dinosaur unisys

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Why the mainframe is the cheapest

solution for most organizationsx

THEDINOSADINOSADINOSADINOSADINOSAURURURURUR

MYTH


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CONTENTS

This Report is based on ongoing research into the cost of ownershipof large systems, storage, and software, carried out by Xephon sincethe mid-1980s.

Copyright on the picture of the Tyrannosaurus Rex on the coverbelongs to the Chinese Web site dinosaur.net.cn;our thanks to themfor permission to reproduce it.

Copyright Xephon 2002-2003. Please respect our copyright, anddontgive copies of this Report to others. A free version, in HTML, is

available from the Mainframe WeekWeb site.

4 Why a new edition?

4 Measures of cost-effectiveness

7 The true costs of computing

8 Hardware and basic software costs

9 Application software

10 Personnel costs

15 Hidden costs and other factors

18 Partial downsizing and the incremental trap

19 The best of both worlds?

20 Future cost trends

22 Conclusion

Why the mainframe is the cheapest solution for

most organizations
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THEDINOSAUR MYTH

The Dinosaur Mythwas first published in 1992. At that time, it wasvery rare to find a reference to mainframe computers in the businesspress that did not state, or at least imply, that they were obsolete,expensive, and doomed to extinction in the near future. Indeed theywere, quite often, likened to dinosaurs.

Because of this negative image, there was much talk of downsizingfrom mainframes to smaller systems AS/400s, minicomputersrunning Unix, or PC servers. The notion of distributed systems, with

end-users taking more control, also fitted well with the then-currentvogue among management consultants for decentralization andemployee empowerment.

In marked contrast, The Dinosaur Mythexplained in non-technicalterms why, far from being obsolete, mainframes at that time offeredthe most cost-effective computing facilities for all but the smallestorganizations and, we predicted would continue to do so for theforeseeable future.

Perhaps partly because of the widespread distribution of TheDinosaur Myth, and the success of the associated Xephon seminar,The Downside of Downsizing, which attracted capacity audiences indozens of cities in every continent apart from Antarctica, thedownsizing fad more or less fizzled out in the mid-1990s.

For example, the 15 December 1992 issue of the Financial Timesstated that the jury appears still to be out on the cost savings fromdownsizing . . . What is not in question is that downsizing involvescosts that are neither obvious nor negligible and are frequentlyignored in making the case for downsizing.

The 19 May 1993 edition of the Wall Street Journal reported that

Computer downsizing can often be an uphill effort. The much-touted

Far from being obsolete, mainframes offer the

most cost-effective computing facilities for all

but the smallest organizations.


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process . . . is the hottest thing in computing today. But despite thehype about its benefits . . . the transition for many companies isproving painful. Indeed, the article continues, boardroomdisillusionment about the pace of downsizing has prompted someanalysts to think what last year would have been unthinkable: thatdemand for mainframe computers could surge as companies realizethat the downhill shuffle isnt all it was cracked up to be.

By 1994 even the consultants had seen the problems of downsizing.Price Waterhouse actually provided the following quote at a Compassmeeting in the UK: "you have to decentralize to see what a mistake itis...the moment data becomes the personal property of the users,fragmentation starts, and infrastructures end".

Why a new edition?

We decided to publish a new edition of The Dinosaur Mythfor two

reasons:1 There are a great many people who have entered the industry in

the past decade who have had no experience of mainframesand just assume that they are obsolete and must be moreexpensive than their newer and vastly more widespreadalternatives.

2 The relative cost-effectiveness of the mainframe against itscompetitors has changed quite markedly in the past few years.

This new edition will put the relative costs of the various platforms into

context today, and also explain the recent changes in the economicsof computer systems.

Measures of cost-effectiveness

Before we can compare different types and sizes of systems, we needsome common yardstick of computer performance or effectiveness bywhich systems of all sizes can be measured and compared.

Processing speed the rate at which the processing unit of acomputer can execute instructions is one plausible measure, and

the commonest yardstick of processing speed is MIPS, or millions of

The relative cost-effectiveness of the mainframe

against its competitors has changed quite

markedly in the past few years.


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instructions per second. Dividing the cost of a computer by its MIPSrating would, it seems, provide a convenient measure of its cost-effectiveness. Its certainly a comparison thats often made by

journalists, invariably to the detriment of the mainframe. Todaysmainframes have a hardware cost of a few thousand dollars perMIPS. A PC on the other hand, may have a cost-per-MlPS of just afew dollars and Unix systems a cost per MIPS measured in hundredsof dollars. Clearly, by this measure, the mainframe appears to beunder a major disadvantage!

