By Alok Mehta (CIO, Business Systems, Kemper), Shravan Kumar (AVP Information Technology), and Partha Dash (Director Information Technology)
In today’s fast-evolving digital landscape, organizations are increasingly transitioning from traditional mainframe systems to cloud-based platforms. This shift, driven by the cloud’s ability to reduce costs, increase flexibility, and scale according to business needs, marks a strategic move to enhance operational agility and reduce overhead costs. While mainframes have been reliable for many years, they require specialized skills and are costly to maintain, which is becoming increasingly unsustainable. Transitioning to the cloud is not just a technological upgrade but a significant transformation that opens new opportunities for growth and innovation (Moschella et al., 2004).
Understanding the Challenge
Mainframes are powerful but come with significant drawbacks, such as high operational costs and a rigid architecture that hampers quick integration with modern technologies. This limits the ability of businesses to adapt quickly to market changes. Cloud platforms, on the other hand, offer greater agility and scalability, allowing businesses to respond swiftly to evolving demands. However, the transition from a mainframe to a cloud platform involves complex processes that need careful handling to avoid costly disruptions and ensure that the new systems align with the business’s strategic needs.
Here are the suggested best practices for sunsetting the mainframe applications and migrating them to the cloud:
Starting Off Right: Discovery Phase
The first crucial step in migrating from a mainframe to the cloud is the discovery phase. During this phase, organizations must conduct a thorough assessment of their current mainframe environment, including architecture, applications, data, dependencies, and workflows. This comprehensive understanding helps in identifying potential risks and planning the migration process effectively. The insights gained are crucial for setting the stage for the subsequent cost-benefit analysis (CBA), ensuring all stakeholders are on board with the proposed changes (Ward and Peppard, 2002).
Making the Case: CBA
A detailed CBA is essential to evaluate the financial feasibility and potential returns of the migration project. This analysis should account for all costs associated with the migration, including software licensing, cloud storage fees, and ongoing maintenance costs. It should also highlight the benefits, such as improved operational efficiency and reduced downtime, which are crucial for gaining stakeholder support (Kappelman et al., 2016). Typically, the elements of CBAs are as following, although different organizations may differ in some categories:
Costs include all expenses related to the migration, such as software licensing, cloud storage, professional services, and training.
Benefits encompass all direct and indirect gains from the migration, such as operational efficiencies, reduced downtime, and avoided costs (especially expensive licensing costs) from not having to maintain the old mainframe.
Net Present Value ( is calculated to determine the value of the migration project over time, considering all future cash flows discounted back to their present value using a chosen rate (typically the organization’s cost of capital).
Internal Rate of Return ()is calculated to evaluate the efficiency of the investment by estimating the rate of return where the net present value of costs (negative cash flows) equals the net present value of the benefits (positive cash flows).=
Choosing the Right Cloud Platform
Choosing the appropriate cloud platform is critical for the success of the migration. It involves evaluating various factors to ensure the platform can support the organization’s current and future needs. This includes assessing the platform’s scalability, performance, security features, and compliance capabilities. It is essential to select a platform that aligns with the organization’s long-term IT strategy to ensure it supports not just current but also future business needs (Gartner, 2020).
