Micro Focus shares fall to 13 year low; CEO leaves

March 23, 2018


By: Herman Eggink

This week, Micro Focus issued a revenue (and profit) warning for the remainder of the year. The company expects revenue to decline between 6  and 9 percent over a 12-month period ending October 31, compared to the previous estimation of a drop between 2 percent and 4 percent.

As a result of this Micro Focus share price dropped by 56% to 823 pence, the largest fall in 13 years. CEO and Director Chris Hsu stepped down with immediate effect.  It is said by Micro Focus that Hsu “wants to spend more time with his family.”

What does this mean? Since there is so much foreign debt in the company, is the market losing trust in their ability to recover? This will no doubt mean further (and immediate) job cuts impacting innovation and customer service beyond what I mentioned in my post in September. A shame because so many of my former colleagues who transitioned into Micro Focus now need to deal with the resulting struggle. Bizarre to read that the “cost savings drive was ahead of schedule” in the same statement containing a higher than expected revenue fall.

Micro Focus’s executive chairman, Kevin Loosemore, said operational issues had led to a “disappointing short-term performance” but that he remained confident in the firm’s strategy. He told Reuters news agency: “We’re finding the integration harder than we’d anticipated or planned.”

Whilst operational excellence is obviously key (isn’t it always), customer value (through innovation) and customer service are paramount. Extending the life of legacy is not driving customer innovation nor customer service.

Customer centricity really should be KING, right?

Sources:
Micro Focus.com
Bloomberg.com
CNBC.com
BBC.com

Disruption in insurance: not a matter of ‘if’ but a matter of ‘when’

January 29, 2018

In an interview on the digital insurance agenda, AXA Chief Marketing Officer and Chief Digital Officer Amelie Oudea Castera talks about the challenges of delivering the Digital Insurance Agenda, the disruption of insurance, and the challenges & success factors of teaming up with Insurtechs.
As a former world champion, Castrera compares the insurance business with a tennis match: “On top of technical skills, insurance requires attention to every detail, a mix of action and anticipation, a capacity to work over the long-term and a lot of technical expertise!”

According to Castrera it is not a matter of ‘if’ there will be a disruption in the insurance industry but a matter of ‘when’. Teaming up with Insurtechs is essential in order to keep up. In her opinion, the greatest challenge for incumbent insurance companies in this cooperation is the cultural gap between the startups and large corporate worlds, including for example the difference in speed of decision-making or the discrepancies in terms of focus (growth vs. profitability).

What we, as legacy transformation experts, find is that legacy environments are often a huge bottleneck that negatively influences exactly those areas. When IT organizations focus on keeping business-critical legacy systems running, valuable resources and huge budgets are taken away from innovation, integration and cooperation.

The moment they decide to get off the mainframe and migrate their legacy applications there is a clear shift in focus which opens the door to innovation. A great example of this is VIVAT, this large insurer encompasses multiple insurance brands (e.g. Reaal Dier & Zorg, Zwitserleven, Reaal, Route-Mobiel and Zelf) and a sustainable asset manager (ACTIAM).

Over the past decades, VIVAT had developed its core insurance systems using the Unisys EAE/LINC programming language running on Unisys Libra 690 mainframes. They found that this environment burdened them with high costs and limited flexibility. After they migrated 15 different applications, of which 8 business-critical, they not only achieved an immediate reduction of 70% on infrastructure and operational cost but there are also new functionalities available that help them realize their growth and innovation ambitions.

Read more here:

VIVAT nominated for Celent award

November 30, 2017

VIVAT, Asysco and TCS are nominated for the prestigious Celent Model Insurer Award.

Every year for the past 12 years, research, advisory, and consulting firm Celent recognizes excellence in technology throughout the insurance and banking sectors through the Model Insurer Awards and Model Bank Awards.

The VIVAT mainframe migration project is nominated for the Model Insurer Award in the Legacy and Ecosystem Transformation category.

Celent’s analyst team will be judging the entries and selecting winners in the coming months.

Each submission is evaluated based on the following criteria:
1. Demonstrable business benefits
2. Degree of innovation
3. Technology or implementation excellence

We believe the VIVAT migration project has a good chance of winning.

Awards will be presented at Celent’s Innovation and Insight Day on the United States east coast in April.

 

Gartner: datacenter growth negatively impacts server market

September 25, 2017

According to Gartner, the data center system segment is expected to grow by 0.3 percent in 2017.
While this is up from negative growth in 2016, the segment is experiencing a slowdown in the server market.

 

“We are seeing a shift in who is buying servers and who they are buying them from,” said John-David Lovelock, research vice president at Gartner.
“Enterprises are moving away from buying servers from the traditional vendors and instead of renting server power in the cloud from companies such as Amazon, Google and Microsoft. This has created a reduction in spending on servers which is impacting the overall data center system segment.”

