Technology migration refers to “the movement of customers from one (old) technological generation to another (new), with the intention of not returning to the old generation.” Attempting to trigger customers to migrate can cause severe migraines for managers who aim to successfully complete such a migration.
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Let's look for a minute at the position a Microsoft manager is in when he tries to migrate customers to the newest Windows generation. Here are some considerations he or she may make.
- First, we do not want to upset customers even more (difficulty of migration, price, etc.) as we have several class action suits against us already, and our public image is not great. Instead, let's ask how we can help them.
- Second, we are dependent for our revenue stream on migration, thus we go to hell if we do not convince customers to upgrade to a new generation.
- Third, if we keep all these old versions alive, that will kill our efficiency in the source code (typically backward compatibility between generations leads to excessive amounts of code as one is built on top of the other). In addition, it will cost a bundle. So, should we kill support to older generations?
- Fourth, how can we convince external application providers to also start programming for the new generation?
- Finally—and this must be a truly scary feeling—“migration moves” can make a difference of multiple billion dollars for Microsoft, and Bill Gates himself is on top of your case.
Feel the migration migraines coming?
Now what are your options? What are the things you must consider when weighing those options?
Let's first concede that we are not going to completely solve all these very complex issues that Microsoft faces (or, that is to say, not without charging a hefty consulting fee). But we certainly can raise some initial issues to consider for people that are new to this game and offer some advice.
You have the following two options:
- Kill or sustain old technology. You can kill or sustain the old generation technology and any position between these two (e.g., killing support to old generation or killing only sales).
- Offer migration assistance. You can assist customers in migration, through converters, support centers, and trade-in programs, or you can choose not to assist them.
The following factors should guide your decision-making:
- How frequently do you release new generations? If you frequently release new generations, there is a fair chance that customers already complain about constant migration pains. If this is the case, the wise thing to do is to not kill old versions very aggressively. If you do, customers will in the end punish you for doing so and will become nomads without loyalty to any of your product generations. Some customers may also prefer to always skip one generation. Make it possible for them to do so. The way to get your customers to migrate to the new generation in this case is through an overload of assistance such as buyback programs on old versions, cheap upgrade programs, hotlines and so on.
- Do customers really need your product? Do you have competitors? If you have no competitors and customers really need your product, it is easier to “abuse” customers, to kill old generation products and send customers to new products without any migration assistance. However, even in this position your power is not infinite, so do not push it too far! At some point, you may trigger the government to regulate or the administration to prosecute (as the Microsoft case clearly illustrates).
- Are your customers knowledgeable and is your new technology really very different from the old? Knowledgeable customers will generally need less migration assistance, but they also desire alternative choices. Thus, pushing them hard to migrate to a new version may definitely backfire. Test their readiness to adopt prior to killing the old generation. Assistance through hotlines or converters may not be really necessary, but you may think of providing them more general training on added features of the new technology to stress its added value. Whether your new technology is really different from the old will affect your migration decisions through its effect on the customer's knowledge (if it is really new, most customers will not have substantial knowledge).
- Are there companies that make applications for your product? If other companies make applications or other complementary devices for your product, you must involve them in your strategic migration decisions. Hear what they want and how they can make money. Without their help, you are not going to make it, and they have to move first to the next generation before your customers will. Think how you can make transition easy for them. A specific way to do this is see if you are able to subsidize their development costs—e.g. through a licensing agreement based on number of users—to make up for the low revenues the new generation will initially generate.
A Word on Microsoft
It is clear that if we were the next business development director on Windows, we would not be too aggressive in killing the old generation (probably killing sales, but not applications and support) and would up our efforts in migration assistance very significantly (through hotlines, cheap upgrade systems).
The step that Microsoft took in philosophy—that people would be customers of Microsoft and pay a monthly fee, without really buying one software version—is definitely one way to guarantee smooth migration. So they may be doing a good job and can save on expensive consulting fees.
Would you (or someone you know) like to know how your migration strategy compares to others? We are conducting a research project among hundreds of high-tech companies on migration strategies and will send those of you who take the survey a detailed benchmark report on how your migration strategy stacks up. Click here to participate in this survey.
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