One firm's story: The mainframe goes, but Cobol stays behind

Owens & Minor moves Cobol-based ERP system to x86 server, Windows machines

A lot of Cobol-based applications have a plot line similar to the first Star Trek movie.

In it, the crew of the Enterprise discovers a huge, intelligent cloud they called "V'ger." It turns out (plot spoiler alert), though, that V'ger was an unmanned spacecraft called Voyager that had been launched from Earth some 300 years earlier and then readapted by alien forces.

That Star Trek movie was released in 1979. The Cobol-based ERP application suite used by Owens & Minor Inc., a medical supply company, began its life in the 1980s as a packaged application. Over time, the company adapted the ERP software to meet its specific needs, creating a highly customized system with 10 million lines of code.

Today, the ERP system runs the company's core business systems, including order and inventory management, purchasing, pricing, accounts receivable and accounts payable. Nearly 130 years old, Owens & Minor reported about $8 billion in revenue last year.

Unlike V'ger, the ERP system over time got a lot bigger, but not necessarily a lot better. Each green screen application had a different user interface, which required that the company buy larger and larger monitors to display the multiple windows, according to Rick Mears, CIO of the Mechanicsville, Va.-based firm.

Owens & Minor is in the process of modernizing its ERP system but the software will remain Cobol-based.

Managers decided not to replace the system with a new one or to rewrite the code in a more modern programming environment like Microsoft's .Net. The company instead took a third path -- moving the Cobol-based ERP system, including its Unix-emulator, off a mainframe computer to an x86 server and Windows clients. Mears said the business logic built into the ERP system was too valuable to lose.

A lot of companies replace Cobol systems or rewrite them because they don't like the interface, Mears said. He compared such a move to razing a house that only needs restoration. "There are all sorts of stories of companies taking on nine figure rewrite projects. I don't understand the payback for that," he said.

Mears said he is convinced that either replacing or rewriting the ERP system would have cost $100 million to $200 million more than what the firm is paying to move it from the mainframe to the x86 servers.

"Many companies who purchase an off-the-shelf ERP system proceed to spend tens or even hundreds of millions to modify the package to meet their business requirements," he said.

The Owens & Minor approach to modernize the ERP system allowed it to reduce spending on hardware. Although the Owens & Minor isn't disclosing exact figures, the cost of operating the new x86 system including migration cost was less than half of the cost of operating its 700 MIPS (millions instructions per second) mainframe.

The argument of whether to use mainframe and distributed environments is longstanding among IT shops, where there are strong opinions on each side.

Bank of America, for instance, is so committed to the mainframe that the company works with IBM to ensure that colleges and universities produce sufficient numbers of graduates with the skills needed to run and use them.

IBM mainframe revenue had been consistently rising until last year when it declined nearly 29%. But that result wasn't unexpected in bad economic times. In fact, 2009 worldwide server revenue for systems by all makers declined by almost 19% to $43.2 billion, according to IDC. In addition, IBM is releasing a new System z computer this year, and its mainframe revenue typically declines prior to the release of a new one.

IBM accounted for about 33% of overall server revenue worldwide last year.

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