At the same time, more and more IT organizations are investigating migration of legacy applications to the cloud.

As Asysco customer Amalgamated Financial Group says: “Hurricane Sandy made us realize our vulnerability, due to the storm we did not have power for almost a week, this meant we were out of business for a week. We knew we needed a cost-effective strategy to solve our business continuity & disaster recovery shortfalls. That is when the Cloud project became reality. Asysco helped us to move to Azure. Now, we are in a secure environment, we don’t have to worry about any installations of patches and updates and we have 24/7-365 availability.”

 

Consequenses of the Micro Focus HPE reverse takeover

September 12, 2017
Asysco blog, Micro Focus, HPE, reverse takeover, merger, acquisition, Micro Focus acquisition, Micro Focus HPE, Micro Focus HP enterprise takeover

 

 

 

 

 

Author: Herman Eggink, CCO Asysco

Let’s say you’ve chosen your “flavor” of Micro Focus COBOL and you’re currently enjoying the enhanced capabilities of COBOL programming, plus a reduction in cost compared to your previous mainframe licenses. Your plan was to stay in Micro Focus COBOL for at least a decade and that is your long-term strategy.
Now, nearly one year after Micro Focus and HP announced the reverse takeover of HP’s non-core software, the deal finally concluded on Friday, Sep 1st, 2017. According to the Financial Times, Micro Focus has made a virtue of buying legacy computer brands and wringing them for profitability by cutting costs. But the $8.8bn reverse takeover of Hewlett Packard Enterprise’s software assets is likely to prove more complicated.

In a recent interview, chairman of the board, Kevin Loosemore made it clear that the operating margin needs to improve from 21% to 45% in 3 years, as happened with all previous acquisitions (e.g. Attachmate). Loosemore said: “There are a lot of companies in this space that are trying to grow when they shouldn’t, as a result, they were running their businesses at half the margin that we run the businesses at. These old companies are often trying to invent the next big thing — but they don’t really know what that is.”

Whilst he may have a point regarding the growth and operating margin, isn’t this ultimately about creating customer value and ensuring you get paid fairly for the value you create? Doubling margin in 3 years for a company the size of HP is only possible through massive internal efficiencies where little optimization synergy exists pre-merger (the reverse takeover): less money is spent on R&D (longer-term issue) and less service and support will be available for existing customers (short term issue).
This will no doubt impact the smaller product lines such as … Micro Focus COBOL, a product that quite a number of their customers still rely on for the core of their organization.

Hardly any R&D is spent on legacy to begin with (less than 1% of the top IT company’s R&D budgets is used for innovating mainframes, COBOL and such, it all goes to x86 and ARM/mobile). In that sense, this reverse takeover is very likely to end up being a reverse value creator for their customers.

According to the Financial Times, one top-10 shareholder describes Chairman Kevin Loosemore as “more a private equity-type than a businessman”.

Do you really want to depend on a company that’s only about margin and is driven by a hunger for expansion?

“Our funding ability has increased now that we are bigger,” Kevin Loosemore said in an interview. “There is no practical cap in terms of the size of future deals.”

Sources:

ZDNet.com

Financial Times

Bloomberg.com

 

The best of both worlds

August 4, 2017

Cobol has been declared dead numerous times over the last decade but is still alive and kicking. Something that cannot be said about the Cobol workforce. Every day, about 10.000 baby boomers are retiring including quite some Cobol programmers. A recent survey conducted on behalf of IBM shows that retirement is the biggest worry in the mainframe world. It is estimated that nearly 20 percent of the programmers are expected to retire within 5 years from now.

Companies still depending on mainframe or legacy systems are concerned about their business continuity and are seeking for ways to outsource their mainframe maintenance. Technology outsourcing firms like Ensono have started to recruit graduate students and outsource them to their mainframe customers after a couple of months of Cobol training.

Question is, can these young programmers replace the wealth of knowledge that the ‘seasoned’ Cobol workforce has? Are they able to correctly interpret the often undocumented treasure of business logic that is built in these legacy systems?

Will they be ‘up and running’ fast enough to fill the hole that the retirement wave leaves? Outsourcing companies benefit of Cobol resource scarcity. Rates and salaries for mainframe programmers and administrators are some of the highest in the IT industry. Starting salaries for college graduates are ranging from $50.000 to $75.000 a year. In combination with the already high mainframe MIPS cost, this cranks up the TCO of legacy systems even more.

Honor the past and embrace the future

Instead of teaching the next generation to work with the old generation’s legacy, wouldn’t it be better to transform the good old stuff into the new world? By taking the valuable knowledge and business logic that resides in legacy systems and transforming that to a modern .NET based environment you will have the best of both worlds.

