Sunset or EOL a Software Product in a Cloud Environment
Not long ago a client said, “We recently acquired a company with a product that significantly overlaps our core solution. Based on the projected growth and typical customer profile, our board has asked that we identify a single platform product and sunset the other offering. However, we need to make a recommendation in 30 days and keep churn at or below 10% through the entire process.
Scenarios like this are increasingly disrupting product lifecycles, introducing a new flavor of product end-of-life (EOL) – particularly in modern enterprise software companies. In small- and mid-market enterprise software companies, a dramatic increase in M&A activity is accelerating product EOL scenarios, with the blending of two or more companies serving as a catalyst. Product professionals in established companies like SAP, Microsoft, or Adobe are affected by shifts to subscription business models and SaaS or SaaS-only product portfolios.
Emerging evidence indicates a paradigm shift in the management of product portfolios, challenging traditional notions of when to sunset a product, and the duration of the process. Several factors contribute to this shift:
Accelerating External Influences: External factors increasingly influence the product lifecycle, hastening the need for EOL decisions. These influences can arise from various sources, such as market trends, technological advancements, regulatory changes, or shifts in customer preferences. Acknowledging and adapting to these influences becomes crucial in determining the optimal timing for EOL.
Non-Routine Decision Making: EOL decisions no longer follow routine patterns but have substantial implications for the existing product portfolio and near-term financial outcomes. Organizations must recognize the transformative impact of these decisions on their business, necessitating a more thoughtful and strategic approach.
Precision Within Time Constraints: EOL decisions now demand precise and accurate assessment within a compressed timeframe. Given the dynamic nature of the business landscape, organizations must act swiftly and decisively to navigate the challenges associated with EOL. Balancing the need for precision with expedience is critical in this rapidly evolving environment.
Considering these developments, businesses must adapt their strategies and frameworks for managing product portfolios. By embracing a more Agile and responsive approach, organizations can effectively navigate the evolving landscape, make informed EOL decisions, and optimize their product offerings for sustained success.
Potential Risks of not implementing EOL best practices can pose several risks and challenges for the vendor and the users, including:
- Security: When software reaches its EOL, the vendor or developer will no longer provide security updates or patches. This leaves the software vulnerable to security threats like malware, viruses, and cyber attacks.
- Compliance: If the software is used in an industry with specific compliance regulations, not properly managing the EOL process can lead to compliance risks. For example, if a healthcare organization continues to use software that has reached its EOL and is no longer HIPAA compliant, the organization could face penalties and fines.
- Performance: As software becomes older and reaches its EOL, it may not be able to keep up with the demands of modern technology, leading to performance issues and potential downtime.
- Cost: As software reaches its EOL, it may become more expensive to maintain, as third-party support providers may charge higher fees to support an unsupported system.
- Reputation: If a vendor or developer does not properly manage the EOL process, it can damage their reputation and erode customer trust. Customers may lose faith in the vendor's ability to support their products and choose to switch to a competitor.
- Legal: If a vendor or developer fails to provide adequate notice of the EOL date and a user experiences losses or damages, the vendor may face legal risks, such as lawsuits or damages.
- Operational: Users who continue to use software that has reached EOL may experience operational risks, such as data loss, system failure, and decreased productivity.
- Compatibility: If a user fails to migrate to a new system before the EOL date, it may become increasingly difficult to integrate with other systems or software, resulting in compatibility risks.
In summary, not managing the EOL process well can pose several risks and challenges for the vendor and the users. Planning and managing the EOL process is essential to mitigate these risks and ensure a smooth transition for all stakeholders involved. Vendors and developers should consider these factors when developing EOL strategies to maximize the benefits and minimize the risks associated with the process.
A software's lifecycle begins when the software is produced and ends once it is not supported nor updated by the developer or software company that created it. Once the software reaches this point and is no longer patched, it is considered EOL and has finished its product lifecycle. Sunsetting or EOL is retiring a software product or service from active use. This can occur for various reasons, including obsolescence, lack of support, or a company’s strategic direction shift.
Implementing best practices can help ensure a smooth and successful transition when sunsetting a software product. Not managing the EOL process well can pose several risks and challenges for the vendor and the users. Planning and managing the EOL process is essential to mitigate these risks and ensure a smooth transition for all stakeholders involved.
What are the key distinctions in processes, contracts, support, and other planning items for SaaS versus perpetual license EOL for software?
The end-of-life process for a software product with a perpetual license and one with an SaaS subscription can differ due to the licensing model's nature and delivery method. While these are some key differences, it's important to note that the end-of-life process can still share common best practices, such as clear communication, providing documentation and resources, and maintaining customer support, regardless of the licensing model used. Companies can better position themselves during challenging times by adopting these key strategies.
Licensing and Ownership
Customers typically own the software and have the right to use it indefinitely. The focus is more on support and updates than terminating access.
Subscriptions involve a usage-based model where customers don't own the software but instead pay for ongoing access.SaaS subscriptions involve terminating access to the software, customer data, and related services.
Customers can continue using the software with limited support and updates. This period allows customers to plan their transition to newer versions or alternative solutions.
Usually involves a predefined termination date, and customers know that their access will cease after a certain point.
Support and Updates
Vendors may continue providing limited support, critical bug fixes, and security updates for a specified period beyond the end-of-life date.
