,000 $2,563 $231

MIPS + Servers $195 MIPS + Servers $ 292

Total Infrastructure $ 877 Total Infrastructure $1,313

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$-

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

0 100,000 200,000 300,000 400,000

Co

st P

er

MIP

S

Installed MIPS

Cost Per MIPS

$-

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

0 40,000 80,000 120,000

Co

st p

er

OSI

Total OSIs

Window Cost per OSI

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2009 2014%

Change

Bank A $13.84 $10.55 76%

Bank B $12.31 $8.22 67%

Average Bank $5.44 $3.86 71%

Income Supported Per $ of Infrastructure Expense

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Income Supported Per $ of Infrastructure Expense Mainframe Heavy Commodity Server Heavy

Banking & Financial Services $5.54 $3.88

Chemicals $13.34 $10.67

Construction, Materials, and Natural Resources $40.63 $30.47

Consumer Products $8.00 $5.76

Education $2.38 $2.26

Energy $46.53 $36.29

Food & Beverage Processing $29.56 $23.35

Healthcare Providers $2.33 $1.75

Industrial Electronics and Electrical Equipment $13.24 $9.54

Industrial Manufacturing $5.92 $4.14

Insurance $1.63 $1.24

Media and Entertainment $9.97 $9.07

Pharmaceuticals, Life Sciences, and Medical Products $11.13 $7.90

Professional Services $6.62 $4.64

Retail and Wholesale $22.77 $17.76

Software Publishing and Internet Services $0.27 $0.33

Telecommunications $5.71 $4.00

Transportation $13.15 $10.26

Utilities $13.97 $11.45

Full Database $13.35 $10.55 14

Industry MeasureAverage IT Cost

of GoodsMainframe

HeavyCommodity

Server Heavy

% Mainframe

Cost Less than Server

2010-2011 Differential % Change

Bank Per Teller Transaction $0.300 $0.125 $0.401 69% 67% 2%

Mortgage Per Approved Loan $295 $100 $358 72% 68% 4%

Credit Card Per Transaction $0.14 $0.09 $0.19 51% 48% 3%

Railroads Per Ton Mile $0.0011 $0.0012 $0.0020 40% 36% 2%

Armored Service Per Person $9,410 $7,124 $12,544 43% 35% 9%

Automotive Per Vehicle $382 $279 $413 32% 31% 1%

Retail Per Store/Door $560,266 $453,444 $675,899 33% 27% 6%

Utilities Per Megawatt Hour $2.58 $2.50 $3.35 25% 19% 6%

Hospitals Per Bed Per Day $82.88 $62.32 $91.56 32% 27% 5%

Oil & Gas Per Barrel of Oil $2.33 $1.80 $2.61 31% 28% 3%

Consulting Per Consultant $58,650 $48,766 $68,100 28% 28% 1%

Trucking Per Road Mile $0.19 $0.16 $0.23 29% 20% 9%

Airlines Per Passenger Mile $0.009 $0.007 $0.010 30% 30% 6%

Chemicals Per Patent $66,588 $58,922 $68,566 14% 10% 4%

Web Sites Per Search $0.040 $0.042 $0.038 -11% -8% -2%

Average 35% 31% 4%

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Mainframe Heavy

Commodity Server Heavy

Credit Card 0.04 0.23

Loan Organization 0.14 0.38

Process and Maintain $1M Loan 103 709

LBS of CO2

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

Da

ta C

en

ter

FTE

s %

of

Tota

l Em

plo

ye

es

FTE Impact: Banking

MF Heavy

Commodity

Server Heavy

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A New Generation of IBM z Systems is Here

Introducing the IBM z13

Ross Mauri

General Manager

IBM z Systems

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Mobile is changing everything

Transforming

how we act,

interact and

transact.

37x increase

in mobile transactions

per day per user

over past decade

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Organizations are exploiting the fundamental

strengths of the mainframe today

• Transaction Processing

• Data Serving

• Mixed Workloads

• Operational Efficiency

• Trusted and Secure Computing

• Reliable, Available, Resilient

• Virtually Limitless Scale

Compelling economics:

68 for 6Mainframes account

for 68% of production

workloads, but only 6%

of IT spend

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Over $1 billion investment with more

than 5000 developers

Co-created with clients

New flexible software pricing to take

full advantage of capabilities

Redefining enterprise IT for digital

business and mobile app economy Transact at the scale and

speed of mobile

Deliver insights at the point

of engagement with

integrated analytics

Ensure highest levels of

security and trust

through cloud

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End the DebateChris O’Malley, CEO

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End the Debate, We Have Work To Do

Q&A

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