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Follow UsSoftware and hardware vendors today call it their
survival strategy–launching fresh versions of products in order to prove that
they are right up the street of cutting edge technology. While this breakneck
speed of development ensures that products are constantly on the betterment
path, it is usually difficult and often unnecessary for enterprises to match
this speed of upgradation.
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How is an upgrade different from a replacement? Users usually pay a fee for
an upgrade that entitles them to new versions annually or more frequently.
However, when vendors introduce new technology or architecture, they often
create distinct products, which are not provided to users as part of the same
fee. In such cases, old applications are gradually phased out and no new
versions are introduced. If users wish to stay with the same vendor by migrating
to the new applications introduced by the company, they need to enter into a
fresh commercial arrangement with the vendor. At such times, users can also
evaluate other vendors, since this amounts to fresh deployment, though it may be
relatively easy to work with the same vendor. This is of course, less common as
it requires major expense for the company and should be done only if required.
After implementing a business application, say ERP (enterprise resource
planning), users typically spend four to five years with it. However,
organizations do retain their applications for decades.
As long as the functionality of the application efficiently meets the
organization’s work process, there is no need to upgrade the software or
hardware. Desktop users with packages like office etc, on desktop OS’
(operating systems) like windows often get into the frequent upgrade tangle,
which sometimes is unavoidable. These upgrades typically happen once in 18 to 24
months. Minor updates and patches happen continuously.
Need for upgrades
As technology evolves at a rapid pace, the time frame between two versions
is reducing. At the same time, budgetary constraints do not permit CIOs to
upgrade hardware as well as software as often as they would like to. How can
CIOs strike the right balance between the two?
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CIOs need to carefully consider the features and functionality actually being
used by users in their organization. Version upgrades are driven by the
collective requirements of users across the globe. Not all are relevant for each
organization. Thus if there are no compelling business requirements for the
upgrade, CIOs need to be cautious since the total cost of upgrades cutting
across software, hardware, training, data migration, bandwidth etc. can be
substantial.
Ideally, the economic justification for upgrades is in terms of increased
productivity. However, in certain cases, upgrades may be justified for reasons
of compliance, compatibility with customers/service providers, high costs
associated with maintaining legacy versions, unavailability of skills and lack
of continued vendor support. CIOs should consider the overall cost of upgrades
viz a viz the benefits. Another strategy could be to quantify the losses
(monetary and otherwise) that will occur if the upgrade is not made.
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Finally, the CIO should try and upgrade across the board in logical units in
order to avoid having multiple generations of hardware/software in the same unit
or geographical location.
For example, changes in the tax regime may necessitate the upgrade of
financial applications. Similarly, rapid changes in tariff policies may require
billing applications to be upgraded frequently in the telecom industry. In the
services industry, the focus on CRM may require rapid upgrades. Thus upgrade
cycles are somewhat linked to the maturity of the technology or business
application. As applications mature, the upgrade cycle stretches. The second
important factor is the scale of deployment. An organization with 10,000
desktops needs to be far more cautious about upgrades compared to an
organization with 1000 desktops. Upgrade projects in themselves may stretch to
three to six months and organizations may be hesitant to commit themselves to
upgrades year on year. For mature applications, there is a growing tendency to
skip generations and synchronize desktop hardware and office upgrades to a 3-5
year cycle.
It is a tightrope act for most corporations. The decision criteria for CIOs
will lie in making a decision based on the end-of-support date for the products
being used.
Warning: Pay now or Pay Later!
It is imperative that enterprises do not fall behind current versions since
support for the older versions will not be forthcoming after a given period.
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Balancing the financial and operational benefits of delaying an upgrade is
understandable, but up gradation is a must. If one does not upgrade for long
periods, upgrades become increasingly unattractive in comparison to the power
and features of new machines. Some technologies may become obsolete. The effects
could be disastrous. Operations could stall and starting all over again may be
difficult.
The issues of not keeping up with upgrades grow exponentially the longer a
company puts them off. Not upgrading technology potentially affects the
competitive advantage, creates large massive upgrades that are hard to manage,
could impact employee productivity, and dictate spending in other areas.
By not upgrading or replacing applications on time, the organization risks
not only loss of competitiveness, but also in extreme cases, financial loss. All
these problems can be avoided if upgrades are properly planned and the vendor is
committed to agreed performance levels, costs and time.
Implementation
It is very important to plan upgrade/replacement of enterprise applications
so that disruption is minimal. Enterprise applications are usually mission
critical and disruption can be hugely expensive. Upgrade/replacement should be
in synchronization with the overall technology direction and priorities of the
company. Sometimes, it may be strategically more important to replace than to
upgrade.
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If the application has been substantially customized, it is important to
ensure that the changes are retained after the upgrade. Managing software
migration is a complex process. In some situations migration is not a choice,
but a necessity. Fixing the Y2K bug, for example, necessitated countless
software and hardware migrations. Other situations will not be mission-critical
but may be productive means of increasing your return on investment and reducing
total cost of ownership.
