Cobol may not make headlines much these days, with technologies such as Java and .Net viewed as the glamorous, contemporary platforms and Cobol seen as legacy code. But Cobol remains pervasive throughout enterprises, notes Stephen Kelly, CEO of Micro Focus, which specializes in application modernization with an emphasis on Cobol. The company also is making a play in the application portfolio management space with its recent acquisition of Hal Knowledge Solutions. InfoWorld Editor-at-Large Paul Krill this week interviewed Kelly, who took the CEO reins in May, about the importance of Cobol and the role of Micro Focus.
InfoWorld: I know that Micro Focus focuses a lot on Cobol and application modernization and things of that nature, but when I read the online Micro Focus introduction that explained what the company is about, there’s no mention of Cobol there. Why is that being obscured?
Kelly: Yes, that’s a good question. I think in terms of what we tend to be doing a lot now for some of the big companies we work for, and we’re deployed across about 90 percent of the Fortune 100 companies in the world, a lot of that historically has been Cobol. But more recently, in the last year or so, particularly, there’s a lot of interest in our application modernization and towards modernization solutions. [We have been modernizing applications for use in] more contemporary architectures.
IW: How important is Cobol? I know it’s all over the place. It’s been around for years and we just don’t hear a lot about it. We hear about Java, we hear about .Net and Visual Basic, but we just don’t hear a lot about Cobol. What’s going on there? How pervasive is Cobol and how important is it still these days?
Kelly: There was a big wave probably after Y2K where a lot of CIOs thought they’d switch their Cobol systems off, and there was kind of a bit of a rush for a year or two towards things like Java. But what we’ve found, certainly in the last three years, is there’s a lot of pressure both from the CFO office and the CIO office to say -- we’ve got to get a lot more value out of the applications that were already built and we’ve got to get a lot more value out of the business processes and business rules that are embedded within these applications. The reality is, about 70 percent of the transaction systems around the world in corporate America and corporate Europe run on Cobol. So a huge amount of code base is based around the Cobol language. And there’s some compelling reasons why we could take those applications forward, put them into contemporary architectures, Web-enable them, embrace them in Web services and just make them look [to be] very modern applications and yet protect all the investments made in the past that have business rules, business process, and applications code … We’ve got a lot of customers in retail and financial services that have taken their core COBOL systems either off the mainframe and put them on contemporary platforms like Linux [or] .Net and browser-enabled those applications to make them much more intuitive, rather than [rely on traditional] green-screen technology.
IW: Why has Cobol been pushed to the background in favor of Java and .Net? Is it the object orientation? What do those languages offer that Cobol apparently is not offering?
Kelly: I think the reality is, it’s kind of more complex than that, because you find a lot of Web developers and a lot of Java developers tend to be cross-language-capable. So, if you’re a Java or C# developer, to actually do or become productive in Cobol, they probably only take two or three weeks in reality. It’s not a binary choice to ask, is it Cobol or is Java? And even what I’ve found going around some big financial services companies in the U.S. and Europe and public sector, there’s a lot of pressure from CIOs to say -- we’ve got so many Cobol developers and we’ve got a lot of Cobol applications and investment, and what we’re seeking to do is get more value out of that. Definitely 10 years ago, if you’d ask all the CIOs around the world they would have said -- we’re going to switch Cobol off within the next five years. And we sit here today and there’s still over 1 million Cobol developers out there. And it’s still running 70 percent of the transaction systems around the [world] … If you’re going to talk to CIOs, they’re way more pragmatic about a heterogeneous language, but they’re much more concerned that they want to take their enterprises towards modernization but also they’re much more animated around architectures like SOA … [Lately], there’s not a lot of pressure to do rewrites from Cobol. There used to be. Certainly when we were coming out of Y2K, there was definitely a perception five, six years ago that the world would be completely object-oriented by now. I guess it would be all things like Java, it would all be things more recently around things like AJAX and XML. That's just not materialized. And the reality is that most core business systems are still written in Cobol.
IW: I have not ever attempted to write Java or some of the newer .Net languages. I did take Cobol once back in the days when you had the punch cards, and I thought it was pretty straightforward. I didn’t think it was all that complex to do Cobol.
