{"id":3016,"date":"2020-10-10T12:59:31","date_gmt":"2020-10-10T12:59:31","guid":{"rendered":"http:\/\/mylessonslearned.co\/?p=3016"},"modified":"2020-10-10T12:59:31","modified_gmt":"2020-10-10T12:59:31","slug":"when-consolidation-is-a-mistake","status":"publish","type":"post","link":"https:\/\/mylessonslearned.co\/?p=3016","title":{"rendered":"When Consolidation is A Mistake"},"content":{"rendered":"<p>I was lucky to learn this lesson early in my career. Many times, an organization will look for consolidation opportunities. Sometimes it makes a lot of sense to consolidate systems: there are cost savings involved, unit costs go down, you decrease the effort needed for change management&#8230;it&#8217;s the classic argument to create scale. A transaction is a transaction, right?\u00a0 So when is it a problem?<\/p>\n<p><!--more--><\/p>\n<p>I was asked to assess two transaction processing systems early in my career. Business A was lower volume, large dollar transaction amounts&#8230;.in the millions. Business B was much more volume, much lower dollar transaction amounts.\u00a0 Business A was eager for Business B&#8217;s volumes&#8230;.why? The unit cost allocation would be much lower with Business B&#8217;s volumes in the denominator and the business P&amp;L would improve.\u00a0 Business B was likely to be the surviving system, so they were for it as well.\u00a0 My recommendation?<\/p>\n<p><strong>No<\/strong>.\u00a0 Here&#8217;s why:<\/p>\n<ol>\n<li><strong>Pipeline capacity<\/strong>: The pipeline has to be able to process every transaction by a certain time. If you haven&#8217;t built a pipeline for the maximum amount of throughput at <em>peak times<\/em>, transactions will fail. This is the one time you do have to &#8220;build the church for Easter Sunday&#8221; . Even if you get this right&#8230;<\/li>\n<li><strong>Controls<\/strong>:\u00a0 there are always controls and queues for review&#8230;and they tend to need manual intervention: if they aren&#8217;t structured to handle large peaks, they will stop the flow.<\/li>\n<li><strong>Who makes the call to prioritize when there&#8217;s contention?<\/strong>\u00a0 You&#8217;ll have to prioritize which transactions go&#8230;but who decides?\u00a0 Try finding a senior person late in the day to make that call.<\/li>\n<li><strong>The impacted customer<\/strong>: often it makes sense to sacrifice the small dollar transactions. Except when it&#8217;s a little old lady who didn&#8217;t get her payment made and just wrote a letter to your CEO.<\/li>\n<li><strong>Change just got more complex<\/strong>: now you have two completely different constituencies fighting for the same dollars to get projects done. Two completely different business with different needs. What data is needed for what group, for which regulator?\u00a0 Which need is more important?<\/li>\n<\/ol>\n<p>Was my analysis unpopular? You bet.\u00a0 Was anyone willing to override it? Not so much.<\/p>\n<p>Before you decide to &#8220;cross the streams&#8221; (see the original Ghostbusters), make sure you know when a transaction is actually not just a transaction.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>I was lucky to learn this lesson early in my career. Many times, an organization will look for consolidation opportunities. Sometimes it makes a lot of sense to consolidate systems: there are cost savings involved, unit costs go down, you decrease the effort needed for change management&#8230;it&#8217;s the classic argument to create scale. A transaction [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":3023,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[38],"tags":[],"class_list":["post-3016","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-not-messing-up"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>When Consolidation is A Mistake - My Lessons Learned<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/mylessonslearned.co\/?p=3016\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"When Consolidation is A Mistake - My Lessons Learned\" \/>\n<meta property=\"og:description\" content=\"I was lucky to learn this lesson early in my career. Many times, an organization will look for consolidation opportunities. Sometimes it makes a lot of sense to consolidate systems: there are cost savings involved, unit costs go down, you decrease the effort needed for change management&#8230;it&#8217;s the classic argument to create scale. 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