BCBSKS cuts mainframe software costs with IBM

Achieving fast, low-risk migration with help from the IBM Software Migration Project Office

Published on 31-May-2013

"The IBM consultants did a magnificent job in working through objections and fixing problems, helping our teams get up to speed on the new products." - Henry Daries, Manager of Mainframe and Distributed Computer Systems, BCBSKS

Blue Cross and Blue Shield of Kansas


Deployment country:
United States

System z Software, Virtualization, Virtualization - Network


Established in 1942, Blue Cross and Blue Shield of Kansas (BCBSKS) provides approximately 880,000 Kansans with medical, dental and life insurance coverage. BCBSKS employs more than 1,400 people at its Topeka, KS, headquarters, and offers online access to health information resources through its ResourceBlue service.

Business need:
BCBSKS constantly strives to cut its operating costs, making more money available for healthcare claims. The company identified an opportunity to make significant savings in its mainframe environment.

Working with the IBM Software Migration Project Office, BCBSKS replaced its mainframe software portfolio with new IBM® z/OS® features and with a suite of IBM Tivoli® and IBM WebSphere® solutions.

IBM ensured rapid and smooth migration; reductions in annual software fees helped to lower IT operational costs; IBM solutions offer the same functionality at lower cost.

Case Study

Established in 1942, Blue Cross and Blue Shield of Kansas (BCBSKS) provides approximately 880,000 Kansans with medical, dental and life insurance coverage. BCBSKS employs more than 1,400 people at its Topeka, KS, headquarters, and offers online access to health information resources through its ResourceBlue service.

The Patient Protection and Affordable Care Act (PPACA) requires large health insurers to spend at least 85 percent of premiums on health costs and claims, leaving a maximum of 15 percent available for administrative costs. For BCBSKS, which already prides itself on being an extremely lean and efficient organization, rising costs in other areas make it a constant challenge to squeeze more and more cost out of operations. Raymond Ayala, CTO at BCBSKS, explains: “We entrust all our data to IBM DB2® on the IBM mainframe, so naturally it’s a major element in our IT budget. We constantly review our operating costs, and an obvious target for savings was the software environment on the mainframe—all the tools and utilities that support major systems such as claims processing and membership.”

Mature solution
BCBSKS saw an opportunity to rationalize its mainframe software landscape by reducing the number of vendors and products. “As a team, we started to look at the IBM mainframe software products and the benefits of choosing them,” says Henry Daries, manager of mainframe and distributed computer systems at BCBSKS. “The idea was that if we could get the job done with the IBM tools, and reduce our costs, we would go ahead with a complete migration.”

The existing mainframe software, sourced from a single vendor, was working well and was not lacking in functionality. However, the annual costs were high, and BCBSKS’s relationship with the vendor was no longer positive.

“What we wanted above all was lower costs with a good vendor relationship and strong inter-product functionality,” comments Daries. “Blue Cross has been an IBM customer for many years, and we knew that their product set was mature. IBM brought in good people to discuss the migration, and that gave us confidence to make the decision.”

Expert migration
Backed by expert planning and execution from the IBM Software Migration Project Office, Raymond Ayala and his team made a strategic decision to undertake a wholesale migration to IBM mainframe software on its IBM zEnterprise® 196 (z196) server. The organization replaced its existing functionality through a combination of the built-in functions of IBM z/OS and solutions from the IBM Tivoli, IBM Security and IBM WebSphere brands.

“The planning from the IBM migration office was very good,” recalls Daries. “There were some internal hurdles to overcome, but the project manager helped us work through those very effectively. We were involved in the migration effort, but I made it clear at the outset that I expected IBM to do the heavy lifting—that gave me more certainty about the timing and cost of the migration.”

The migration was staged over the course of one year, and IBM helped BCBSKS to beat the license renewal dates for some pieces of software, avoiding financial penalties.

“We were very happy with the performance of the IBM team throughout this major migration project,” says Daries. “The team kept us informed and made sure that we had the right level of technical expertise available at all times.”

He adds: “A migration like this inevitably creates internal tensions: people are used to working with the existing tools, and are naturally resistant to change. The IBM consultants did a magnificent job in working through objections and fixing problems, helping our teams get up to speed on the new products. In this scenario, the last thing you want is a know-it-all—instead, IBM gave us experienced people who took the time to understand our teams’ concerns and address them.”

Comprehensive coverage
Using the IBM z/OS Data Facility System Managed Storage hierarchical storage management V1.11 feature, BCBSKS can now apply the appropriate retention policies to data stored on direct access storage devices (DASDs). The z/OS DFSMS removable media manager V1.11 feature enables BCBSKS to manage all physical and virtual tape-based data stores securely and reliably.

