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December 12, 2012

Research finds fault with mainframe outsourcers

71% frustrated by hidden deal costs

By Jason Stamper

A global CIO survey by Compuware has found that multiple hidden mainframe outsourcing deal costs are causing frustration for 71% of CIO’s.

The firm spoke to 520 CIO’s worldwide, and also found that 67% of respondents reported an overall dissatisfaction with the quality of new applications or services provided by their outsourcer, citing a widening in-house skills gap, difficulties with knowledge transfer and staff churn within outsourcer organisations.

Speaking to CBR, Compuware director of mainframe solutions, Neil Richards, said he didn’t believe that outsourcers were deliberately hiding costs, but that, "These deals get incredibly complicated, and outcomes are hard to predict. Every contract is slightly different."

Richards said that mainframe infrastructure outsourcing deals were less complex than those involving outsourced applications. He argued that once outsourced, the outsourcer has little incentive to tune the mainframe for optimum performance, which is why 57% of all respondents believe outsourcers do not worry about the efficiency of the applications that they write, and 88% of those whose deals are based on CPU consumption believe that their outsourcer could manage their CPU costs better.

Richards said challenges with such deals include lack of comprehensive documentation, lack of in-house mainframe skills, limited skills transfer and the difficulty of transferring application knowledge to the outsourcer.

Respondents also said mainframe use is on the rise, with MIPS costs increasing on average by 21% year over year, with 40% of respondents claiming that consumption is getting out of control. However Richards said few companies are trying to move away from the mainframe despite the challenges: "Businesses know these systems are mission critical," he said, "but there needs to be improved visibility and transparency around outsourcing deals and the business and outsourcing companies need to work together to make these deals a success for both parties."


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