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Sagitec Blog

Obsolescence: How It Threatens Your Pension Administration System

Today’s pace of technological advancement is fast. Scary fast. For the IT professional driving the technological equivalent of a Ford Pinto, every road is an entrance to the freeway and one look in the mirror is enough to send shivers down the spine. Obsolescence has a lead foot. It's got the pedal to the metal (so to speak) and it's bearing down on your legacy system like a Mack truck with the high beams on.

You can't outrun obsolescence. But you may be able to outsmart it. First, you'll need to know what you're dealing with. As Sun Tzu said in the Art of War, “Know yourself…know your enemy…and fight a hundred battles without danger.”  

Defining the Problem: Two Types of Obsolescence

Obsolescence is the biggest threat to the long-term viability of your pension administration system. And there are two distinct types: technical and functional obsolescence.

Technical Obsolescence

Technical obsolescence occurs when existing products and technologies are outperformed or replaced by newer counterparts; or, alternately, when they are marooned by companies who cease to support them. This is the kind of obsolescence that gives you serious tech envy. (You’ve experienced this. Remember when you bought the first-gen iPad and then the very next year they offered a slimmer, sexier design with FaceTime capability? You couldn’t even look at your old iPad anymore, could you?)

All kidding aside, it can be a serious issue trying to keep up with the Jones’. Especially if upgrading isn’t an option. Incorporating new products and technologies into an existing system can be costly, time-consuming, and challenging. Even if new pieces are successfully incorporated in one area, they may cause unforeseen consequences in others. This can lead to performance loss, system downtime, and  serious headaches for your IT staff.


Functional Obsolescence

Functional obsolescence, on the other hand, occurs when products or technologies can no longer perform the duties required of them. Let’s look at an example. More and more people nowadays are using the internet, and not just to search for videos of kittens but for other important stuff like banking or managing their pension benefits. Suddenly, the market demands online self-service capabilities. Does your system provide that? If not, you’ve got a whole lot of upset retirees of your hands. (And let’s just say those people want zero obstacles to a stress-free retirement, if you know what I mean.)

This problem is further compounded by the fact that when outdated versions or products suffer problems, there is nobody around to fix it. Sure, you may have a system that’s served you well over the last 20 years, cobbled together piece-by-piece, circuit board-by-circuit board, by your one-man IT superstar (let’s call him ‘Gus’). But what happens when Gus retires and goes off to fulfill his dream of wrestling Kodiaks in the Siberian tundra? And meanwhile your system breaks down? You’ve got a Frankenstein's monster on your hands and no doctor to revive it. You'll wonder, "Is it alive...ALIVE?!" Nope. It's dead. DEAD!

What to Do About It?

OK, now that we know what we’re dealing with, is there anything we can do about it? Well, obviously there are strategies. Some are better than others.

If you have a tree growing in your back yard that sprouts hundred-dollar bills instead of leaves then you might opt to rip and replace your entire IT investment every other year or so. That could work. But, if you DON’T have one of those trees that grows money--and I'm guessing you don't--then you might want to think about investing in technology that was designed with future growth and change in mind. An evolutionary software framework, for instance.

But's that's a discussion for another day. In the near future, we'll be talking about evolutionary software and how it can help extend the life of your IT.

Until then, please share with us your horror stories about technical or functional obsolescence. Were you able to respond to the threat? How so?


Our benefit administration solutions are designed to avoid both types of obsolensence. Learn more about our solution offerings.

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About Sagitec Solutions:

Sagitec Solutions, LLC designs and delivers tailor-made pension, provident fund, and unemployment insurance software solutions to clients of all sizes. Sagitec has the expertise necessary to help their clients achieve strategic business objectives, enhance service offerings, and lower operating costs. Find further information by visiting http://www.sagitec.com. For more information, contact Rick Deshler at (651) 335-3406 or at rick.deshler@Sagitec.com.

Topics: Managing Risk, IT Projects