Assignment 6 - IS Managment Issue Identification

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Assignment 6 - IS Managment Issue Identification

  1. 1. Ashley Leonzio BMIS 2056: MIS Practicum IS Management Issue Identification and Definition ApplicationRetirement&Technology Obsolesce:Knowing WhichProducts to Sunset and When Introduction Application retirement, or “sunsetting,” is defined as the process pulling products or features from the market. It seems logical that this process should occur when the cost of development and maintenance exceeds profit, but in most industries, the decision is not so simple. Other factors such as functional and technical obsolesce, strategic fit, contractual commitments, and regulatory compliance standards can come into play. Businesses also make compelling arguments for keeping a legacy systemin place such as:  The costs of redesigning or replacing the systemare prohibitive because it is large, monolithic, or too complex  Implementing a new system would be costly, compared to the anticipated benefits of replacing it  The way that the systemworks is not well understood. This can occur if systemdesigners have left the organization and the system has not been fully documented or documentation has been lost. Knowing when, or if, it is right to retire a product or feature will be the focus of this paper. Specifically, this paper examines software based applications and services and does not address issues related to manufacturing and consumer goods. What is the issue? Most successful organizations do rather well when it comes to bringing new technologies to market, but very few of them do a good job of retiring legacy applications. JimDuggan, a Research VP with Gartner, makes the following observation, "On average, 10% of the applications in an un-optimized portfolio are candidates for retirement. An additional one-third can require migration or rationalization."1 This statistic, along with one from ZDNet.com stating that, on average, organizations spend 75% of their software budgets on ongoing operations and maintenance, means that there may be significant savings in the retirement of legacy applications. 2 It seems that sunsetting products would be a no brainer then, so what’s the catch? Knowing you should, or can, retire an application is one thing, but knowing what products and when is more difficult to determine. In theory, sunsetting or retiring products should happen when the 1 (Koopman, 2010) 2 (Applimation, 2009)
  2. 2. product no longer fits into the company’s competence or market strategy and when the product is no longer profitable. Figure 1 provides a unique view at the product life cycle stages in that it depicts what most organizations tend to ignore; at some point, the cost to support and maintain a product exceeds the sales revenue if a product is not adequately retired, or if there are no significant upgrades to increase sales revenue. Figure 1: Product Life Cycle3 Determining what products should be retired is another question organizations grapple with. Figure 2 provides a framework for determining what to do with a product or feature that is in question for improvement or retirement. Figure 2: Business Value Matrix4 Sunsetting can be especially difficult with a new, yet unsuccessful, non-differentiating product. The worst thing that can happen to a bad new product is sales, because now there are customers to support. Another potential wrench in making the leap to sunset a product can be political ramifications. The product might be critical to one customer, or gaining buy in with management may prove difficult. 3 (Levitt) 4 (Collings & Atherton,2010)
  3. 3. It is also possible that an organization wants to axe a product or feature, but the costs of redesigning or replacing the system are prohibitive. This is particularly applicable in on-premise monolithic applications where implementing a new system would be costly. It is also common that the way that the systemworks is not well understood. This can occur if systemdesigners have left the organization and the system has not been fully documented or documentation has been lost. In many of these cases, organizations do not even have adequate knowledge of how their customers are using their systems. Product managers recognize that the product is past its prime, but without truly understand the product it is likely that the wrong decision will be made. One way organizations try to manage the issue of application retirement is through a concept known as planned obsolescence. For example, Microsoft lists the support end dates for all of their products on support.microsoft.com. Many other companies, residing mostly in the software and electronics industries use a planned obsolescence model that allows them to easily sunset old releases, but this model is not without its own struggles. There are ethical debates on the use of this model and it still does not address knowing with its time to sunset a particular feature or an entire product line. Once a decision is made to retire a product or feature, it is likely that organizations will struggle with the process because they lack experience and expertise. Generally speaking, communication to customers (both internal and external) will be insufficient, required data will be not retained properly and the organization will fail to provide an alternative solutions or upgrade path. Also, many organizations find it very difficult to tell their customers “no” and therefore end up supporting products and features they very well know they should not be. What makes this issue fundamentally difficult? How can one tell this issue is fundamentally difficult? Everyone wants you to pay for information to help with this process! This may be why only 20% of technology companies report discontinuing software products, according to the Software Product Management: Best Practices (2004) report from Software Minds.5 Standards exist that outline best practices for the process of sunsetting products, but there is very little documentation on making the decision. There are an unlimited number of factors to consider, such as strategic and portfolio fit; contractual commitments; market factors; technology; customer, employee, and supplier impacts; cost control; ability to archive data; regulatory compliance; knowledge of application or platform; and the list goes on and on. This decision making issue tends to make organizations fall into a state of analysis paralysis whereby no consensus can be reached and no action is taken. Bill Gates is quoted saying, “The only big companies that succeed will be those that obsolete their own products before someone else does,” and he is spot on. 5 (Johnson,2007)
  4. 4. Who are the stakeholders? Company employees, suppliers, shareholders, and customers are all stakeholders when it comes to sunsetting a product or product feature. Without understanding how a customer is utilizing said product or feature, organizations risk customer dissatisfaction and leading their customers to feel abandoned if the decision is made to sunset the product. Without proper communication to internal resources, it is likely that key stakeholders will not be made aware of the decision and more importantly why the decision is being made. By better understanding what products to retire and when, organizations can save costs, focus attention and resources to other more lucrative areas.
  5. 5. Bibliography Applimation. (2009, January). A Practical Guide for Retiring Legacy Applications. Retrieved October 31, 2010, from ZDNet.com: http://whitepapers.zdnet.com/thankyou.aspx?&docid=947913&view=947913&load=1&regSrc=z d-dir Collings, J., & Atherton, M. (2010, April ). Application Retirement: What about the Data. Retrieved October 31, 2010, from Freeform Dynamics: http://www.freeformdynamics.com/fullarticle_subscribe.asp?aid=1048 Johnson, S. (2007, July 19). End of Life: Retiring a Product. Retrieved October 31, 2010, from Pragmatic Marketing: http://www.pragmaticmarketing.com/publications/magazine/3/3/0505sj Koopman, J. F. (2010, Feb 10). Solix ExApps Brings New Relief to Application Retirement Anxiety. Retrieved October 31, 2010, from DCIG Inc: http://sponsored.dciginc.com/2010/02/solix-exapps-brings-new-relief.html Levitt. (n.d.). Product Life Cycle. Retrieved October 31, 2010, from 12manager.com: http://www.12manage.com/methods_product_life_cycle.html

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