A fully automated like for like migration will do just that. You will even have the choice of whether to continue programming in Cobol or switch to C#/VB.NET. This way you continue to capitalize on your current Cobol knowledge while opening the door for new technology at the same time. Click here for more information.

Sources:
Grains Chicago Business article by John Pletz

Datacenter Dynamics Article by Max Smolaks

Top 5 retail trends 2017 – 2018

July 17, 2017

Top 5 retail trends 2017-2018

  1. Flexible stores
    The number of traditional stores is decreasing but there’s an increase in non-traditional concepts like pop-up-stores and mobile stores.
  2. Chatbots and Artificial Intelligence (AI)
    AI chatbots that facilitate mobile commerce are on the rise. They are continuously present during the customer journey.
  3. Mobile wallet
    More and more it is possible to pay by using a mobile phone. People barely carry cash anymore. The mobile wallet is the future.
  4. Virtual and augmented reality
    Although invented in the USA, the APAC region takes the lead in VR. Huge investments are made in creating the best VR shopping experience.
  5. Voice control
    Besides the widely used search commands, voice control services like Siri of Apple, Alexa of Amazon and Allo of Google will more and more be used for purchasing and payment.

Legacy systems major show stoppers for innovation

Today’s consumers are demanding. If they see something they like, they want it right away, same or next day latest. The above trends are developed to accommodate these demands. If you cannot deliver, you lose business. Supply chain optimization is key.
However, all of these trends require massive data exchange, advanced integrations and a high degree of flexibility in order to process high amounts of orders, enable easy payment, fast delivery and manage customer care. Legacy systems are major show stoppers that slow down innovation in this fast-changing and highly competitive market. In order to stay ahead retailers, have to modernize these legacy systems and embrace new technology.

Smart retailers have taken steps to transform their legacy environment and open the doors for innovation. See some examples below.

Associated Food Stores
For over 25 years Associated Food Stores ran the core system of their business on a Unisys mainframe. The move to migrate these systems to a Microsoft SQL environment saves them hundreds of thousands of dollars each year. They now run the same core systems on two virtual servers. Check out the case study.

Brabantia
Brabantia is a privately owned Dutch company that manufactures and sells items for the home such as waste bins, laundry racks, food storage containers and other products.

The nightly scheduled batch procedures on the NX4600 machine was running out of the capacity and was declining the operational on-line performance. Therefore, Brabantia needed a migration to directly solve their batch capacity issue. After the migration, they only use half of the capacity of the NT machine and with the on-line reporting of AMT LION they are able to service users with operational information fast. Their business applications run just as stable under Windows as they used to do on the mainframe. But now they are much more flexible in linking to external applications and can easily provide their legacy applications with a web interface. Check out the case study.

Toolbank
For years Toolbank was using a Unisys A-series mainframe to run its ERP system. Concerns regarding the long-term commitment from Unisys in combination with the constraints of the mainframe, which was holding back the enhancement and development of the platform made Toolbank decide to migrate its mainframe to open systems using Asysco Migration Technology.  A good decision, as it turns out. Not only did they achieve ROI in under 3 years, as anticipated, but they have also been able to integrate modern .NET screens with the application as well as API interfaces for Excel. Users are happy and the applications are future-proof. Check out the case study.

Legacy system modernization key in accomplishing Digital Government

July 13, 2017

Governments worldwide still heavily depend on legacy technology. In fact, approximately three-quarters of all IT related budgets are spent on keeping legacy technology running. Besides the huge spending, many skilled legacy code programmers are nearing their retirement age. Valuable knowledge is walking out the door and few new programmers can be found. Meanwhile, Government agencies struggle to innovate and keep up with the increasing citizen demand. Things must change. The need for Digital Government is pressing.

A Gartner global survey of government sector CIOs found that 13 per cent of the technology budgets of public sector entities will go towards legacy modernization this year.

“Governments need to pay down technical debt by accelerating modernization initiatives to allow them to explore alternative sourcing options and to focus on innovation and meeting citizen expectations. Application rationalization is part of this, so the Government’s commitment in the budget to platform consolidation and a shared services model should help accelerate the transition to digital government for many of the smaller agencies,” Dean Lacheca, Gartner’s public sector research director, told CIO Australia.

Although Government has set aside funding for legacy ICT modernization, all change is challenging, specifically when resources are tight and risk is high. Old legacy systems need to be transformed, existing data needs to be preserved while integration between separate agencies and citizen access to public services need to be improved. Safe federated data exchange platforms reduce the need for citizens to enter similar information to multiple agencies.  In addition, enhanced data analytics enables Governments to design better targeted and more effective public services, e.g. in education, social services, and health care.