The service provider maintains regular support and updates until the termination date, ensuring customers receive the latest features, bug fixes, and security patches during their subscription period.
Customers usually store their data locally, making migrating to alternative solutions easier.
SaaS subscriptions often involve data stored in the provider's infrastructure, necessitating mechanisms and support to help customers securely export or migrate their data to their desired destinations.
Includes upgrading to newer versions, transitioning to alternative products, or switching to a subscription-based model if available. Some vendors offer data migration services.
Customers may need to migrate their data to alternative platforms or switch to a different SaaS provider altogether.
Respecting contractual obligations with customers regardless of the licensing model is crucial. However, terms and conditions, such as termination clauses and refund policies, may vary between perpetual license software and SaaS subscriptions. Vendors must ensure compliance with the agreed-upon terms and communicate any changes or implications during the end-of-life process.
Using best practices in EOL for software or SaaS is crucial for ensuring a smooth and responsible transition. Implementing these practices helps minimize potential risks, ensure customer satisfaction, and maintain a positive reputation.
Using best practices for a software product's end-of-life can offer several benefits:
Security: By following best practices, vendors and developers can help ensure that users know the EOL date and have adequate time to migrate to a new system or application. This can reduce the risk of security vulnerabilities and attacks due to unsupported software.
Compliance: Best practices for EOL can help ensure that the vendor or developer complies with industry and regulatory standards, reducing the risk of penalties and fines for non-compliance.
Performance: By managing the EOL process effectively, vendors and developers can help ensure that users have a smooth transition to a new system or application, reducing the risk of performance issues and downtime.
Cost: Effective EOL management can help reduce the cost of maintaining unsupported software, as third-party support providers may charge higher fees to support an unsupported system.
Reputation: By following best practices for EOL, vendors, and developers can maintain a positive reputation and build customer trust. This can increase customer loyalty and reduce customers’ risk of switching to a competitor.
Innovation: By retiring outdated software, vendors and developers can focus their resources and efforts on developing new, innovative software that better meets the needs of their customers.
Sustainability: Retiring outdated software can help reduce the carbon footprint and energy consumption associated with maintaining legacy systems, contributing to sustainability efforts.
Resource Management: Effective EOL management can help vendors and developers optimize resource allocation and reduce the need for ongoing legacy software maintenance and support.
User Satisfaction: By providing users with ample notice of the EOL date and offering support during the transition process, vendors and developers can increase user satisfaction and loyalty.
Scalability: Retiring outdated software can help vendors and developers focus their resources on developing new, scalable solutions that can better meet the needs of a growing user base.
Using best practices in end-of-life for software or SaaS is crucial for ensuring a smooth and responsible transition. Implementing these practices helps minimize potential risks, ensure customer satisfaction, and maintain a positive reputation. In summary, following best practices for ending a software product's life can offer several benefits, including improved security, compliance, performance, cost-effectiveness, reputation, and innovation.
Sunsetting or EOL – 10 Best Practices
By following established EOL guidelines, companies can effectively communicate with their customers about the EOL process, including timelines, migration options, and data retention policies. Using a standard method like a playbook and an EOL roadmap is useful, as it removes the uncertainty for those engaged in the process, especially support teams that will form the first line of communication with customers. The goal is to provide a path for customers to end their reliance on a product that helps them do their job while minimizing the impact on their business operation.
A proactive approach allows customers to plan, make necessary adjustments, and seamlessly transition to alternative solutions. Additionally, adhering to best practices demonstrates a commitment to customer centricity, fosters trust, and upholds professional standards, ultimately contributing to long-term success in the software industry.
Changing your approach to EOL products and services is critical to surviving in a mature market. By refocusing and considering your customer’s needs, you can take the necessary steps to set your company up to get past the slowing market demand and stabilize in 2023, improve in 2024, and thrive in 2025.
Related Publications and Deliverables:
Optimize Software Pricing in a Volatile Competitive Market – Product leaders must price products based on a deep understanding of the buyer price/value equation and alignment with financial and competitive pricing strategies.
Get Started with Customer Advocacy – Customer success leaders must reposition their CA program around growth; recognizing that customer advocacy is a strategic growth initiative is necessary to succeed in today’s competitive market.
Define the Role of Project Management in Agile and Product-Centric Delivery – The activities in this research will guide you through clarifying how you want to talk about projects and products, aligning project management and agility, specifying the different actions for project management, and identifying key differences with funding of products instead of projects.
Product Delivery Strategy Template – Describe your product families and hierarchies and their alignment with the organization's objectives. Showcase the pain points, gaps, and opportunities of your current product management and delivery practices. Outline the key initiatives to achieve your product delivery target state.
- "End-of-Life Software Best Practices." Carnegie Mellon University's Software Engineering Institute, 2018
- "Perpetual Software License: Advantages and Disadvantages." Bright Hub Project Management, n.d.
- "SaaS Subscription Models: Advantages and Disadvantages." Investopedia, n.d.
- Smith, Mike. “Taking a look at the End-of-Life Phase.” Pragmatic Resource Institute, 2021.
SoftwareReviews helps technology providers systematically build more effective marketing, product, and sales processes to grow and scale their organizations.
© 1997-2023 SoftwareReviews. SoftwareReviews is a division of Info-Tech Research Group Inc. All rights reserved.