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Monday, 15 December 2014

Vendor relationship management and "Orphan Technology" - what next?

Orphan Technology refers to the phenomenon where a technology is effectively abandoned by it's owner.  This happens in many cases due to mergers and acquisitions - a firm acquires a competitor and then orphans the acquired firm technology portfolio. 
Note that orphan is a very different thing from "end-of-life".  When a software firm declares end-of-life it's clear that the technology will no longer be supported.  Orphan technology is when the process of stopping support is covert.

An example, Vendor A acquires Vendor B.  Both A and B compete in a particular market and have directly competing products.  Vendor A announces to the combined client base that vendor B and vendor A products will be supported but the "strategic direction" will be a specific set of the products.  Behind the scenes, the losing product development teams will shrink and downside to a "keep-the-lights-on" capability.
The challenge here is that this is generally a covert process - the vendor will never formally announce an orphan product.  But the trick here is for firms that use vendor products to maintain productive but moderately conflictual vendor relationships.  In some cases I have seen vendor relationship managers in the pocket of the vendor based upon a personal relationship.

So - what should you do if you inherit a technology portfolio in a financial services firm?
  1. Create a complete list of all vendor software in use.
  2. Establish the amount paid to each vendor.
  3. System map the vendor platforms in use to work out categories - which are mission critical/strategic/legacy and so on.
  4. Set up a vendor relationship management board (not one person) to manage the vendors.
  5. Conduct scenario and cost analysis - which systems are most at risk of being orphaned and what would the cost be to replace?
  6.  Ensure that the cost of replacement of systems is included in the process for system selection.
  7. Include diversity in the decision making process for buying in technology.
This is a topic to which I will return....

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