Transfer costs are key to managing legacy risks

In the years since HP’s end-of-life decision for the HP 3000, was it a “worst practice” to be an HP 3000 user over its final life in the vendor’s stable? How do the users of legacy systems avoid painting themselves into a technology corner?

The key is a concept that vendors understand intimately – transfer cost. Transfer cost is the cost of changing from one vendor or platform to another. For example, switching phone carriers involves low transfer cost. You hardly know it happens. But changing from one operating system to another – say, HP 3000 to Solaris – means high transfer costs. Vendors try to make transfer costs high, without being obvious about it, to discourage customers from switching to competitors.

It is your job to identify potential transfer costs in your technology decisions, and to keep them as low as possible. One way to lessen risk to spread the risk over multiple platforms and vendors. Trust no one, and always have a Plan B.

This means making the assumption that everything that has been happening – vendor consolidation, commoditization of hardware, and the subordination of operating system to DBMS and application – will continue unabated.

Switching gears plans

The days of something like an “HP shop” are long over. Even if you’ve decided to standardize on HP, Sun, IBM, you should do so with the knowledge that one day you may need to switch gears abruptly.

Start with a networked storage platform that supports as many operating systems as possible. This is the foundation layer for your IT infrastructure.

The best Total Cost of Ownership in IT is based on consolidation. However, that doesn’t necessarily imply homogeneity. It’s a matter of degree. It’s a matter of physical location as well.

Software drives hardware. Choose DBMS, applications, tools based on support for multiple operating systems and hardware. Be cautious regarding any decision that locks you into one vendor. For example, SQL Server based solutions, which only run on Wintel, will have higher transfer costs than Oracle.

Keep your vendors honest, but at the same time don’t underestimate the value of a true partnership. Any time one side thinks they have the other over a barrel, there’s bound to be trouble. We’re all in this together.

Leave a Reply