Microsoft Technologies Gaining Ground in the IBM Midrange

September 27, 2010 Dan Burger

The battle of the midrange continues. And Microsoft continues to put the heat on IBM. We know it best as a struggle for IBM i shops to remain i-centric when it comes to their mission critical applications as Microsoft technologies gain stronger footholds in enterprises. Last week I talked with Dee Hester, who heads up platform migration sales in North America and Latin America for Microsoft. Here’s the view from where he sits.

Hester works for Microsoft’s Enterprise Partner Group (EPG), which has a goal of accelerating the adoption of Microsoft technologies at the enterprise level and supporting business partners that do the same. His partners are not the independent software vendors. They are the systems integrators that help manage the migration process as it pertains to hardware infrastructure, databases, middleware, and applications.

This network of service providers to migrate competitive platforms and languages to Windows is responsible for practically all of the heavy lifting and therefore deserves a big share of the credit for Microsoft’s success. You might say Microsoft provides the guns and ammunition, but the boots on the ground belong to these services-oriented business partners. (IT Jungle will follow-up this story with a perspective on the independent software vendor ecosystem in an upcoming issue of The Four Hundred.)

According to a June 2010 Gartner report on Microsoft’s modernization strategy, Microsoft’s Server and Tools division calls the shots with EPG as an organizational wing. Server and Tools is a $14 billion group that has increased its emphasis on platform migration in recent years.

The program dates to 2000 when Microsoft first took aim at Unix migrations. It wasn’t until 2007 that these efforts were expanded to the mainframe and midrange. And only in the past two years or so have there been coordinated product plans, marketing messages and, most importantly says the Gartner report, “a modernization ecosystem around the world.”

“It’s not done with separate teams,” Hester says. “We’ve collected all subject matter experts worldwide under one team. We have a corporate team called the Enterprise Platform Modernization Team responsible for the partner ecosystem as well as supporting the field by working up proposals, developing partner relationships, and developing ROI calculators.”

Some readers who have been following Microsoft’s midrange efforts may remember the Midrange Alliance Program (MAP), which started in early 2005. Hester refers to that as a marketing-specific aimed at software companies (ISVs) that wanted to work with Microsoft on materials such as joint collateral, white papers, and projects to educate customers. It gave Microsoft partners an opportunity to market the message that “we have technology to help you modernize AS/400s and take advantage of .NET,” Hester says.

What’s changed, he says, is that the Midrange Alliance Program was an early step toward putting in place a program that now places emphasis on “the value of the Microsoft application platform as a comprehensive and integrated set of tools and technologies that provide capabilities that help maximize value of application portfolio.” It’s more cohesive and all encompassing. And although there are platform specific aspects to it, there is also a single team focused on migrations from multiple platforms.

So Hester has his troops taking aim at IBM midrange customers as well as mainframe and AIX shops. There are other targets as well, but it’s primarily IBM territory that Microsoft is interested in.

Microsoft clearly wants more enterprise business. And they’ve been getting it according to Hester.

In 2009, customer wins (conversions to the Windows platform) in the midrange totaled 121, according to Hester. And he estimates that nine out of 10 of those were IBM i shops. His scorecard also shows 212 wins in the mainframe arena and a whopping 797 wins in the Unix field.

He also shared pipeline statistics that are being counted as wins in progress. Unix conversions again led the way with 1,022, followed by 778 mainframes, and 719 midrange systems. Again that 90 percent IBM i estimation is being applied to the midrange number. That comes to a total of 2,619 Microsoft enterprise wins.

Hester added some clarity to these numbers by saying they could reflect as many as three wins at a single company when there’s a mix of platforms under one corporation. In other words, don’t correlate these wins with the number of companies that have made platform migrations.

He also pointed to a pie chart that indicated 49 percent of the customer wins (a combination of midrange, mainframe, and Unix) were total system replacements that included packaged application replacements.

The rehosting piece of the pie was tabbed at 27 percent of the wins. Hester described that as taking a business critical app–“usually written in a relatively modern language that has a future such as C, C++, COBOL, or Java,” as he put it–and recompiling it to run on Windows.

“This is an app that delivers a good value as-is,” Hester says, “and customers don’t want to go through the risk of rewriting.” They choose rehosting to save money on the cost of the hardware and operating system.

Hester’s stats show that 24 percent of the customer wins were willing to rewrite their mission-critical applications.

“When we go into an AS/400 shop, we run into a lot of packaged apps,” Hester reports. “That package is maybe 60 percent of their workload with 40 percent of their workload being all this custom stuff that’s written around it. So the migration is a combination of rehosting, rewriting, and replacement of that packaged app. The same is true on Unix, but on the mainframe side we would rarely see 60 percent of the workload coming from a package. It’s more likely to be 60 percent coming from custom apps.”

The perception that rewriting code is prohibitively expensive is over-generalized from Hester’s perspective.

The amount of processing a company does and the amount of coding being done are completely separate, he says. “Just because a company has a massive AS/400 implementation doesn’t mean they have millions of lines of code. They may just have a system with a high transaction volume.”

“Companies with millions of lines of code rarely rewrite. It’s risky and it’s costly,” he admits. “The decision to rewrite or rehost have a lot to do with that [the total amount of coding that’s required]. If it’s too expensive or too risking to rewrite, that’s why companies rehost. And that’s why companies like ASNA exist. Moving from RPG to .NET running in Visual Studio using an ASNA product would be an example of rehosting.

“Do companies see high expense in the process? Yes, they do. But companies want to know how to drive innovation, grow business, save money, and gain efficiencies.”

Then there’s the uncomfortable topic of staffing and skills. Hester says companies are becoming increasingly alarmed about the dwindling number of IBM i professionals.

“There are not a lot of people learning RPG and it’s hard for companies to find people to maintain their systems. It’s not just RPG programmers. It’s the people who know how to fully use the operating system, fully use the database. The guys who are reaching retirement are the guys who know the business logic and the maintenance schedules. They are the one that know how to keep the systems running.”

As the Gartner report points out, the perception of Microsoft as unreliable in mission critical situations still needs to be addressed. We can count on enterprise wins for Windows to be loudly trumpeted by Microsoft as it attempts to shake off its client-only image and the dissatisfaction of customers that have not done enough to grow from small businesses with limited IT resources into larger enterprises with sophisticated IT operations operating with high availability.

Microsoft is still hell-bent on proving it’s capable of handling mission-critical business applications and running large-scale businesses.

“We are having 120 percent year-on-year growth,” Hester says. “Three years ago it was about 50 percent. The market for migration is increasing at a fast rate.”

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