U.S. Public Sector Under Pressure to Upgrade Mainframes

Demand for mainframe services among state and local governments in the U.S. is higher than ever, because many of these organizations can no longer wait to modernize their systems, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

The 2024 ISG Provider Lens Mainframes — Services and Solutions report for the U.S. Public Sector finds agencies are alarmed by recent mainframe failures in some states. At the same time, their aging systems need to support new services, while many hard-to-replace mainframe experts are retiring.

“Mainframe upgrades come with a lot of uncertainties, but the risks of doing nothing continue to grow,” said Nathan Frey, partner and lead, ISG Public Sector, for the U.S. “State and local governments are taking action to prevent catastrophes and prepare to meet future constituent demands.”

U.S. public-sector demand for mainframe services is rising by as much as 10 percent to 20 percent, the report says, though growth is slower in the federal government due to regulatory and security constraints. By contrast, in the private sector, mainframe services engagements are growing by 5 percent or less, owing to already extensive moves to cloud computing.

Like private enterprises, large state and local agencies are recognizing that mainframes will be part of their IT infrastructure for the foreseeable future and are exploring hybrid approaches that integrate legacy systems with the cloud, ISG says. Hybrid strategies are harder for these organizations to carry out, because public-sector mainframes have not been updated as often, but providers are helping agencies close the gap using DevOps methodologies. Smaller public-sector clients are often choosing to move away from legacy systems through lift-and-shift initiatives.

AI is becoming essential to mainframe modernization and optimization, reducing costs and timelines by automating the analysis and documentation of legacy code, the report says. AI tools can recognize the patterns and dependencies in complex systems, helping IT teams recreate the business logic of mainframe applications in modern, cloud-based software.

“Public agencies need AI for mainframe analysis more than most, because their systems are especially complex after decades of modification,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “Service providers are helping them take advantage of these tools.”