Tying into a recent IBM Institute for Business Value thought leadership booklet entitled, “Incumbents Strike Back,” IBM (NYSE: IBM) has invested considerable time and effort into reminding analysts of the dominant install base IBM mainframes enjoy in large enterprises, where they transact 68% of the world’s economic activity. IBM categorizes its existing customers into three camps: those that have yet to embark on an IT modernization initiative, those that went for wholesale rip and replace at great economic cost, and those that seek to modernize ― or refinance ― their existing investment in legacy mainframe assets to prepare them for the digital business era as outlined by TBR in its recent special report The Business of One.
Wholesale rip-and-replace initiatives come at a great upfront expense that is difficult, IBM asserted, for corporate boards to justify from an ROI perspective. Rather than retire that technical debt, large enterprises seeking to migrate to digital business streams are finding a more prudent alternative to be refinancing the technical debt through application modernization. IBM hinges future mainframe revenue growth and ongoing relevance on this point, netting out the IBM Z value proposition as bringing pervasive encryption, analytics infusion across the business stack, and simple and secure connections into multiple cloud environments.