When companies are looking to cut costs, application rationalization should be one of the first methods that they turn to. There are a set of list and guidelines to successfully carry out application rationalization.
What is Application Rationalization?
Application portfolio rationalization is the act of streamlining the existing application portfolio with an explicit goal of improving efficiency, reducing complexity, and lowering TCO through a myriad of processes.
Application rationalization can be the basis for other cost-saving endeavors, including:
- Software license optimization
- Application retirement
- Server optimization
- Project rationalization
- Data storage optimization
- Retiring aged and low-value applications
- Eliminating redundancies
- Standardizing common technology platforms.
Application rationalization also takes the form of specifically selecting your applications solely based on their positive effect on the business, balancing the value and cost of all existing proposed applications, and constantly monitoring application value in real time, and adjusting it accordingly.Application rationalization leaves your organization with a more vital, adaptive and scalable application landscape.
Why rationalize? The key benefits:
Application rationalization decreases complexity and lowers IT spend. Numerous studies show that eliminating inefficiencies in the IT landscape can uncover hundreds of millions of dollars in savings. Infosys, a global leader in technology services & consulting reports that application rationalization can lead to the cost-saving of more than US $2 million in an enterprise.
Best Practices for Application Rationalization
#1 – Compile a list of applications
Compile a list of past, present and future applications currently deployed on your system. This includes all offices in different continents.
#2 - Identify who owns the application
Identify the appropriate stakeholders (users) of the applications. During this session of discovery, it is often to find out that not many people are using certain applications. You may also find that some applications go totally unused.
#3 – Identify the life cycle of the application
Once technology becomes active, the value increases and risk goes down. At the end-of-life of a technology product, IT management has to deal with challenges such as integration issues, limited functionality, low service levels, lack of available skills, and missing support from vendors. Experience shows that executives are quite good at managing the risk at the early stage – at least problems here are not going to surprise most managers – but that they tend to underestimate or ignore the risks of end-of-life technology.
Figure 1 - Viewing application lifecycles in LeanIX dashboard.
#4 – Assess the usage of applications
Misused applications can be identified in an Application Rationalization endeavour. Often, applications are not used to their full potential, or can be easily exploited if used incorrectly.
#5 - Establish the application business value, its quality and its costs
Determine the total cost and business value of every single application – even the ones that are barely used. Compare this cost to the TCO of similar applications being used in the industry.
Its best to use business capabilities in this step. Business capabilities encapsulate what a business is doing right now and what it needs be doing in order to meet current and future challenges. They define “what” a business does, rather than “how” it does it .
Business capabilities help to identify redundancies in IT, to spot risks and to develop innovative technology solutions.
#6 - Create an Application Architecture Framework
A best practice is to develop an application architecture vision and an application architecture framework with principles and set rules. Define a set of business, information, and application concepts that your organization would like to see reflected long term.
#7 - Create an Application Architecture Framework
This is where LeanIX shines. Having an easily referenceable, tangible, visual display of the application landscape helps to keep a full overview of which parts of the organization are being fulfilled by the current application stack. One can also conclude the true relevance of each application.
#8 - Map the total concept onto the landscape
Business leaders, IT leaders, and EAs should gather to review the recommended actions of each application and formulate a best-fit roadmap for implementation going forward. Involving various business leaders while creating a supporting architecture will help to establish transparency and will properly align business to IT. Some consolidation endeavors will be easier to implement than others. It is best to consolidate applications within a business domain e.g. Human Resources, Financials, etc, to achieve a shared business model.
#9 - Make application rationalization a continuous process
Now that the portfolio is officially optimized, it is imperative to continually maintain the landscape. Onetime application rationalization endeavors might save the organization money in the beginning, but they lack the long-term value that continual application rationalization offers. Application rationalization improves the overall effectiveness of IT and ensures that the IT landscape is actively aligning to business goals and objectives.
The continual revisitation of the application portfolio is just as important as the previous steps.