Editor's Note: Beware A Hidden Cost In Buying IT - InformationWeek

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Software // Enterprise Applications
Commentary
6/24/2005
06:30 PM
Stephanie Stahl
Stephanie Stahl
Commentary
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Editor's Note: Beware A Hidden Cost In Buying IT

Let's say it's time to purchase a new technology asset--a new enterprise software application, new infrastructure systems, whatever the case. A ton of time and energy likely go into determining the ROI (in the next three, six, nine months and beyond), the vendor analysis (financial stability, customer-service rankings, service-level agreements), the price (up front, maintenance, licensing arrangements), and everything else that goes into the purchase process.

But Scott McNealy, who posits that all technology has the shelf life of a banana, recently posed this question: "What are the barriers to exit?" In other words, what will it cost to move from that technology to the next, whether it's an upgrade or a new system? He argues that the exit-strategy costs often dwarf the barriers to entry and the ongoing operational costs. It's one of the things that gives Sun bragging rights when it comes to its history of open standards-based computing, a strategy that has made it less costly for customers to shift technologies.

Sun is making new moves in open computing with an aggressive open-source strategy. Our story this week analyzes whether it can move into a leadership position (see story, "Sun Opens Up"). Also worth noting is a broader open strategy Sun calls the "Participation Age," which McNealy says is based on the belief that people add value by working and sharing in large communities. Think telemedicine, distance learning, and blogging. It's a way to form a bridge from the haves to the have-nots in the digital economy. In some ways, he argues, it's counter to the iPod phenomenon, in which individuals carry their own content libraries around with them instead of storing content in a shared space (but let's not forget that a lot of music sharing goes on these days!). The Participation Age reminds me of some brilliant thinking by University of Michigan professor C.K. Prahalad on the co-creation of value among firms and their customers. You can read more about that in Optimize (see story, Co-creating Value With Your Customers).

Want to hear more from Scott McNealy? Check out The News Show for interviews and much more (June 22 edition) and (June 20 edition).

Stephanie Stahl
Editor-in-chief
[email protected]


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