Merrill Lynch

Bank saves millions by building a mainframe-based service-oriented architecture

March 9, 2006

3 Min Read
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A mainframe isn't the most conventional platform for a service-oriented architecture (SOA), but since investment bank Merrill Lynch looks to save around $40 million annually with it, no one's quibbling.

SOA treats applications software as a collection of autonomous, reusable business services. That way, users can run these applications across different platforms, including the Web.

But, for many firms, standards issues and vendor hyperbole are major hurdles in the path of the technology. (See SOAs: Approach With Caution, SOS for SOAs, Users Send SOA SOS, and Wall Street Eyes SOAs.)

Not Merrill, which started work on its SOA back in 2001, prompted by a need to ease the strain on its storage systems. Jim Crew, former director of infrastructure and data services at the bank, tells Byte and Switch that prior to deploying the SOA, Merrill was forced to replicate data from its eight IBM z/Series mainframes onto Oracle, SQL Server, and Sybase databases running on multiple EMC Symmetrix boxes. This data, in turn, was used by applications supporting, for example, online statement services.

The applications in question knew how to write against a Sybase application, they didn’t know how to write against a mainframe application,” explained Crew, highlighting the challenge of working with a technology regarded as outdated by some vendors. “We were copying Tbytes of data on a daily basis. We took a really hard look at this and realized this is a place where we’re spending an awful lot of money." (See Mainframe Skills Shortage Looms and IBM Celebrates a Birthday.)A number of vendors, including IBM, HP, Sun, and BEA, are currently touting SOA offerings, although Merrill opted to go its own way, effectively building its own SOA from scratch. “We looked at everybody,” said Crew, who felt that vendors were too focused on Java and .Net programming languages, something that would have placed a burden on Merrill’s mainframe-intensive environment.

Instead, Crew and his team built X4ML, a software package that runs on the mainframes, allowing the bank’s programmers to Web-enable specific services. “As a user of it, you don’t have to know any Java, you just have to know the specifics of the service you are publishing."

This, in turn has removed the need to replicate data from the mainframe onto the EMC devices. “Obviously, it’s cheaper because you don’t have to pay for additional storage."

The SOA has also reduced Merrill’s expenses elsewhere. “There’s no middleware involved in taking the data from the mainframe,” explained Crew, adding that Merrill has already got rid of five middleware servers used to support its online statements service.

While Crew was less forthcoming on how much Merrill’s SOA cost, he confirmed that 16 man-years were spent developing X4ML. “It was a very significant investment, but there is a significant payback on it."Merrill, for example, shaved $20 million off its IT expenditure last year, across both hardware and software, although Crew thinks that this figure could eventually reach $40 million as more services are rolled into the SOA. Currently the SOA supports 45 services, including the firm’s broker-dealer and 401(k) email systems, and this is on the rise.

But the deployment was not without its challenges, according to the exec. ”There were people that thought we should be eliminating the mainframe. The biggest challenge was convincing them that the mainframe is relevant.”

Crew obviously won the battle. “People have eventually realized that the mainframe is not going away -- it’s reliable, scaleable, and not terribly expensive. We know what the costs are and we can predict those costs.”

Clearly there is plenty of movement in the SOA space at the moment. Merrill, for example, recently sold the X4ML to vendor SOA Software for an undisclosed sum, and the startup is now developing the bank’s Web services architecture. Crew left Merrill to become vice president of SOA Software.

— James Rogers, Senior Editor, Byte and SwitchOrganizations mentioned in this article:

  • BEA Systems Inc. (Nasdaq: BEAS)

  • World Cellular Information Service (WCIS)

  • Hewlett-Packard Co. (NYSE: HPQ)

  • IBM Corp. (NYSE: IBM)

  • Merrill Lynch & Co. Inc.

  • Microsoft Corp. (Nasdaq: MSFT)

  • Oracle Corp. (Nasdaq: ORCL)

  • Sun Microsystems Inc. (Nasdaq: SUNW)

  • Sybase Inc.

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