For automated job scheduling, BCBSKS deployed IBM Tivoli Workload Scheduler for z/OS V8.5.1 software, and for storage management it is using IBM Tivoli OMEGAMON® XE for Storage on z/OS V4.2 software.

BCBSKS also deployed the z/OS Library Lookaside (LLA) feature to dynamically load, fetch and refresh load modules that reside in z/OS Linklisted libraries, as well as the z/OS Virtual Lookaside Facility (VLF) feature. The latter enables BCBSKS to retrieve modules from a virtual space instead of needing to retrieve them from the program libraries of DASDs, boosting performance.

BCBSKS replaced its previous security software with a combination of the z/OS Resource Access Control Facility (RACF®) feature and versions 1.12 of IBM Security zSecure™ Admin, IBM Security zSecure Audit for RACF and IBM Security zSecure Command Verifier software. The RACF feature enables BCBSKS to control security access to datasets and resources, while the Security zSecure Admin software makes it easier to define access rules, grant access, set or reset passwords, generate reports and test security changes. With Security zSecure Audit for RACF software, BCBSKS can detect and analyze security exposures and attempted breaches, while Security zSecure Command Verifier software raises alerts when the z/OS RACF feature executes certain commands.

“IBM is embedding more security code in z/OS, and integrating RACF more tightly with DB2, so we can now take advantage of things that we couldn’t before,” comments Daries. “This integration also reduces our administration effort. For example, we no longer need to separately upgrade our security landscape when we upgrade z/OS.”

BCBSKS replaced its existing report-generation software with IBM Migration Utility for z/OS and OS/390® V3.2 software. This solution enables the organization to generate IBM Common Business Oriented Language (COBOL)-based applications from the report-generation programs written in CA Easytrieve Plus. The IBM Migration Utility allowed BCBSKS to continue developing and maintaining these programs using either the familiar previous software language or in COBOL—whichever proved most advantageous to the individual developers.

Cutting costs for reinvestment
The new IBM mainframe software landscape enabled BCBSKS to achieve its strategic objectives of reducing costs while maintaining functionality. Ultimately, this frees up money to invest in healthcare provision to the organization’s members. And with an IBM Enterprise Licensing Agreement (ELA) covering the new software, BCBSKS now also has greater certainty about its monthly costs, helping the organization to plan and control its operating expenditure.

“We reduced the number of products and vendors, and we improved our ability to handle the monthly spend-rate,” says Ayala. “The IBM software landscape is significantly less costly than our previous landscape, helping us to decrease our IT operational costs. We also now have just one vendor for the main elements of the mainframe landscape, which gives us greater leverage around support and pricing negotiations.”

Products and services used

IBM products and services that were used in this case study.

System z, System z: zEnterprise 196 (z196)

DB2 for z/OS, z/OS, Tivoli OMEGAMON XE for Storage on z/OS, Migration Utility for z/OS, IBM Security zSecure Audit, IBM Security zSecure Command Verifier, IBM Security zSecure Admin

Operating system:
z/OS and OS/390

Legal Information

© Copyright IBM Corporation 2013. IBM Corporation, Software Group, Route 100, Somers, NY 10589. Produced in the United States of America. April 2013. IBM, the IBM logo, ibm.com, DB2, OMEGAMON, OS/390, RACF, System z, Tivoli, WebSphere, zEnterprise, zSecure, and z/OS are trademarks of International Business Machines Corp., registered in many jurisdictions worldwide. Other product and service names might be trademarks of IBM or other companies. A current list of IBM trademarks is available on the web at “Copyright and trademark information” at ibm.com/legal/copytrade.shtml. This document is current as of the initial date of publication and may be changed by IBM at any time. Not all offerings are available in every country in which IBM operates. The client examples cited are presented for illustrative purposes only. Actual performance results may vary depending on specific configurations and operating conditions. It is the user’s responsibility to evaluate and verify the operation of any other products or programs with IBM products and programs. THE INFORMATION IN THIS DOCUMENT IS PROVIDED “AS IS” WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND ANY WARRANTY OR CONDITION OF NON-INFRINGEMENT. IBM products are warranted according to the terms and conditions of the agreements under which they are provided. The client is responsible for ensuring compliance with laws and regulations applicable to it. IBM does not provide legal advice or represent or warrant that its services or products will ensure that the client is in compliance with any law or regulation. Statements regarding IBM’s future direction and intent are subject to change or withdrawal without notice, and represent goals and objectives only.