These point-to-point data exchanges between several government agencies require flexible and secure integrations which cannot be accomplished with legacy systems. When considering a modernization there are several options to choose from like rewrites, standard off the shelf packages, lift & shift and Legacy Transformation. Check the video.

On top of that is the security issue. Cyber attacks are the order of the day and civilian security is at stake. While Cloud computing offers maximum flexibility and agility at lower cost, it is a challenge to achieve compliance. Therefore, Microsoft has developed Azure for Government, a sophisticated Cloud solution that has the most certifications to simplify critical government compliance requirements.

Successful Government Legacy Transformations

At City of Columbus the migration of the Criminal History mainframe system to a Windows platform resulted in faster access to crucial criminal information databases for police officers and their law enforcement partners. Check the case study.

Right after the migration, Swedish Transport Agency was able to reduce batch time for an end of year batch from 7 hours to just 22 minutes. Due to the higher performance of the system the number of operational issues was reduced instantly as well. Check the case study.

At the Treasury Office of Allegheny County, the migration of their Fund Accounting and Investment (FAI) legacy system to a Microsoft Windows based platform enabled them to more quickly receive and reimburse funds and to rapidly update the FAI system due to changes in tax law and regulations. Check the case study.

 

 

Legacy systems & the Internet of Things

June 9, 2017

Are you ready to jump on the IoT train?

Internet of Things (IoT) is the next megatrend. The 1990s’ fixed internet wave connected 1 billion users while the 2000s’ mobile wave connected another 2 billion. According to a Goldman and Sachs study, the IoT has the potential to connect 10X as many (28 billion) “things” to the Internet by 2020, ranging from bracelets to cars.
IoT will have far-reaching implications that touches every industry, from healthcare to retail to oil and gas exploitation and homebuilding.
Just as the first 2 waves of the internet era led to profound changes in the economy, the IoT will create new winners and losers based on a company’s ability to adapt to a world where things are connected.
Insurance Nexus recently conducted an Insurance IoT Industry Survey which shows that 90% of the 350 respondents agree that IoT will revolutionize the way insurers do business. It also shows that only 7% of the Insurance companies are fully embracing IoT today.

Don’t miss the train of IoT opportunities
The insurance world increasingly embraces IoT initiatives that help reduce risk, improve loss ratios, claim to handle and drive premium growth like:

• Telematics: gathering car data like the history of speed, distance, turning and braking patterns, time of day, etc. to price and maintain “usage-based” insurance (“UBI”).
• Environmental Sensors to detect temperature, smoke, toxic fumes, mold, earthquake motion, etc. With two-way communication, these IoT devices can also provide predictive alerts on potentially dangerous conditions.
• Connected Biometrics. Gathering lifestyle information on daily activities like calorie burn, heart rate and sleep pattern history.
• Diagnostics: Highly intelligent sensors are embedded in many products including appliances, toys, consumer electronics, industrial machines, vehicles, etc.
As manufacturers of these devices embed and enable IoT, predictive and preventative service prior to product breakdown or component failure can be provided.

Mainframe blocking the road to innovation
The new world requires a new approach to new technology. Transforming Legacy Applications is mandatory in order to:

– embrace new technologies, protocols and standards. The ‘old’ mainframe technology makes it difficult to connect to new technologies
– handle data and analytics. Legacy systems are not able to keep up
– deal with security challenges. Cures for new threats are developed for new technologies first
– smoothly connect/integrate all different environments – open systems are much easier connected than mainframe
– avoid exorbitant operational costs. The drastic increase in workload and MIPS will drastically increase the cost
– keep up with the competition. Time to the solution is a major driver in gaining and keeping a competitive advantage. Legacy can be a major road blocker in the race for market share

Conclusion
Innovation is key if you do not want to miss the train of IoT opportunities.
It is clear that the mainframe does not offer the flexibility and agility required to adopt new technologies. Although the transformation of your mainframe environment requires an investment the immediate cost savings, due to drastically reduced operational cost, make the ROI rapid and the investment worthwhile.

Don’t move the legacy issue elsewhere but solve it by truly transforming it….
Check out the success stories

Sources

Goldman Sachs report

Forbes article, 5 ways IoT will change the insurance industry

Save cost, gain agility

February 8, 2017

Asysco's Migration Technology allows organization to save cost while gaining agility.

On average, a company spends between 60% and 80% of the IT budget on maintaining existing systems instead of on new developments. Half of these costs are related to the time and resources spent on the research and adaptation of legacy systems. However, technology evolves faster than ever. Organizations that are able to adapt to this new technology paradigm quickly are more successful than companies that are held back by their inflexible and expensive legacy systems. If legacy systems are a bottleneck for innovation, legacy transformation is the answer!
Click below to read more…