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

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 "Veeger." It turns out (plot spoiler alert), though, that Veeger 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 Veeger, 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.

Owens Minor has so far moved the ERP software to two Hewlett-Packard HP ProLiant DL785 servers each with eight quad core AMD Opteron chips rated by HP at 3,200 MIPS. One server is for failover. The system was brought into production late last year.

Mears said that recent improvements in the x86 hardware platform helped with the decision to port the ERP system there. The new servers are 50% larger than the hardware Owens & Minor originally evaluated three years ago, while the cost remained about the same.

Owens Minor worked with a number of vendors on the project, including the Dell Perot Health Care Systems Group and Micro Focus Ltd., to move the code to Windows Server 2008, which has built-in Unix emulator. New user interfaces were and are being developed, included a composite that combines business functions, such as customer support, the various processes employees need to access.

The change for users was dramatic.

For instance, previously the firm's 400-plus customer service representatives had to access at least four different systems -- the order management system, which had information about the customer and order; the warehouse management system; the product management system that stores all information about the products; and the accounts receivable system -- to resolve an issue. Each of the systems had its own separate screens and business logic. Now, the information is brought together in a GUI instead of a green screen, increasing processing speeds and improving order accuracy.

The company is now in the process of modernizing other screens with a Windows GUI.

The new environment also has a plug-in to Microsoft Visual Studio.

Al Gillen, an analyst at IDC, said that in general terms "it is probably not the best thing to do to extend the life of Cobol application in a Windows environment because the user interface is wrong and your don't really get a lot of the benefits you would get from moving to a more current system," he said.

But Gillen also said that Owens Minor's "business logic was embedded in the Cobol" and "for better or worse that wasn't easily replaceable."