Kelly: I think it’s relatively easy, English language-based, and it’s very logical in terms of its structure. And I think you’re right. Yes, I learned back in punch card days, and I did Cobol, Fortran, and Basic. It was easier than anything else, but certainly the programmers that we’ve got -- we’ve got about 200 engineers, and they’ve all typically been doing Java, C++ and Cobol -- and they will all say that Cobol is as easy as any other language and it’s pretty easy to pick up.
IW: There are no punch cards anymore, are there?
Kelly: I haven’t seen any for a while. I came from a world where we had to send punch cards and then get the results back two or three days later. And I think things are a bit more immediate now. And I think the other thing, kind of the nice thing about what the CIOs are asking, is they’re asking architectural questions around SOA, .Net. What we offer is a bit of the best of both worlds. We offer robust applications that have been around for a while, but we can put them into these contemporary architectures like .Net. So you can have very modern-looking applications, browser-based, where the core engine runs in Cobol. And it’s the case [where] there’s a lot of what we call independent software vendors out there, like Lawson and even people like Oracle, that embed our language within their application packages.
IW: I’m looking at information on some of your products, the Micro Focus Studio line. Can you talk about your application modernization and migration strategy?
Kelly: The overriding element is the modernization agenda and modernization kind of breaks down [into] what is modernization? I mean we’ve touched upon it in terms of moving core applications into modern architectures and we’ve talked about a couple of examples of that. The migration strategy really is where there’s a lot of pressure purely based on cost reductions [and getting] more efficiencies [by] moving some of the mainframe applications running on the big mainframe farm down to Linux or even Windows. Now again, it’s not a binary decision, it’s not a religious decision, because what we’ve got is a lot of customers, even folks like Wachovia, who started off looking at just moving the development of the mainframe applications onto open systems platforms. And then you can do all the testing on the open system platforms as well, and then you actually send the code back compiled back to the mainframe. A lot of customers say the best place to run really high-throughput transaction systems 24/7 that [offer] reliability, availability, scalability, is on the big mainframe. But there is a compelling reason where they don’t want to have to put up with batch cycles and only getting machine time at certain times of the day for their developers. So they basically take a mirror image of the application and then on that do development on a Linux box, test it on the Linux box, and then ship it back up to the mainframe for maybe final tests and then run it. And then they keep the integrity of their systems perfect. [This procedure] allows them to reduce their mainframe farm and they get much higher availability and throughput in terms of application development.
IW: Can you talk about the Hal acquisition and what that means for Micro Focus?
Kelly: I’m actually in Milan, Italy, where the acquired company’s headquartered. What the Hal acquisition gives us is [when] we talk about modernization, the first question you get hit by a CIO, is -- what do you mean by that? And the first point of that answer is you’re going to get a big financial services company, then one thing we’d say is, tell us what applications you’ve got in place. And the truth is they’ve probably got 300, 400, 500 business mission critical applications in a combination of languages from Cobol, PL/1, even things like Assembly and stuff like that. But [there are] also a lot of Java, C++ and other contemporary languages. But very rarely do CIOs have any real intelligence about lines of code, who the developers are that developed them, the documentation, what business rules are present within the different applications that are common across applications … What [Hal provides] at the simplest level is almost like a CIO dashboard of all the enterprise applications. It’s almost like an outlet. So it gives a complete encyclopedia to the CIO.
IW: Micro Focus is profitable, correct?
Kelly: Yes, Micro Focus is profitable. That’s correct.
IW: What kind of growth rates have you been having at Micro Focus in the last few quarters or years?
Kelly: We’re growing at just short of 10 percent. During last year the company actually went through some revenue decline, and therefore the valuation depreciated. And this year what we’ve done with the latest set of results is profitability has increased by [about 50 percent], we’ve increased the dividend shareholders by about 50 cents [slightly], and the revenue’s kicked in and grown again.
IW: You said 10 percent growth. Is that year over year?
Kelly: It’s eight percent growth, year over year. The health of most software companies is depicted by the license business. Our license business, sequentially six months on six months, has grown by 15 percent.
IW: Anything else you want to add?
Kelly: A final thing would be in terms of our partnership strategy. IBM has selected Micro Focus [for its] advanced-level partnership, so we’ve got great partnerships with Microsoft, obviously. [We also partner with] Oracle.