Agencies are exploring modernization, cloud migration after some systems fell short amid surging need for services during pandemic, ISG Provider Lens™ report says

Demand for mainframe modernization is growing in the U.S. public sector as governments and institutions struggle to meet changing constituent needs with antiquated systems, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

The 2023 ISG Provider Lens™ Mainframes — Services and Solutions report for the U.S. Public Sector finds that state and local agencies are under pressure to broaden access to mainframe data and deliver improved constituent experiences. The need is especially acute among human services agencies, especially those involved in education and unemployment services.

Constituents’ sudden need for online information and services during the COVID-19 pandemic exposed the limitations of public sector mainframes that had not been significantly updated for years, ISG says. The increased mainframe utilization caused minor system disruptions when systems could not be scaled up quickly enough.

“Lockdowns made digital services mandatory, and the private sector raised expectations for online customer experience,” said Nathan Frey, partner and lead, ISG Public Sector, for the U.S. “The public sector has fallen behind, and its mainframes are on borrowed time.”

While often falling short on performance, existing mainframe applications also burden many agencies with high costs and technical debt, the report says. To access modern capabilities and scalability, most public sector organizations need to rehost mainframe applications in the cloud, compile the code to run them in the cloud without changing the application logic, or rewrite them in modern programming languages.

Providers of modernization services can help clients take steps such as connecting mainframe applications to cloud-based technologies and adopting agile development, microservices, APIs and AI services. Some public agencies, with an eye to cost savings, are looking to mainframe-as-a-service (MFaaS) providers with pay-as-you-go options.

Recent federal legislation has provided long-needed funding for mainframe modernization, but state and local agencies so far have been conservative about spending this windfall, focusing on budget-neutral projects and ones with immediate cost savings. However, ISG predicts exponential growth in the number and size of mainframe migrations to the cloud over the next three years.

“U.S. public sector organizations are becoming more knowledgeable about mainframe modernization and its benefits,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “They are starting to strategize how to gain both flexibility and cost savings, often with the help of mainframe transformation service providers.”

The report also examines several other mainframe trends affecting the U.S. public sector, including widespread IT skills shortages and the growing potential of AI-powered language translation tools.

For more insights into the challenges faced by public agencies with mainframes, along with advice on how to get modernization projects off the ground, see the ISG Provider Lens™ Focal Points briefing here.

The 2023 ISG Provider Lens™ Mainframes — Services and Solutions report for the U.S. Public Sector evaluates the capabilities of 27 providers across four quadrants: Mainframe Modernization Services, Mainframe Application Modernization and Transformation Services, Mainframe as a Service (MFaaS) and Mainframe Operations.

The report names Ensono, Kyndryl and TCS as Leaders in three quadrants each. It names DXC Technology and Infosys as Leaders in two quadrants each. Accenture, Atos, Fujitsu, HCLTech, Tech Mahindra, Unisys and Wipro are named as Leaders in one quadrant each.

In addition, Infosys is named as a Rising Star — a company with a “promising portfolio” and “high future potential” by ISG’s definition — in one quadrant.

The 2023 ISG Provider Lens™ Mainframes — Services and Solutions report for the U.S. Public Sector is available to subscribers or for one-time purchase on this webpage.

About ISG Provider Lens™ Research

The ISG Provider Lens™ Quadrant research series is the only service provider evaluation of its kind to combine empirical, data-driven research and market analysis with the real-world experience and observations of ISG's global advisory team. Enterprises will find a wealth of detailed data and market analysis to help guide their selection of appropriate sourcing partners, while ISG advisors use the reports to validate their own market knowledge and make recommendations to ISG's enterprise clients. The research currently covers providers offering their services globally, across Europe, as well as in the U.S., Canada, Brazil, the U.K., France, Benelux, Germany, Switzerland, the Nordics, Australia and Singapore/Malaysia, with additional markets to be added in the future. For more information about ISG Provider Lens research, please visit this webpage.

A companion research series, the ISG Provider Lens Archetype reports, offer a first-of-its-kind evaluation of providers from the perspective of specific buyer types.

About ISG

ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 900 clients, including more than 75 of the world’s top 100 enterprises, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in Stamford, Conn., ISG employs more than 1,600 digital-ready professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry’s most comprehensive marketplace data. For more information, visit www.isg-one.com.

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