71 Percent Of Companies Frustrated By "Hidden Costs" Of Mainframe Outsourcing, According To Compuware Study

DETROIT, Dec. 12, 2012 (GLOBE NEWSWIRE) -- Compuware Corporation (Nasdaq:CPWR), the technology performance company, today announced the results of a *global CIO survey on attitudes and experiences with mainframe outsourcing. The survey found that reducing costs is a major business driver for outsourcing mainframe application development, maintenance and infrastructure. Yet multiple hidden associated costs are causing frustration for 71 percent of CIOs. These hidden costs result from increases in MIPS (million instructions per second) consumption, as well as higher investments in testing and troubleshooting all due to poor application quality and performance. In fact, two thirds (67 percent) of respondents reported an overall dissatisfaction with the quality of new applications or services provided by their outsourcer, citing a widening in-house skills gap, difficulties with knowledge transfer and staff churn within outsourcer organizations. Compuware has published a related white paper titled, " Mainframe Outsourcing: Removing the Hidden Costs," which details the findings from the study.

"It is true that outsourcing can help companies reduce costs and gain access to technical expertise they might not have in house, particularly as experienced mainframe developers move on and take their applications knowledge with them," said Kris Manery, Senior Vice President and General Manager, Mainframe Solutions, Compuware. "However, as the research shows, there is a growing frustration that outsourcers are failing to meet expectations. Because there is no means to easily transfer application knowledge to the outsourcer--and to verify code quality and performance when it is delivered--application quality suffers, thus undermining any potential savings."

MIPS Consumption

One of the greatest expenditures relating to mainframes is MIPS consumption. Contrary to popular belief, mainframes are being used more than ever, meaning consumption is naturally on the rise. However, consumption is also escalating due to inefficient coding, adding unnecessary costs:

• MIPS costs are increasing on average by 21 percent year over year, with 40 percent of respondents claiming that consumption is getting out of control.
• 88 percent of respondents using pay structures based on CPU consumption (approximately 42 percent of those surveyed) think their outsourcer could manage their CPU costs better.
• 57 percent of all respondents believe outsourcers do not worry about the efficiency of the applications that they write.
• 68 percent of respondents believe that the increase in mobile applications, for things like mobile banking, is driving higher MIPS usage and creating additional costs.

Quality

The quality issues in the outsourced development of mainframe applications are increasing the total cost of ownership, as additional time and resources are required to complete projects, contributing to an overall picture of dissatisfaction within the end-user community:

• 54 percent of companies have had to increase investment in performance testing and troubleshooting due to the poor quality of work provided by their outsourcers.
• 51 percent of respondents outsourcing their mainframe application development and maintenance believe they are having to increase their investment in their internal QA team due to the poor quality of work being delivered by outsourcers.
• Almost half of respondents (47 percent) find that the error and bug rate in application code delivered by an outsourcer is higher than with in-house developers.
• IT teams are spending an average of 10 days fixing application bugs and performance problems from outsourcers on any given project.
• 67 percent of respondents expressed that the quality of new applications or services provided by their outsourcer is not always satisfactory.

While some outsourcers invest in best-in-class application performance management tools to ensure the applications perform optimally before delivering them to their client companies, many do not.

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