That MIPS really stands for Meaningless Indicator of Performance isan old joke among computer technologists. Computers of differentdesigns have different sets of instructions to which they respond.Some instructions invoke complex and time-consuming operations (egmoving a large block of data around in memory), others call on thecomputer to do very little (eg adding two numbers together). So MIPSisnt even a sensible measure of processing speed, except incomparing systems of similar design (and even then it has to be usedwith great caution).

In any case, most commercial work is data-intensive rather thanprocessor intensive relatively simple operations are applied to verylarge amounts of data. The calculations involved in creating aninvoice, or validating a cash withdrawal, or making a seat reservation,are relatively trivial, but a lot of data has to be located, retrieved,updated, and stored again for each transaction. For commercial work,a computers MIPS rating is about as meaningful as the 0-60 mphacceleration time of a forklift truck.

Mainframes are designed specifically for data-intensive work, withvery sophisticated data handling facilities. Minicomputers andworkstations, on the other hand, are designed to be very fast atcomputation but are rather feeble at data handling. Graphics is also acompute-intensive rather than a data intensive task, so PCs with agraphical user interface such as Windows do need a lot of processingmuscle. On the other hand, they have only a single data path betweenprocessor and storage, capable of transferring typically only a fewmillion characters per second. A mainframe, by contrast, can haveeffectively thousands of channels, each capable of transferring

For commercial work, a computers MIPS rating

is about as meaningful as the 0-60 mph

acceleration time of a forklift truck.


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hundreds of megabytes per second many thousand times morethan a PC.

In practice, mainframe systems tend to be data rich and MIPS poor that is, they control very large amounts of data relative to theirprocessing power. PCs and Unix systems, on the other hand,generally have the opposite profile: they are MIPS rich and data

poor. For example, a mainframe today typically has 5 to 10 gigabytesof data per MIPS, compared to less than one gigabyte for Unix minisor PCs (a gigabyte is a thousand million bytes or characters).

Now, the amount of data that a computer system can manage is ofrather greater practical interest to most commercial organizations thanthe speed with which it can perform a million subtractions or additions

many organizations have massive files that need to be accessible toits computer users. And, by that measure, mainframes clearly have agreat advantage over Unix systems and PCs.

However, even data handling capability is not an entirely satisfactorymeasure of a computers value to an organization. What reallymatters is the number of users, performing whatever functions arenecessary to the organization, that a computer can support, with areasonable level of service. Therefore, the key yardstick of acomputers cost-effectiveness is the total cost per user, measuredover a reasonable time-span to eliminate any high up front rather thanlong term costs say five years.

To help them achieve this multiple application capability, mainframeshave evolved mechanisms for the efficient sharing of resources

among large numbers of concurrent users. In particular, they havemultiple interrupt levels, permitting them to switch from task to taskwithout losing track. This means that a task waiting for an externalevent (a transaction from a terminal, or a data transfer from a diskdrive, for example) can be suspended and returned to later, whileother tasks are attended to in the meantime. They also have verysophisticated resource management capabilities which allow theusers to have their work completed on a priority basis such that evenwhen fully loaded the key applications get the capacity needed toperform the task in hand. These resources can be reallocated literallysecond by second to achieve this goal. Unix systems and PCs do not

have such sophisticated mechanisms.

The amount of data that a computer system can

manage is of greater interest than the speed with

which it can perform a million subtractions or

additions.


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This ability for all work to be completed on one system is crucial. Forexample, lets say ten applications are each used by all of the staff; ifeach required up to 10 MIPS of capacity, but in total no more than,say, 20 MIPS were needed at peak load, then on a mainframe 20MIPS would suffice, whereas in the Unix or PC case 10 systems of 10MIPS each would be needed five times more capacity in total thanon the mainframe. Indeed, in many cases things are far worse thanthis, with users having three systems for each application one forproduction, one for back-up, and one for testing.

Neither PC servers nor Unix systems can run effectively at 100%utilization. At anything above 50% utilization response times sufferand system failures occur. So we must once again double therequired capacity. This also increases the storage and supportrequirements and by default lowers the availability as the morecomplex the environment the more likely the system is to fail.

