U.S. state and local agencies rethink mainframe strategies amid AI interest
State and local governments in the U.S. are reassessing their approach to mainframes amid a growing interest in leveraging Artificial Intelligence (AI) for efficiency and cost savings, according to a recent report by Information Services Group.
The 2025 ISG Provider Lens™ Mainframe — Services and Solutions report finds that AI is helping to simplify the maintenance of mainframe systems and is fostering new interest in their capabilities. This trend, which began in earnest in 2024, is expected to continue into the coming years as agencies explore the potential of AI for critical data management.
“AI offers a wealth of new options to help the public sector unleash the potential of mainframe systems,” said Nathan Frey, ISG partner and lead, U.S. Public Sector. “When agencies weigh those possibilities against the risks of moving data and applications that have run on mainframes for decades, they often reconsider their roadmaps.”
Agencies are now considering which applications to retain on mainframes and how to access mainframe data effectively for AI applications. Generative AI (GenAI) is also contributing to the streamlining of development processes, though the skills gap in mainframe expertise remains a concern.
The report notes a shift in policies regarding the offshoring of state and local government data, alongside the adoption of hybrid cloud architectures which facilitate compliance with regulations while allowing cost-effective resource management.
As demand for mainframe services grows, more providers are entering the market. Notably, agencies are favoring those with specialized experience and an understanding of unique mainframe requirements.
“State and local agencies in the U.S. are finally rising to the challenge of modernizing age-old mainframe IT environments,” said Jan Erik Aase, ISG partner and global leader. “Leading service providers have the AI tools and specialized skills to help them make the leap.”
The report evaluates 29 service providers in four areas: Mainframe Optimization Services, Application Modernization Services, Mainframe as a Service, and Mainframe Operations. Wipro is noted as a Leader across all four quadrants, while other companies like DXC Technology and Kyndryl excel in multiple areas. Customer experience within this sector is highlighted by UST's recognition as a top performer in customer satisfaction.
For those interested in deeper insights into challenges and opportunities in the U.S. public sector regarding mainframe infrastructure, the report is available for subscribers or one-time purchase.