The HP Pitch on Rehosting i5/OS Applications on Integrity

March 17, 2008 Timothy Prickett Morgan

Having formally declared war for the umpteenth time on the mainframe last October with its Application Modernization Initiative in partnership with database maker Oracle and server chip maker Intel, Hewlett-Packard is gearing up to take a run at the OS/400 and i5/OS installed base. Getting customers to change platforms is never easy, even when they are not particularly happy, but rehosting environments certainly help and have always been part of such programs.

And so it is with HP’s moves to get customers to leave their AS/400, iSeries, and System i servers. With Infinite Software (formerly known as California Software) left as one of the only providers of RPG application rehosting tools in the market after taking over Unibol’s products several years ago, there is no surprise that the two companies have formed a partnership to find customers who are ready to make a move off the IBM iron and OS/400 or i5/OS operating system and onto HP’s Itanium-based Integrity server line, which supports HP-UX Unix, Windows, or Linux running the Infinite iSeries rehosting environment against Oracle 10g or 11g databases or Microsoft SQL Server databases. (See Infinite Software Partners with HP, Acquires Altos Technology Group for my interview a few weeks ago with Infinite Software about its plans to help companies rehost legacy applications on HP iron.)

As I say whenever I write about application rehosting or any competitive takeout situation for a server platform, at any given time only a small percentage of customers are even contemplating moving platforms because of the arduousness of such a move. Companies have years–sometimes decades–of experience in programming for and administering a particular set of hardware and software, and they will put up with a fair amount of economic pain before they take on the technical pain of a platform shift.

That said, according to John Pickett, worldwide manager of HP’s mainframe alternative program, which is also involved with the newly constituted run at the OS/400 and i5/OS installed base, about 100 mainframe customers a year take some or all of their applications off mainframes. While the initial profit on a mainframe or AS/400 replacement deal might not be high, future sales of hardware and software as well as migration and support revenues make it a very profitable business. And once you get a customer to jump to your platform, they are once again less likely to make a move for all the same reasons that they stuck to the previous platform.

The AS/400 target is certainly larger than the mainframe target, so you would think that perhaps it would be easier to hit. Depending on whom you ask, there are 10,000 to 12,000 mainframe footprints out there in the world after several decades of consolidation, with maybe anywhere from 6,000 to 9,000 unique companies running those boxes. (That customer count is a weaker estimate than the box count.) As best as anyone can figure, there are around 200,000 or so unique OS/400 and i5/OS shops in the world, and before server virtualization took off a few years ago, maybe 500,000 total boxes out there. The customer and box count has probably shrunk a bit in the past two years, but I am not sure how far it might have contracted. (IBM has not said anything about it in a long time.) Being a bigger target, you would think that server makers such as HP and Sun Microsystems, which have had strong midrange server product lines for more than a decade, would have had an easier time taking a run at it. But, as it turns out, OS/400 and i5/OS shops are a much harder target to hit because it is a much more diffuse base and each deal is, by definition, smaller than one that can be done at a mainframe shop.

“I would say that the mainframe is a much easier target,” says Pickett. “And that is not because of the technology in the machines. Neither the System i or System z are bad machines at all. The problem with the System i is that it is such a broad market that it is hard to take it on directly. Which is why we are taking it on with the help of partners. Resellers open the doors, and they cast a much wider net.”

Pickett says that with mainframe replacements, HP does work with Micro Focus, Clerity, Relativity Technologies, and others with application rehosting tools, but that these deals are nonetheless lead by a more direct HP sales assault.

This is not the first time that HP has gone after the AS/400. In 1994, when the AS/400 was doing pretty well but the economy was still not great and HP’s Unix gear was pretty powerful and inexpensive by comparison, HP launched a marketing campaign against the AS/400 called AS/sault. This effort pretty much fizzled, and I said that it would at the time in this very newsletter–see TFH Flashback: Assault, Battery Not Included–and explained why. In a nutshell, I said that HP could give its Unix iron away and not many people would jump because the iron is not the issue. The systems software and the application software is, and back then I also suggested that maybe HP should look to a rehosting environment for OS/400 applications instead of relying on hardware discounts. Well, it took 14 years, but HP apparently listened.