The true costs of computing

The true costs of computers fall into these main categories:

1 The cost of the hardware (including terminals, printers, and otherperipheral devices) and the basic operating software, over areasonable period. This figure should include the cost ofmaintaining the hardware over that period, and incidental costslike office space, electrical power, special cooling requirements,etc.

2 The cost of the application software the off-the-shelf packagesor customized programs that allow the computer to performuseful work.

3 The personnel costs associated with operating the hardware andsoftware and sorting out any problems that may occur. To thisshould be added the cost of any time wasted waiting for thecomputer system.

There are, in addition, other costs that can be directly attributed tocomputer systems, which may not be so readily quantified but shouldalso be considered. These will be touched on later.

Neither PC servers nor Unix systems can run

effectively at 100% utilization.


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Hardware and basic software costs

The following comparisons are based on a representative selection ofsystems from amongst our clients performing the same or similartasks:

Various mainframe configurations supporting large numbers of

users.

Several Unix servers from different vendors supporting similarnumbers of users.

A selection of PC servers from different vendors supportingsimilar numbers of users.

We calculated the basic hardware, software, and maintenance costsover five years for these systems (excluding the cost of finance, andignoring inflation). Our estimates per end-user were:

Mainframes Unix minis PC servers

$0

$5,000

$10,000

Basic hardware, software, and maintenance costs

$4,750$5,750

$7,500

Already it can be seen that the alternative platforms do not have anyadvantage over mainframes. This is largely due to the additionalcapacity required as outlined above.

These figures may surprise some readers who have seen themainframe as expensive and the software in particular beingperceived as exceptionally expensive. But if you need ten times lesscapacity to perform the same work then the perceived hardware pricedisadvantage soon evaporates.

The Unix and PC server cost figures used here are higher than thosefor very small numbers of users, as it has become apparent that

If you need ten times less capacity to perform

the same work then the perceived hardware

price disadvantage soon evaporates.


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neither Unix nor PC server systems are truly scalable at the samelevel of cost. By that we mean that, as the number of users increases,the cost per user increases. Our own estimate, based on extensiveresearch, is that for a doubling of the number of users the costsincrease by close to 125% on a non-mainframe platform but by only90% on a mainframe.

These figures make no real allowance for batch work (work thatrequires no on-line interaction with end-users for example, overnightupdates of customer accounts from data generated during the day bycash dispensers or off-line data entry clerks, printing invoices, creatingmanagement reports, etc). Most mainframe sites also use theovernight shift to reorganize files and defragment data, to improveon-line performance during the day. Mainframes are the undisputedmasters of batch processing most run 24 hours a day whereas theiron-line networks are active for far less time, even today.

However, it is difficult to quantify batch processing in terms of on-line

users, which is the measure weve chosen to adopt, and so we haveopted to discount the benefits of batch processing altogether, eventhough weve retained the costs within the mainframe system costs.

In the past we had to add something for the cost of floor-space andspecial environmental requirements. This would typically be higher forthe mainframe than for Unix systems, with no costs under thisheading for PCs, since they occupied much the same space as theterminals for mainframe and minicomputer systems. For mainframes,we also needed to add the cost of the network hardware and softwarewhilst the equivalent costs for interconnecting minicomputer systems

and PCs were very variable, and any figure we proposed would havebeen open to dispute.

But today all of these costs are at worst similar on each platform, withthe mainframe if anything proving the cheaper today in mostinstances.

Application software

The application software required will obviously vary widely fordifferent organizations. However, with most packages available acrossall platforms and most platforms requiring similar levels of tailoring of

Mainframes are the undisputed masters of batch

processing.


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applications or custom-built applications, the costs today are similarregardless of the platform for the equivalent number of users. A figureof around $150 per user per year ($750 over five years) is theaverage of the clients studied to date. Adding these costs, we get thefollowing approximate figures:


$0

$5,000

$10,000



$5,500$6,500

$8,250

Personnel costs

All computer systems require some human supervision, ranging incomplexity from loading the printer with paper to diagnosing and fixinghardware or software faults. End-users may be able to handle someof this work themselves, but even the most independent willoccasionally require the assistance of specialist staff. At the otherextreme, end-users supported by mainframes are largely shieldedfrom both the complexities and the chores involved in tending to thecomputers needs instead, full-time specialists are employed. Unixsystems fall somewhere between these two extremes.

