This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

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

Stock quotes in this article: CPWR

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.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,804.71 -238.19 -1.40%
S&P 500 1,946.16 -26.13 -1.32%
NASDAQ 4,422.0850 -71.3050 -1.59%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs