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DNP (Declining - Not Permitted Technology)

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I have worked with several financial services clients, including banks, insurance companies, and trading firms. One of their most vexing issues was dealing with DNP (declining - not permitted technology).  This is technology used in older but critical applications that, while once state of the art, are now considered dangerous because vendors no longer support it and/or have very few employees knowledgable to work on it.
 
While the application is fully functional and does its job, the DNP technology is frequently core to the application, meaning that the IT staff are not allowed to do any maintenance on it, for fear that the application might not even reboot.
 
Also, having an application with one piece of DNP technology frequently causes a spiraling effect that results in using other outdated technology.  For example, one banking client of mine had a bulk FX currency application that used an old EJB server that was DNP.  Because the vendor stopped upgrading this server years ago, the server could only connect to Oracle databases using older driver versions that Oracle no longer supported, thus leading to more risk. 
 
One of the strategic challenges that I have worked on is to decide whether to completely replace the application or if the application can be ported to non-DNP technology.
 
In different cases, I have recommended both options.  A big determinant is how well the application was developed.  If the developers followed best design principles and standardizations, then it should be possible to swap out the DNP technology.
 
Frequently, however, the DNP technology was implemented when the technology was "bleeding edge" - before standards were developed.  In those cases, the application interfaces with the DNP technology using customized programming, making it messy to port.
 
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Don't Let Tax Decisions Drive Your IT To The Cloud

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The latest thinking among CIOs and CFOs is to drive IT to managed cloud services in order to convert capital expenditures (CAPEX) into operational expenditures (OPEX).

OPEX spending has the advantage of being immediately deductible, while CAPEX has to be carried on the books and depreciated over time.

However, when it comes to business and investing, making decisions based on tax consequences is the equivalent of "playing not to lose" in sports.

For every tax dollar you save, you could be giving up a potential 5-10 dollars, simply by not considering a long term competitive IT strategy.

It might make sense, for example, to migrate routine, lower level IT functions to the cloud but, if all your systems are in the cloud, what differentiates you from any start-up who plunks down $100 at Amazon Services?

With so many competitors accessing cloud services, with the same performance, it might make sense for your company to retain your existing infrastructure to deliver critical functionality faster and more reliably.  This creates a competitive advantage, "a moat", that competitors can't easily offer.

As a strategy consultant, I always advise my clients to focus on the key question: "How can we increase the value we provide to our customers?"  If you continually increase your relevance and value to them, you won't be considered a commodity - you will be a trusted business partner.

Your internal tax treatment (CAPX vs. OPEX) has no value for them, but proprietary IT infrastructure  / operations that enable them to meet their objectives better and faster than cloud - only has a lot of value.

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