The acquisition of Compuware this week by rival BMC Software signals that the rate at which mainframe environments are being modernized might not be occurring fast enough to support a vibrant third-party tools provider ecosystem.
Both BMC and Compuware were sold to private equity firms in 2018 and 2014, respectively. Thoma Bravo, which acquired Compuware, is now selling the company to KKR. BMC was acquired by KKR in 2018 from Bain Capital and Golden Gate Capital for $8.5 billion. BMC was originally taken private by investors in 2013.
Other rivals in the mainframe category include CA Technologies, which was acquired for $18.9 billion by Broadcom last year, and Micro Focus, which includes software assets originally developed by Hewlett Packard Enterprise.
BMC executives declined to comment on the merger and terms of the deal for Compuware were not disclosed.
All these machinations by private equity investors doesn’t do much to inspire confidence among end customers, said Judith Hurwitz, president and CEO of Judith Hurwitz & Associates, a market research and IT consulting firm.
“Private equity firms always have to eventually look for an exit,” she said. “In this case, one investor wanted out.”
That leaves IT leaders in the unenviable position of not knowing whether the application development platform on which they have standardized might be around for the long haul, said Hurwitz.
The challenge faced by third-party providers of application development tools in the mainframe space is largely two-fold. While the number of workloads running on mainframes continues to increase thanks mainly to availability of Linux on the platform, the number of organizations that have a mainframe has declined. The low end of the mainframe market has been eroded by high-end distributed systems. In addition, many applications that previously ran on a mainframe have been shifted into a public cloud.
The second challenge these providers face is IBM, which is now a much more formidable competitor in the mainframe tooling sector. IBM has launched a series of initiatives to provide tools to modernize mainframe platforms using best DevOps practices as part of a larger digital business transformation initiative. However, regardless of the relative strengths of IBM’s DevOps portfolio, there will always be a significant base of mainframe shops that will prefer tools from IBM over those provided by a third-party rival.
In a prepared statement shared via email, Barry Baker, vice president of IBM Z Software, said:
Over the last 18 months, we’ve come a long way to expand the ecosystem for mainframe skills by bringing new tools to IBM Z and LinuxONE. Our goal remains unchanged – to make development on Z a common experience for all developers across the tech stack – not just mainframe developers. We’ve made significant progress toward this goal with the adoption of DevOps and industry-standard tools like Git and Jenkins on the platform, along with our own offerings including IBM Z Open Development and IBM Z Unit Testing. We took another step with Red Hat OpenShift on IBM Z, further enabling cloud developers to deploy z/OS applications using OpenShift without any special Z skills required.
We continue to invest and over the next few months we’ll be unveiling even more tools across three focus areas: developer experience, automation and operations to truly deliver on our promise for a cloud native experience – and encourage our clients to watch this space.”
Of course, all of IBM’s tooling rivals in the mainframe space have launched similar DevOps initiatives. The challenge they all face is the rate at which mainframe organizations are embracing DevOps may not be fast enough to sustain a vibrant third-party ecosystem. Not surprisingly, BMC has also been extending its reach to encompass distributed computing platforms. Competition among tooling vendors on those platforms is already fierce.
There can be no doubt mainframes will continue to play a crucial role in IT. Most large enterprises are still dependent on mainframes to run some of their most mission-critical transaction processing applications. Less clear is to what degree those organizations intend to modernize those applications beyond simply making application programming interfaces (APIs) available for legacy applications. IBM, along with every provider of development tools for the mainframe, has been making a case of deploying new applications running on Linux on a mainframe because the total cost is lower than trying to connect those applications running on a distributed system to a legacy mainframe application.
A recent global survey conducted by Vanson Bourne on behalf of Micro Focus suggests that argument is starting to resonate. Nearly two-thirds (63%) said some form of modernization was favored over the replacing and retiring of older COBOL-based systems in 2020.
Regardless of how much economic sense that argument makes, however, the rate at which mainframe applications are being modernized will, at best, continue to be an extended process.
