San Francisco-based startup Mechanical
Orchard aims to use its own AI to help rewrite
old mainframe applications in new code, and
move them to the cloud.
So much for Watsonx Code Assistant. . .
https://www.wsj.com/articles/mainframes-find-new-life-in-ai-era-1e32b951
Banks, insurance providers and airlines still find uses, including artificial intelligence, for the large computers that have been around for decades
By: Belle Lin
Aug. 5, 2024 12:00 pm ET
The industrial-strength mainframe computer, invented decades ago for heavy-duty data processing, is proving its staying power even as next-generation artificial intelligence takes center stage.
The two are interconnected: Banks, insurance providers and airlines are a few of the big industries that still rely on the mainframe for high-speed data processing. And now, some are looking to apply AI to their transaction data at the hardware source, rather than in the cloud.
For banks, analyzing potentially fraudulent transactions must be accomplished in milliseconds. “You can’t go off to the cloud, go do a search, go do a generative AI query, because it will just time out,” said Steven Di-kens, vice president and practice leader for cloud at Futurum Group, a research and advisory firm. That means performing a query, looking it up and analyzing it can only happen in real time, on the mainframe, he said.
“Everyone’s kind of realizing that it’s better to bring your AI to where the data is, than the data to the AI,” said Ross Mauri, general manager of International Business Machines’ mainframe systems.
IBM reported 6% growth in its mainframe business during the quarter that ended June 30.
Part of the mainframe’s staying power is that it can support huge numbers of transactions, as many as 30,000 a second, at super fast speeds. The latest version of IBM’s zSystem mainframe can hold up to 40 terabytes of data, weigh up to 1,800 pounds and cost upward of $1 million.
IBM is by far the biggest player in mainframes, with over 96% of the market, followed by NEC, Fujitsu and Hitachi, according to International Data Corp. Forty-five of the top 50 banks and four of the top five airlines still use mainframes as their core platform, IBM said.
Globally, the mainframe market was valued at $3.05 billion in 2023, but new mainframe sales are expected to decline through 2028, IDC said. Of existing mainframes, however, 54% of enterprise leaders in a 2023 Forrester survey said they would increase their usage over the next two years.
Mainframes do have limitations. They are constrained by the computing power within their boxes, unlike the cloud, which can scale up by drawing on computing power distributed across many locations and servers. They are also unwieldy—with years of old code tacked on—and don’t integrate well with new applications. That makes them costly to manage and difficult to use as a platform for developing new applications.
For IBM, the mainframe has already found new life as a place to run AI. The company’s latest mainframe can immediately return results from AI models, it said, with an on-system processor that can help insurance companies, for example, accurately predict which products to sell to their clients. The next version of its processor and its zSystem mainframe will include the ability to run traditional AI capabilities, plus large language models like the ones that power ChatGPT, IBM’s Mauri said.
Mainframes are also prized for their reliability and features that protect against cyberattacks, business leaders say. Even if part of the computer goes down, it remains operational because it can switch to other components. The latest IBM mainframe is also resistant to attacks from powerful quantum computers, according to Mauri, because of their advanced encryption.
Banks, telecom keep mainframes in the mix
New York-based Ponce Bank uses a mainframe for its loans business, Chief Executive Carlos Naudon said, which involves a “batch system” running overnight to create a set of files that get uploaded all at once. The bank said it is using the mainframe along with its cloud-based digital and mobile banking platforms.
Some businesses still prefer managing their own mainframes and servers. “If you’re in the cloud, you’re relying on Amazon or whoever else is running that cloud,” Naudon added.
Telecom giant Verizon Communications similarly uses a combination of cloud with its own data centers and mainframes, said Kamran Ziaee, senior vice president and chief information officer for technology strategy and global infrastructure.
Still, efforts to do away with the mainframe have been going for years, especially as the number of developers conversant in Cobol—one of the primary programming languages used in mainframes—quickly dwindles.
Working with AI and the cloud
As companies modernize their information-technology tools, mainframe computers will continue to play a role. BMC Software, an IT services, consulting, and enterprise software company, said clients want to run AI on those machines, although such uses likely won’t materialize until next year, according to John McKenny, BMC senior vice president and general manager for mainframe modernization.
The ability to access or replicate their mainframe data in the cloud also helps companies train AI models, said Phil Buckellew, president of Rocket Software’s infrastructure modernization unit.
Over time, it is possible that mainframe hardware will give way to the cloud. San Francisco-based startup Mechanical Orchard aims to use its own AI to help rewrite old mainframe applications in new code, and move them to the cloud.
The company just raised $50 million in a Series B round from Google Ventures, and is using that cash to help create cloud-based “digital twins” of mainframes.
Even if mainframes are destined to eventually fade away, it is unlikely to happen soon. Mechanical Orchard Chief Customer Officer Edward Hieatt said the startup’s biggest challenge is the power of the status quo.