Migration planning can require significant time, money, and technical
resources. Users in your organization are likely to increase pressure to migrate
as newer versions of software with new features become available. The management
is likely to resist software migrations due to budget constraints. Balancing the
factors that influence your decision is the first step in planning a migration.
You could conduct a detailed study among your users and create software and
hardware reports to help you identify version and compatibility issues.
Migrating one piece of software can necessitate other, more significant software
migrations. Be prepared for this likelihood by investigating your enterprise…
Do you find users running software that is not compatible with the new
operating system that you are preparing to roll out? Do you hand down hardware
as new equipment comes in, thus creating a situation in which users need their
hardware upgraded or adjusted? Do users make enough use of the product to make
an upgrade worthwhile? Do all users need to be upgraded? Do the benefits of the
new features outweigh potential compatibility issues?
Understanding the implications of a software migration is crucial to your
decision to migrate, as well as to your planning process.
It is equally important to have a committed team to ensure the success of ‘Mission
Upgrade’. The team needs to have an in depth understanding of why the upgrade
is essential for end users. Team members should be equipped with detailed plans
that have contingency options. Team leaders should be able to prioritize issues
arising during the migration process and then direct the team to sort them out
promptly. And team leaders should have skills to interact with users and iron
out any doubts they may have.
Buying hardware
The need for desktop software upgrade arises as and when new versions are
available in the market (though the user may not necessarily need it at that
time).
For this reason, organizations should typically buy desktops with the best
configuration that fits their budget. The pace of technology change often makes
upgrades beyond RAM (random access memory) and HDD (hard disk drive)
difficult/unattractive. Newer applications demand higher processor ratings and
therefore old desktops even with sufficient RAM and disk-space are unattractive.
Organizations should plan for desktop lifetime of five years with a mid-life
upgrade if required after three years. Software development organizations should
plan to phase out machines in three years. The right balance is to go in for a
package deal when buying desktops– a complete upgrade when the new OS, office
suites are available, up gradation of hardware once in four years for desk tops
on buyback or by lease operations. Hardware vendors can lease desktops and
replace all of them at the end of three years.
Buying software
The need for software up gradation is dependent on a company’s area of
operation as well as its business plans. If business plans are ambitious and
aggressive, there is naturally a need for frequent up grades. The need for
enterprise software arises when there is a major workflow or functionality
change in the organization. One of the issues would be to ensure there is no
downtime or business impact due to the upgrades/changes. Testing for stability
of the new versions is another key challenge.
Sometimes CIOs prefer to wait for the newer versions to stabilize before
jumping in to upgrade their versions, especially for software.
A school of thought asks enterprises to always be a version behind on aspects
like desktop software. The idea is not to deny users what is the best in the
market, but actually make sure it works well for your organization and then
deploy it. A CIO could set up a mini laboratory (with just one or two PCs) in
his department. These PCs could deploy the latest versions available, test it
for a fixed time period and then implement the software across the organization
if found to be good.
When old is not gold...
One of the prime reasons for resistance to upgrade is that the management
sees "discarding of old hardware and software" as a waste of resources
that were valuable till recently. Planning for the effective use of these assets
is also a task the CIO has to undertake.
The first priority should be to re-deploy these resources to areas requiring
lower configuration for computing needs. However, it is becoming increasingly
difficult to re-deploy old hardware. Typically, the cost of buying new hardware
is comparable to the depreciated cost of old hardware. Therefore new users do
not see a business benefit in taking on hand-me-down hardware. Negotiating with
vendors for exchange schemes is a good option. Also, while buying hardware,
organizations must identify the useful life of the same, and develop the phase
out plan and try to exchange with new hardware after this period.
Crystalball-gazing
As vendors outpace each other in launching products and versions based on
the latest technologies, the rate of obsolescence is likely to be high. Portable
devices, mobile computers and multi-function devices will add to the up
gradation concerns of CIOs. It is difficult to predict where IT will lead
enterprises in the next few years. Given the uncertainty that jet-setting
technology brings, CIOs must make sure that the plans they make today, are
flexible and adaptable.
Smart Spending
The tough period of the last two years has changed paradigms and created
challenges for CIOs. Here’s how they can ensure that the best infrastructure
comes in, at affordable costs
n Purchase
hardware in the secondary market instead of new or lesser quality hardware. This
results in significant savings in the acquisition of tier one hardware. With the
slowdown, there’s a lot of quality stuff our there
n Leverage the
lowest cost region when purchasing hardware. Hardware is often less expensive in
a particular region and shipping it to other regional offices from the low cost
region is worthwhile
n Wherever possible,
leverage the ASP model to ensure software and hardware up grades are included
and do not require special up grade projects. Prioritize systems according to
their criticality to business to ensure only truly critical systems are upgraded
n Upgrades often
happen based on a defined cycle not on true business needs
n Investigate
licensing options and associated costs in regions that your company has a
presence in and buy in the region/country that has lower license costs
n Implement lower
cost technologies that reduce hardware requirements and software licensing. For
example, implementing Linux solutions is a cost effective method of not only
lowering or stabilizing hardware costs but also reduce licensing costs
n Lease equipment
and/or software
n Check how many in
the organization are really using the software and upgrade those workstations
alone