Sunsetting a product — the right way
A product manager is often called CEO of the product and very rightly so. PM is responsible for the building such products for customer that can offer them superior and unique benefits compared to similar products available in the market. He’s the one to decide how the product aligns with company goals, how to communicate the value to customers, how the product look and feel should be and see to it that user experience with product is best. He’s also directly or indirectly responsible for the P&L of the product. While these are the responsibilities which usually are known and PM has keen focus on, there’s an additional responsibility usually not thought of that the Product Manager should bear. That’s the responsibility to Sunset the product.
Every technology and every product, even a software has a shelf life. In the ever changing face of technological landscape, the shelf life of software products is also decreasing and the good PM should be aware of it and should have an upfront strategy and plan for.
The whole sun-setting exercise can be divided broadly into:
1) When to sunset
2) How to sunset
We will look at both of these in detail
When to sunset
There are multiple factors which need to be considered if and when the product has to be sunset. The factors can be financial or technological. Let’s consider them one by one
The first step would be to check if the product is still generating revenue for company or not. Now, consider the product as a separate entity and figure out the maintenance, R&D and support cost for the product. If the revenue the product is generating is not able to meet the expenses to support it, then tick one box. One should start considering sun-setting this product.
Product Market Fit
The technology trends are changing at a much faster pace now than they were few decades back. So the customer needs are also changing equally fast. The product which was built few years back for the then market, may not meet all the needs today. Having a conversation with the customers and then getting their feedback on their needs may help mapping out how much of their needs the product can meet in its current form and with current feature set.
Product Enhancement Potential
Looking at the product architecture and the changing customer needs, how feasible is it to enhance the current product to meet the new requirements. If it’s feasible to make the changes and accommodate new features at low cost, then the decision to sunset can be deferred provided the changes and enhancements will result into better revenues and meet the margin expectations.
Products are usually built using the best available tools and languages at a given point in time. Sometimes the underlying technology can be Open source or the technology is not evolving fast to meet the market needs. Maintaining product line built on such technology can be suicidal. Take for example the case of Nokia. Symbian was OS of choice for several mobile manufacturing companies in first decade. However, with Android and IOS in picture, the Symbian OS development started faltering. The only manufacturer who decided to stick to the OS was Nokia and designed new product lines around it. This proved fatal for Nokia. So it’s important to understand the technology trends and revamp the product line on latest technologies. If the product is built using a technology which is not evolving fast, it may be good idea to consider rebuilding the product lineup and retire the existing ones.
The decision to sunset the product should consider a combination of the above factors. Paramount is the ability of the product to make enough revenue to meet the margin expectations of the company. The remaining factors can be early indicators to start planning for sunset.
How to sunset
Now that the PM has decided that the current product in no way is going to meet the expectations of customers and the margin expectations of the company, then he should start considering sunset. This requires elaborate planning which involves multiple stakeholders both internal and external. Following are the action items one may need to consider:
How many customers will be impacted
This needs to consider both existing customers and the ones who are about to sign the deal. In all likelihood company is not letting go of the new revenue opportunities even if they intend to sunset the product in 2–3 years’ time-frame. So both existing and the potential new customers also need to be considered.
What’s the timeline to sunset
This depends on multiple factors again:
i) Type of product: Large enterprise product with complex integration or a simple SaaS product. The amount of time customer would need to switch to an alternative product will vary depending on nature of the product
ii) The integration costs: If the integration costs to the current product is high, typically customers would see the ROI and only when they have got the desired ROI, they would move to the new product.
iii) When will new alternative product be made available and the time taken to migrate from current product to the new product
The communication strategy
The communication strategy should consider all the stakeholders, both internal and external. This includes Marketing and Sales, Channel Partners, Customers, Development and Support teams. For each of these, there should be dedicated communication plan.
No company would want bad reputation when they want to sunset a product. Hence a clear communication to customer suggesting how this move will help them, what are their alternatives and what would be the migration strategy and where the company is going to help them move to the new product. They have to be taken into confidence and at the same time they should be assured that this decision is not going to have any negative impact on their business and is only for their own good.
Marketing and Sales
The communication plan to marketing and sales team should clearly emphasize the customers who will be impacted and should capture what sales and marketing collateral need to be updated. This would help them planning their activities and optimize their efforts.
Development and Support
These team needs to understand the rationale behind the decision and how this change aligns with organizations goals. They need to understand how this change impacts them and what the plan for transition is. They may need an understanding of how the product roadmap will look like until the product is shutdown.
The channel partners are key to success of the company. They should be apprised of the changes in strategy and the rationale behind it. They should be treated as customers and their concerns should be addressed just the way it’s planned for customers.
Roadmap for next few years
Customer should be made aware of the roadmap plan for the next 2–3 years and any serious concerns should be accommodated. This gives a fair idea to the customer about any impact this can have on their business. If they see any impacts, they can flag it and PM should plan to accommodate and address those concerns in the roadmap.
Above steps will help the product manager plan the sunset well and help transition every stakeholder to the new product line.
The decision and process to sunset a product is as comprehensive as developing a new product hence this activity needs to be planned meticulously and should involve all the stakeholders from planning to implementation stage. If done right, the customers still stick with the company and will be happy to upgrade to new product when it’s made available.
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