The staff costs of running mainframes are very visible: operators andtechnical support staff do nothing but minister to the mainframe, andtheir salaries and employment costs are easily identified. Currentmainframes on average require one technician (systems programmeror operator) for every 250 mainframe users, which, at an averageemployment cost of $75,000, amounts to $1,500 per end-user over afive-year period.

End-users supported by mainframes are largely

shielded from both the complexities and the

chores involved in tending to the computers

needs.


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Two points are worth making here. First, the number of operators andsystems programmers required per mainframe MIPS has fallentenfold in the past seven years, and is expected to at least halveagain in the next five years. Second, the estimate weve adoptedassumes multi-shift 24-hour operation, which means that the batchwork typically carried out overnight is included in the cost, eventhough we have made no allowance for it in our cost-per-end-usercalculations.

For Unix systems, fewer technical staff are required to tend thesystem because they do not normally operate 24 hours a day and ourresearch puts the level at close to one person per 500 users. A cost ofaround $750 per user over five years at the typical cost of $75,000 perannum per person. In addition, it is generally reckoned that, onaverage, one full-time support specialist is required for every 100 end-users in a typical Unix environment, which is close to the three to oneratio compared to the mainframe reported by our clients. If thatspecialist costs (say) $75,000 a year to employ, the five-year cost perend-user will amount to $3,750. Putting the operational and supportneeds together we get a figure of $4,500 per user over five years.

In the PC environment, in many cases the end-user is the operator.Its his or her responsibility to take back-ups, copy files, put theappropriate paper in the printer, look up error messages in themanual, and so on. It is estimated by the users studied that theaverage PC user spends one hour a week, or 12 minutes a day, eithertending to the system or waiting for a response from it. This seemslike a conservative figure to us, but it nonetheless equates to 2.5% ofthe end-users time. How much that might cost will of course varydepending on the end-users jobs, but if we assume a minimumannual end-user employment cost of $36,000, 2.5% of that amountsto $900 a year, or $4,500 over five years.

To this must be added the cost of specialist support staff or local helpwithin the user group to help out when users are unable to solve aproblem themselves. The users surveyed reported that PC-basedsystems require the equivalent of one support person for every 50 PCusers today which may seem a high figure but is in fact only theequivalent of 2% of each end-users time. At $45,000 a year (anaverage between the cost of the end-user and the technical people),that costs another $4,500 per end-user over a five-year period.

In the PC environment, the end-user is the

operator.


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Adding these estimates to the running totals gives the followingresults:


$0

$5,000

$10,000

$15,000

$20,000



Support

$7,000

$11,000

$17,250

Returning to our cost-comparison, the Unix systems on which thesefigures are based are less effective compared with the mainframe,and will only provide response times in the 2-4 second range. An

average extra delay of two to three seconds for every interaction(which weve assumed will take place on average every 45 seconds)equates to a 5% overhead. Its unlikely that end-users will be able todo any useful work during that time, so in effect the minicomputersolution levies a hidden cost equivalent to 5% of all end-users time(their salary plus other employment costs). At $36,000 per person peryear this adds a minimum figure of $1,800 a year to the Unix systemcosts, or $9,000 over the five years.

PC server-based systems are typically no better in this respect, andoften far worse, but for the sake of this comparison we will assume a

hidden cost of $9,000 over five years for these systems as well.

Minicomputers levy a hidden cost equivalent to

5% of all end-users time.


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If you accept the argument that a fair cost-comparison should takeaccount of time wasted because a system is slower to respond, wenow have the following estimated five-year costs per end-user:


$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000



Support

Personnel costs

$7,000

$20,000

$26,250

These figures are compared below with the equivalent or comparablefigures published in 2001 by ITG, in a management brief entitled TheCost Implications of Platform Choice:

A fair cost-comparison should take account of

time wasted because a system is slower to

respond.


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Mainframes Unix PC

0

$10,000

$20,000

$30,000

$40,000

$50,000

$7,

000 $

14,

000

$20,

000

$39,

440

$26,

250

$45,

000

Xephon ITG

Our figures are on the low side around half of the ITG figures.

However, in terms of the relative costs they are very similar. Thereason for them being lower in our case is that they are based uponvery large organizations where the cost per user is lower throughsimple economies of scale. These large users are also more efficientin their use of any of the platforms than the average user representedin the ITG case.

The breakdown of our estimates is shown graphically in the chart onpage 13. While mainframes show only slightly lower costs for thehardware and applications areas, their advantage in support andemployee efficiency costs are enormous. In particular, for the

mainframe system the cost of personnel accounts for just 21% of thetotal, while for the PC and Unix solutions this figure is around 68%.