Planning Application Migration
Deciding on the future state of each application involves evaluating whether to retire, re-platform, re-factor, re-host, re-purchase, or re-architect each application. This decision is based on each application’s business value, usage, and complexity (Chretienne et. al, 2024) Below is a breakdown of possible dispositions for mainframe applications:
Table 1: Application Disposition Options
| Disposition | Definition | Example |
| Retire | Decommission the application entirely | Shutting down a legacy CRM system no longer in use |
| Re-platform | Move to a new platform with minimal code changes | Moving a database from on-prem to AWS RDS |
| Re-factor | Modify the code for performance or scalability | Updating a monolithic app to improve performance in the cloud |
| Re-host | Lift and shift with no code changes | Migrating a web app from on-prem to Azure without changes |
| Re-purchase | Replace with a commercial solution | Replacing a custom ERP with SAP |
| Re-architect | Redesign for modern architecture | Rebuilding a legacy app as a microservices-based solution |
| Retain | Keep as-is, no changes | Continuing to run an on-prem HR system unchanged |
Managing Risks
Effective risk management is crucial for a successful migration. This involves ensuring the availability of subject matter experts, comprehensive planning, and addressing potential issues with legacy systems. Strategies include detailed testing to confirm that the new system replicates the functionality of the old one accurately and comprehensive planning to address integration and data integrity challenges. Table 2 includes mitigation and risks that should be considered when sunsetting the applications on mainframe and migrating to the cloud:
Table 2: Risk Mitigation:
| Risk Category | Risk Description | Mitigation Strategy | Example |
| Expertise Availability | Difficulty in finding skilled professionals knowledgeable about legacy mainframe systems. | Secure commitment from skilled personnel early in the project. Plan for knowledge transfer and training. | Contract with a consulting firm specializing in mainframe systems for the duration of the migration project. |
| Complex Legacy Systems | Legacy systems are often complex and poorly documented, making migration challenging. | Conduct thorough documentation reviews and interviews with key personnel to map out all system dependencies. | Use software tools to automatically document system architecture and user pathways before decommissioning. |
| Data Integrity | Risk of data loss or corruption during migration, leading to operational disruptions. | Implement robust data validation and reconciliation processes throughout the migration process. | Employ ETL (Extract, Transform, Load) tools to verify data accuracy and completeness after each transfer stage. |
| System Downtime | Potential extended downtime during switchover to the new system, affecting business operations. | Develop a detailed cutover plan that includes phased rollouts and parallel runs to minimize operational impact. | Perform trial runs and simulate live environment testing to ensure all critical functions are performing as expected. |
| Cost Overruns | Migration projects can often exceed initial budgets due to unforeseen complexities. | Regularly review project scope and budget. Utilize contingency planning and reserve funds. | Set aside a 20% contingency budget based on initial estimates to accommodate unexpected expenses. |
| Integration Challenges | Difficulty in integrating the new cloud system with existing IT infrastructure. | Use middleware solutions to ensure compatibility and seamless integration between old and new systems. | Implement an enterprise service bus (ESB) to facilitate communication between legacy and cloud applications. |
| Security Vulnerabilities | Increased risk of security breaches during and after migration. | Strengthen security protocols, conduct regular security audits, and ensure compliance with all regulatory standards. | Upgrade encryption methods and perform comprehensive penetration testing during the migration phase. |
| User Acceptance | Resistance from users accustomed to the legacy system, leading to lower productivity. | Engage users early in the project through training and demonstrations to foster acceptance of the new system. | Set up a demo cloud environment where users can familiarize themselves with new features before going live. |
| Regulatory Compliance | Failure to meet industry-specific regulations can lead to fines and legal issues. | Maintain rigorous compliance checks and involve legal and compliance teams throughout the migration process. | Conduct a compliance audit before the project starts to ensure all regulatory requirements are addressed. |
| Testing and Validation | Inadequate testing can result in system failures when going live. | Implement a comprehensive testing strategy that covers functional, performance, and security aspects. | Use automated testing tools to perform stress and load testing under various operational conditions. |
Conclusion
Migrating from a mainframe to a cloud environment is a complex but strategic move that modernizes an organization’s IT infrastructure, enhancing its flexibility, scalability, and cost-efficiency. By understanding the challenges, carefully planning the migration, and effectively managing risks, organizations can ensure a successful transition to a cloud environment that supports their current and future business needs.
References
- Moschella, D., Neal, D., Opperman, P., & Taylor, J. (2004). “The Cloud at Your Service: The when, how, and why of enterprise cloud computing.” Journal of Cloud Computing.
- Alexis Chretienne, Phil de Valence, and Yann Kindelberger “Demystifying mainframe technical debt and unlocking value of core application modernization.” AWS Cloud Operations
- Ward, J., & Peppard, J. (2002). “Strategic Planning for Information Systems.” John Wiley & Sons Ltd.
- Gartner (2020). “Magic Quadrant for Cloud Infrastructure and Platform Services.” Gartner, Inc.
[HM1]introduced CBA in previous paragraph so all set!
[HM2]what is NPV?
[HM4]What is IRR?