The 74-year-old's five-year tenure ended on Wednesday morning with a mutual decision reached after Ireland's failure to reach the 2014 World Cup.
Holland felt the decision was right, but praised the veteran Italian's work while in the job.
"I think it is (right)," he said.
"We should pay tribute to what he achieved and he has done an excellent job.
"The style of play was what frustrated the Ireland supporters because he is pragmatic and defensive-minded.
"We have better players than the way we performed."
Holland, who won 49 caps for Ireland between 1999 and 2006, added: "Let's not feel sorry for him. He's 74 years of age and has had a great career. Look at his achievements, he's won everything in the game.
"But everything comes to an end."
Holland played primarily under Mick McCarthy while wearing the green shirt, and does not see a reason why the Ipswich manager could not make a return.
McCarthy, former Celtic and Sunderland boss Martin O'Neill and Leeds' Brian McDermott are among the early favourites.
"The big favourite is Martin O'Neill, he's the one everyone is talking about," Holland said.
"He's out of a job and very much in the running. Brian McDermott at Leeds has potential."
On McCarthy he added: "He's doing a good job at Ipswich and I'm not sure he'd be too keen, but why not?
"Mick had great success so why not? A number would fancy it because we've got some very good players."
- Sports & Recreation