For mainframes, the cost of personnel accounts

for just 21% of the total, while for the PC and

Unix solutions this figure is around 68%.


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This ratio of over three to one in favour of the mainframe is evenbetter than the level we found in the early 1990s. As personnel is theone area which has been increasing in costs over time it is notsurprising that the mainframes current cost advantage is greater thanwe last reported, and is also more or less certain to continue toimprove into the future.

In effect, the PC solution, and to a lesser extent the Unix solution,move much of the personnel costs out from the Data Center to theend-user. That has two consequences: first, it tends to hide the costs,which are absorbed into other budgets, and, second, it increases thetotal costs, because more people are involved in identicalhousekeeping activities. For example, whereas a mainframe systemwill back-up the data of thousands of end-users either automatically orwith minimal operator intervention, with the PC solution eachindividual, or perhaps each workgroup, has to initiate the process.

We should emphasize that all our cost-estimates ignore inflation and

the cost of money, and assume a green-field site. They cannot becompared with the budgeted costs of existing installations. Formainframes in particular, given that prices are falling all the time,systems installed some time in the past will be correspondingly moreexpensive, and our figures are also based on complete systemsrather than upgrades, which tend to cost considerably more forequivalent performance. Many organizations write off capital costsmore quickly than the five years weve allowed. And the figures donttake account of batch applications. If these and other salient factorsare taken into account, the budget costs over a five-year period for thehardware and software costs of all solutions will be higher than thefigures weve quoted here. However, the relative costs would certainlynot change as the figures we have calculated are conservative for thenon-mainframe solutions.

Hidden costs and other factors

Mainframes have been around for quite a while, and their direct andindirect costs are now well known. Unix systems and PC servers aremore recent. Problems that have been recognized and solved (at acost) in the mainframe environment are often not even acknowledged,

The PC and Unix solutions move personnel

costs out from the Data Center to the end-user.


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let alone tackled, in these less mature technologies. Some examplesfollow.

Mainframes provide very high levels of data integrity, by taking regularback-up copies of important data and keeping a log of transactions,so that, in the event of a system crash (caused, for example, bysoftware/operator error or a power failure though most large

mainframes are protected by uninterruptible power supplies), data canbe restored to its pre-crash state by reinstating the last back-up copyand re-applying all intervening transactions from the log automatically.Indeed for most large users today everything is mirrored on adisaster recovery system and production can continue uninterruptedby virtually any type of hardware, software, or operational failure.Taking these precautions against data loss and corruption costs timeand capacity though much of this takes place at night during batchprocessing, there is a continuing overhead while the on-line network islive, so the system has to be powerful enough to suffer the overheadand still deliver sub-second response times to end-users. Ourmainframe cost estimates allow for this overhead.

In over 99.99% of mainframe system crashes, no significant data islost today. Contrast this with the typical PC or Unix environment,where its often left to the user to remember to take back-up copiesbefore going home. If a crash occurs, all work since the last back-upcopy was taken has to be redone. And PC and Unix systems are farmore prone to system crashes than mainframes today mostmainframe installations experience on average fewer than one systemcrash, or outage for change, in a year. The other platforms experiencefrequent (by comparison) failures, and also frequent periods ofdowntime to install new software or hardware.

Downtime costs money for some organizations, literally hundreds ofthousands of dollars per hour and millions per day. For others itmeans the end of the business! With e-commerce growing rapidlythese costs will escalate and the 99.99% availability of the mainframewill prove invaluable. In this case remember that even 99.9%availability, something no large and complex PC or Unix based systemcan deliver, means over 8 hours down time per year compared to themere minutes endured by most mainframe users.

Downtime costs money for some organizations,

literally hundreds of thousands of dollars per hour

and millions per day.


17/2317

Similarly, mainframes can offer very high levels of security throughpassword protection and data encryption. Again, there is a penalty tobe paid in terms of the security softwares performance overhead the system has to be that much more powerful in order to deliveracceptable response times; this overhead, too, is allowed for in ourmainframe cost estimates as the impact on the performance isnegligible. Security packages are available for PCs and Unix systems,but in general security is the responsibility of the end-user, who mayor may not be conscientious. The level of security to be expected fromend-users themselves is fairly dubious particularly since computercrime is mostly committed by end-users anyway.

