Anthropic says Claude Code can help streamline 'cost-prohibitive' COBOL modernization, but IBM says it's not that simple – 'decades of hardware-software integration cannot be replicated by moving code'

Anthropic believes Claude Code can play a key role in modernizing legacy code like COBOL, but IBM appears to disagree.

In a recent blog post, Anthropic said its flagship coding tool can automate much of the legwork required in COBOL modernization, which is a notoriously difficult process for enterprises.

"With AI, teams can modernize their COBOL codebase in quarters instead of years," the company said.

If as useful as promised, Claude could be the tool that finally breaks the ongoing dependence on COBOL, or Common Business-Oriented Language, a programming language first developed back in 1959.

While it's still widely used, that's largely for legacy operations, and efforts are being made to shift at least some of those workloads to more modern platforms. Anthropic noted COBOL runs 95% of ATM transactions in the US and is used to power critical systems including finance, airlines, and government.

"Despite that, the number of people who understand it shrinks every year," Anthropic noted in its blog post. "The developers who built these systems retired years ago, and the institutional knowledge they carried left with them."

Waning expertise in COBOL is exacerbated by the fact universities no longer teach the language. Indeed, it’s becoming increasingly difficult to find qualified engineers in this domain.

That could have serious implications for major industry players such as IBM, largely because COBOL is a major selling point for IBM systems as the company continues to sell mainframes to customers reliant on the language.

After Anthropic's announcement, shares in IBM fell 13.2% – the biggest drop seen by the company in more than 25 years, according to Reuters.

Claude Code vs COBOL

Anthropic said COBOL modernization is different from standard code, adding "you're reverse engineering business logic from systems built when Nixon was president."

With that in mind, it’s not just about coding, but understanding long lost institutional knowledge that's only represented in the code itself.

That's one reason why "armies of consultants" are now required to update these systems – at high cost and with lengthy timelines.

"Tools like Claude Code can automate the exploration and analysis phases that consume most of the effort in COBOL modernization," the post noted.

Using Claude Code, Anthropic said researchers were able to map dependencies across thousands of lines of code, document long-lost workflows, spot risks more quickly than human analysts, and offer "deep insights" to make key decisions.

"AI excels at streamlining the tasks that once made COBOL modernization cost-prohibitive," the company said. "With it, your team can focus on strategy, risk assessment, and business logic while AI automates the code analysis and implementation."

By going through a step-by-step process that includes validation, the AI can translate COBOL logic into modern languages, creating API wrappers around legacy components and building a system to run old and new code together.

IBM isn't convinced

In an apparent response, IBM published its own blog post about AI coding tools and COBOL – without specifically mentioning Anthropic – that argues there's a clear difference between translating code and modernizing a platform.

"Translation captures almost none of the actual complexity," said Rob Thomas, Senior Vice President, IBM Software and Chief Commercial Officer, later adding: "Decades of hardware-software integration cannot be replicated by moving code."

IBM's mainframe business isn't just about COBOL, Thomas said. Indeed, nearly half (40%) of COBOL doesn't even run on mainframes.

"COBOL on IBM Z is code optimized over decades of tight coupling between software and hardware," Thomas added.

"An analogy is the iOS and iPhone: someone could build an alternative, but it is unlikely to displace a billion iPhones. The performance derives from tight coupling of software and hardware, processor-level acceleration, I/O subsystem optimization, and decades of performance tuning."

Whether that convinces the markets to stop battering IBM's shares remains to be seen, but IBM isn't the first company to see its price fall over an Anthropic post or product launch in recent weeks.

Software and services shares dipped over the launch of Claude Cowork, while another reveal about security tools tanked share in a host of major cybersecurity companies.

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