Of course, even with a rehosting environment partner in place, getting traditional AS/400, iSeries, and System i resellers to peddle rehosting tools is a pretty tough job because there is no way these resellers will not incur some sort of retribution from Big Blue for not focusing on real System i sales. That is why HP is partnering with Infinite Software and its Infinite iSeries product to peddle a combined solution to end user companies. But that is not the only thing that HP is working on with Infinite Software. The two companies are also approaching independent software vendors who have created RPG and COBOL applications to run on OS/400 and i5/OS to help them rehost those applications on Infinite iSeries so they can run on HP-UX and Itanium iron as well as natively on System i gear. Pickett says that HP is just getting going on selling to end users, so he doesn’t want to talk numbers yet, but he says that the two have lined up ISVs (but fewer than a dozen) to port their applications. With around 2,500 active RPG-based application providers in the ISV community, and with a lot of legacy modernization tools available in the market, HP and Infinite Software are going to have to make a strong case for their approach to dealing with whatever issues–cost, portability, server flexibility, database convergence, or operating system independence–that OS/400 and i5/OS shops are wrestling with. HP is also working with application partners Oracle (particularly the J.D. Edwards part) and SAP to go into OS/400 and i5/OS shops to propose new Integrity or ProLiant servers running new JDE, PeopleSoft, Oracle, or SAP ERP suites to replace legacy RPG-based applications, which more times than not are homegrown.

To help make the case for an Infinite iSeries migration, HP, Oracle, and Infinite Software have put together a platform comparison starting with a traditional iSeries shop running green-screen RPG applications that is considering modernizing those applications. The scenario involves a setup that supports 1,000 end users, and the company has to upgrade its hardware and software to start recoding applications in Java and moving to WebSphere. (Right off, I have an issue with requiring the shift from RPG to Java, but let me just tell you what the document says.) Or, the company can buy an Integrity server, an Oracle database, and modernize the RPG applications using Infinite iSeries.

On the hardware side, the proposed System i machine has four Power5 cores running at 1.9 GHz and is rated at 3,800 CPWs (about 140,000 transactions per minute according to the document I have seen). The machine is configured with 14 GB of main memory and just under 1 TB of disk capacity; it costs $392,585, but in this scenario, IBM takes the old box in trade and cuts 45 percent off the deal, dropping the price of the system to $215,992. The comparison put together by the vendors assumed an upgrade is done after the third year it is installed, and they took a shortcut and just said that this will cost as much as the initial upgrade did–with no discount from IBM or its reseller partner–yielding a five-year hardware cost of $431,844. On the HP side, the vendors proposed an eight-core rx6600 server using 1.6 GHz Itanium 9000 processors, equipped with 32 GB of main memory and 1 TB of disk. This machine has a list price of $147,986, and the comparison assumes that is the street price and that the upgrade in year three is available with a 45 percent discount (which runs kinda counter to real market practices), yielding a total five-year hardware cost of $229,378.

On the software side, the comparison shows that it will cost $464,800 to put WebSphere on the System i box, compared to $290,000 for the Infinite iSeries stack, and shows further that an Oracle database only costs $6,000 on the rx6600 box because it is “incremental to the current installation.” Last time I looked, Oracle 11g Enterprise Edition cost $40,000 per core for a greenfield installation (with a discount down to $32,000 per core for a volume purchase) and with a 0.75 scaling factor for dual-core Itaniums, which should mean that Oracle should cost $192,000 on this box–not $6,000. (Why should a legacy application modernization comparison assume that the customer already had Oracle databases?) Infinite iSeries costs $19,999 per developer, and this scenario includes two developers, plus $250 per end user, or $250,000. To these vendors’ way of doing the comparison, the software and maintenance costs come out to $574,724 for the System i side and $296,000 for the HP Integrity rehosted environment, but I think the software and support costs are more like $771,497 over the five years. Again, this assumes the company is not already paying for Oracle.

No hypothetical comparison is perfect, of course. And that is why you should always do your own comparisons based on your own iron and software stack, your own end user and development situation, and your own discounts.

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