IBM, master of the mainframe, recently reported that revenue for its z Systems mainframe business dropped 40 percent in the second quarter of 2016. While Big Blue said this is to be expected as it is moving toward the end of the company's mainframe product cycle, when sales of the big iron slow down as customers look ahead to the next newer, better machine, this eWEEK interview takes a look at how the slowdown impacts others in the mainframe ecosystem.
Chris O'Malley, CEO of Compuware, which provides software for mainframe users and application developers, said his company's fortunes are less and less tied to the IBM product cycle, adding that the introduction of DevOps and Agile development methodologies into the mainframe environment has spurred business for the software maker. Just when you think the mainframe may be going away, somebody finds a new way to make it more relevant. Compuware's tagline is "The Mainframe Software Partner for the Next 50 Years."
As IBM goes, so goes the mainframe business. Big Blue recently reported a 40 percent decline in its z Systems mainframe business, what does that indicate to you?
As it relates to the mainframe, the big news is that there was no news. The mainframe continues to be a backbone of the worldwide economy, and customers that have been historically dependent on the platform continue to be. When you look at the numbers they spoke about regarding the mainframe, they were all in line with expectations and in line with the release cycle for the z13. While everybody's thinking that the mainframe might someday turn the corner and become part of the past, it continues, unlike any other technology in history, to sustain itself and to be able to grow. The big thing is there was no big news; everything was in line with expectations.
How does the hardware cycle—the IBM mainframe release cycle—affect Compuware's business?
As time goes on it's less and less, because the way they sell the technology is they sell bigger boxes than customers necessarily need at a given moment, but they can grow into them. They pay IBM based on usage. So it's kind of a false positive when they do really well at the beginning of a cycle, because we don't become the benefactor of that until the consumption occurs. So our business comes from those customers where their transaction lines go up or their mobile and digital business increasingly creates transactions on the mainframe that are creating growth. It's only when those things occur that gives us opportunity.
So you saw in their numbers that they are at the end of the cycle. The IBM z Systems revenue was down some 40 percent, which was in line for this point in the cycle. But our new bookings for this quarter were up 23 percent. So we're less connected to what you would see from them. But we're showing that customers are seeing needs on the platform and are trying to address them. Otherwise, you don't create that kind of growth in any kind of business in this day and age.
What opportunities do you see for Compuware going forward on the mainframe?
Over the last seven quarters we've become a DevOps company and we made all these aggressive promises that on the first business day of every quarter we would come out with all of these new capabilities and updates to our existing or classic offerings and integration with our DevOps tool chain. And we've kept that promise. We've gotten to the point now where we've mainstreamed mainframe code and data in a way that preferred DevOps tools from SonarSource and Atlassian and Splunk and XebiaLabs can now be used relative to mainframe development and mainframe operations as an equal class citizen to any other platform that our customers are building any apps on.
So we've solved those problems and customers are trying to move, as time goes on, away from things like waterfall development methodologies into Agile. And they're trying to create a culture that's not siloed to these different platforms—a mainframe culture, a distributed culture, a mobile culture; they want just one culture. They want one Agile set of processes regardless of platform, and they want one set of tools regardless of platform.