Mainframe
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It’s time: Kill your mainframes

Protocol Enterprise

Hello, and welcome to Protocol Enterprise! Today: why FedEx could be paving the way for enterprise tech to finally ditch the mainframe, the U.S. is considering new restrictions on chipmaking gear sold to China, and a week’s worth of new enterprise funding rounds.

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Cloud evangelists have, for years, predicted the eventual demise of the mainframe.

The bulky black boxes that store and process corporate data have been a staple in IT stacks for decades. And despite the groundswell of new technology that’s been built since mainframes began lining the walls of offices in the 1960s, many businesses continue to run them today.

But increasingly, there are signs that the expensive machines will soon face the same fate as other aging enterprise technologies, like on-premises data warehouses or bloated ERP suites.

  • Mainframes often support the most mission-critical applications within an organization, like processing transactions for banks, which has made businesses hesitant to move too quickly to a modern architecture.
  • But last month, FedEx became the most recent company to announce a wholesale pivot to the cloud, including a plan to remove all its mainframes by 2024.
  • “Technology is the central nervous system of this business,” CIO Rob Carter said at FedEx’s investor day. “But the full power and potential of that network has yet to be fully unlocked.”

The announcement is perhaps not too surprising given the rush among corporations of all sizes to embrace a cloud-first technology strategy. Those plans were likely accelerated by the pandemic, which served as a forcing function for businesses to take stock of their on-premises footprint.

However, FedEx’s proclamation could have broad reverberations. Other in-house technologists look to Carter as a trusted voice.

  • Over the past two decades, Carter has led FedEx through a slew of important technology modernization efforts, including reducing its application sprawl and experimenting with delivery robots.
  • CIOs often rely on their network for advice on important decisions like which vendor to choose or how to build their modern data stacks, so it’s likely that Carter’s backing of a cloud-only strategy will spur others to pursue a similar goal.
  • The move away from mainframes and data centers is also expected to save FedEx $400 million annually. During a time when companies are racing to cut costs amid worsening economic conditions, such a significant number is sure to draw eyeballs.

Despite the move to the cloud, IBM, the last major manufacturer of mainframes, continues to release new versions with attractive features like improved fraud detection. Still, like other parts of IBM, the company seems to be two steps behind.

  • Meanwhile, the cloud giants continue to balloon by offering businesses the ability to more easily move mainframes to the cloud and retire the machines that can cost $500,000 and above per system.

It’s very difficult to kill off technology once it’s been deployed across the enterprise, especially expensive machines like mainframes. But FedEx’s announcement signals that, increasingly, business leaders are willing to finally shove a stake through the heart of the phantom hardware.

— Joe Williams (email | twitter)

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Chipping away at China

Hoping to hobble China’s ability to manufacture chips, the U.S. has engaged in the not-so-subtle strategy of convincing one of its allies to block the export of key machines needed to manufacture the most advanced processors. Those machines, which can cost upwards of $180 million, use a technology called extreme ultraviolet lithography, or EUV, and they are exclusively made by Dutch company ASML. ASML is banned by the Dutch government from selling EUV tools to China.

On Tuesday, Bloomberg News reported that U.S. officials are now trying to convince the Dutch to block the export of the older-generation deep ultraviolet machines, or DUVs, which ASML also makes. DUV tools continue to make many of the chips that power autos, smartphones and computers, and will likely continue to do so for the foreseeable future even as newer tools arrive.

But banning ASML from selling the DUV tools to China probably wouldn’t be effective — at least, not in the way the U.S. officials would like. Primarily, that’s because DUV tools aren’t exclusively made by ASML. It has two competitors in Japan — Nikon and Canon — and even though ASML dominates the market, if China can still get its hands on the DUV systems from other companies, the export ban won’t be effective.

— Max A. Cherney (email | twitter)

Financial corner

Nomad Health raised $105 million to build a staffing marketplace for the health care industry.

Pave raised $100 million for its compensation data software.

Gloat raised $90 million to help enterprises build internal job marketplaces.

— Aisha Counts (email | twitter)

Around the enterprise

Cloud-computing transitions aren’t going to work effectively unless enterprises realize they probably need to change their IT culture as well, AT&T CTO Jeremy Legg told Protocol.

NIST has settled on four encryption algorithms it will use to protect government systems against future quantum computers, which are expected to break current encryption technologies.

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