Other security-related problems are virtually unknown on themainframe but are very prevalent in the PC and (to a lesser extent)Unix environments. One is computer viruses fragments of codewritten by malicious individuals, which attach themselves to programsand infect other systems via shared diskettes or across LANs. Thesecan be very destructive, and guarding against them is becoming anincreasingly time-consuming chore for end-users and their supportstaff.

The second problem is less obvious, and that is software theft theunlicensed copying of software. An audit of the hard disks of end-users PCs often reveals one or more stolen programs. Corporatemanagement may be quite unaware of these illicit copies, butnonetheless corporate management is legally liable, and the Software& Information Industry Association and Business Software Allianceare waging an increasingly high-profile campaign against offendingcompanies. Policing end-users to prevent illegal copying is alsobecoming a time-consuming and unpopular chore formanagement and support staff.

One final aside on the topic of security there is a thriving blackmarket in stolen PCs, but no record of a mainframe being hi-jacked.The financial impact of a stolen PC could well exceed the actualhardware costs by a huge margin if the PC in question holds datarelating to individuals which is covered by privacy laws. To avoid thisproblem future PCs, when connected to a mainframe, have thecapability of losing all data and even software when switched off,with the mainframe reloading the PC when it is powered on again.

Policing end-users to prevent illegal copying is

also becoming a time-consuming chore for

management and support staff.


18/2318

This ability to download the software will in itself create large savingsand avoid problems caused by different levels of software on differentPCs.

There are other non-obvious costs associated with Unix and PCserver based systems. For example, there is an active second-handmarket for mainframe systems, and used mainframes are typically

worth many times more than other systems as a percentage of theiroriginal purchase price (and its difficult to find a buyer for any but themost common Unix servers). After three or four years, PC servers arevirtually worthless. Possibly most significant of all, the other solutions,unlike mainframe ones, do not provide scalability with linear costincreases, as we pointed out earlier in this report. For example, theSun 10K systems in our survey typically cost over 125% more peruser than the smaller Sun servers. We believe from our research thatall non-mainframe servers will exhibit this same tendency, with theactual cost per user increasing as the number of users increases. Thismeans that in practice all of the mini and PC costs in this reportshould be increased substantially if it is your intention to support morethan a few thousand users.

Partial downsizing and the incremental trap

Though there are a few instances where organizations have fallen onhard times and replaced mainframes with smaller systems to run amuch reduced workload, we know of no case where a sizable modernmainframe has been wholly replaced by another platform running thesame workload. Many press reports of downsizing turn out on closer

inspection to be nothing of the kind. Downsizing in the commonlyunderstood sense just didnt happen, and doesnt now. But what hashappened, and still does happen, is a sort of incremental downsizing,which can have equally disastrous consequences.

The problem with mainframes was that a relatively small number ofmodels covered a very wide power spectrum, from perhaps 50 end-users up to 25,000. Unless its workload was growing very fast, anorganization could be faced with a much larger, and more expensive,upgrade than it really needed in order to add another application witha small number of end-users. In that situation, the cost of the upgrade

With non-mainframe servers the cost per user

increases as the number of users increases.


19/2319

could seem exorbitant compared with the cost of a Unix or PC serversystem capable of handling the new application. The temptation was,of course, to implement the new application separately on a smallerfree-standing system. When the need for another new applicationarose, the same logic applied. And so it went on in time, theorganization had both a mainframe and a number of separate smallersystems running individual applications, all of which could far moreeconomically be accommodated on a larger mainframe.

And often, removing small applications from the mainframe does notreduce the required mainframe capacity anyway! The reason issimple: in most organizations 20% of the applications take 80% of thecapacity, and 100% when peaking. The smaller applications use upidle time between peaks. Removal of such applications therefore haslittle or no impact on the overall capacity needed.

Now, however, with capacity on demand and workload pricing, usersare able to add quite small increments of processing power to their

mainframe relatively cheaply. This is one important development thathas occurred recently, which helps to reduce the single significantdrawback of mainframes that we identified in the early 1990s.

The best of both worlds?

Another major new opportunity for mainframe users is the availabilityof Linux. This solution is a halfway house, as it brings many of themainframes advantages to the Open world. It allows users to runmultiple Unix applications on a single system and allows literally

hundreds or thousands of simultaneous servers to be accommodatedon one system. In this mode it eliminates many of the support andmanagement issues of the massive Unix and NT server farms thathave materialized in many organizations today.

The main advantage of Linux is that it allows the traditional mainframeuser to add new applications to the current systems at very lowincremental cost. This eliminates the sole problem that we found withthe mainframe in the past (the incremental cost of adding a singlesmall application to an existing system).

Linux on the mainframe brings many of the

mainframes advantages to the Open world.


20/2320

Future cost trends

Even if the mainframe is the most cost-effective alternative at present,what about the future? Everyone believes that the price/performanceof PCs is falling far faster than that of Unix systems, which in turn isfalling faster than the price/performance of mainframes. It thereforemay be argued that sooner or later and probably sooner rather than

later any advantage the mainframe may have will disappear.

In fact, the opposite seems likely in the future, just as it has proved inthe past, because of another, less widely publicized trend. PC serversand Unix servers still lack much of the functionality that mainframeusers take for granted. These missing functions, along with theperformance overhead that they impose, are being added insuccessive software releases.

Meanwhile, the cost per MIPS of the mainframe is falling steadily at25% to 40% a year. And the emphasis in system software

development is less on adding functionality (much of which it alreadyhas) and more on improving performance, in particular takingadvantage of new hardware features such as 64-bit storage. As aresult, the same system running a later release of the operatingsystem can show significant performance gains over a system runningan earlier release.

One more or less certain trend is that staff costs will continue to rise inreal terms. Bearing in mind that staff-related expenditure currentlyaccounts for around 68% of the total costs for both PC and Unixserver systems, compared with around 21% for mainframes, the

relative effect on PC and Unix server costs will be over twice as greatas on mainframe costs. And, as we remarked above, the establishedtrend is for mainframes to require fewer technical staff each year.

Linux on a mainframe can offer a six-to-one

price advantage over Unix or PC server based

systems.


21/2321

Taking all these factors into account, our estimated average five-yearcosts per end-user in 2010 are as follows:


$0

$10,000

$20,000

$30,000

$6,250

$19,000

$24,000

Incidentally, our estimates in 1994, in the second edition of TheDinosaur Myth, for the costs in 2000 compared to the actual coststoday are shown below:

One more or less certain trend is that staff costs

will continue to rise in real terms.


22/2322

Mainframes Unix PC$0

$10,000

$20,000

$30,000

$40,000

$50,000

$8,

458

$7,

000

$17,

871

$20,

000

$17,

935 $

26,

250

Prediction Actual

Our predictions were somewhat higher than the actual costs today forthe mainframe, as a result of IBMs efforts to lower mainframe prices,but much lower than the current PC costs, which have improved littleover time, and close to the figure for Unix.

According to our projections, the PC and Unix server solutions will beslightly worse relative to the mainframe 204% more expensive now(compared with 186%) for Unix, and 284% more expensive now(compared with 275%) for PC servers.

Our predictions were somewhat higher than the

actual costs today for the mainframe, but much

lower than the current PC costs.


23/23

This Report is based on ongoing research carried out by XephonsEnterprise Market Service, which has tracked the cost of ownership oflarge systems, storage, and software since the mid-1980s.

Copyright Xephon 2002-2003. Please respect our copyright, anddontgive copies of this Report to others. A free version, in HTML, is

available from the Mainframe WeekWeb site.

Not only did the mainframe not die, but it has re-

invented itself and is now set to dominate the

market for the next decade.

Conclusion

We believe that our cost estimates are realistic, and if anythingunderstate the financial advantages of the mainframe. For example,our choice of a five-year period is very flattering to the other platforms,which rarely last so long. If any kind of intercommunication or datasharing between systems is required, then more powerful Unix or PC

servers, or more of them, would be required. However, we have takenno account of this in our costings. Nonetheless, we would not claimthat our figures are universally applicable. They should instead beviewed as a checklist of the costs to take into account in making ameaningful comparison between different systems. If such acomparison is carried out without bias, we believe that the mainframewill prove to be the cheapest option for all but the smallest multi-usersystems.

With all of these changes, the mainframe has begun a new life. Andmainframe skills now command a salary premium, with new staff

being trained in mainframe technology, according to a front pagearticle in Computerworld (March 4 2002).

Not only did the mainframe not die, but it has re-invented itself and isnow set to dominate the market for the next decade.

Those who dismiss them as dinosaurs should remember thatmainframes have existed in their present form for fifty years at most and dinosaurs ruled the earth for 150 million years!
http://www.mainframeweek.com/http://www.mainframeweek.com/

dinosaur unisys

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