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Why Do Companies Overlook Application Rationalization?

Posted by Lesa Moné on 21 November 2017
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We are living in the era of technology. Smartphones power the world around us, giving us tips of where to eat in new cities, keeping us connected with family members on different continents, and keeping a steady beat of music in our ears as we go throughout the day.

In business, technology has rewritten entire business models, opened the door to expansion into new markets, and curated a customer-first shared economy. In keeping up with the rapid changes, organizations have added many applications to enable them to work faster and smarter. As business spreads quickly, enterprises suddenly need separate applications for CRM, accounting, supply chain management, chatbots, enterprise architecture, content management, identity management, business process management, and more. 

Sometimes different user groups test out different applications. After testing, they realize that the software doesn’t offer what they need, so they move on to the next, then the next, and the next. Apply this testing to various needs and various user groups, and you’re left with an excessive amount of applications deployed simultaneously – many are not even being utilized. 

Most IT teams are not even aware of how many applications are deployed. According to a recent study by Capgemini, 48% of CIOs believe that there are more applications in their portfolio than the business actually requires. 

Why rationalize applications?

Without active application portfolio management, organizations run the risk of application sprawl. Application sprawl is the unmanageable growth of an IT system to include more applications. IT Systems that experience application sprawl suffer from inefficiency due to poor design, lethargy, redundancies, and over exhausted resources.  This could directly impede an organization’s ability to stay competitive and innovative.

While simultaneously working on multiple revenue-generating projects, it can be difficult to find the time and opportunity to optimize the application stack. But, organizing your company’s software portfolio should be a top priority, as it saves money and resources. Currently, 75-80% of IT budgets are spent on operating and managing applications.

LeanIX internal research indicates that large enterprises with over 1bn euro annual revenue have an average of 650 applications deployed at one time. The 10% largest have an average of a staggering 3,400. Not all of these applications are mission critical. In order to stay abreast of current innovative trends, provide first-class customer service, reduce cost, and scale globally, enterprises would benefit from having a tightly integrated application landscape.

 

What goes into application rationalization?

The goal of application rationalization is to free your organization from unnecessary and unused tools. Unfortunately, this isn’t as easy as a round of spring cleaning on a warm Sunday morning. During spring cleaning, it is obvious which items should go – the broken stereo that has been collecting dust for the last 8 months, the half-eaten slice of birthday cake that is growing mold in the fridge, and the stray puzzle pieces can all be tossed into the trash with no worries. The same goes for unused applications with absolutely no logins or activity for the last year.
 

The tricky part comes to rationalizing the barely beneficial items. The pants you’d like to fit in one day, but judging by how your diet and exercise regimen looks, you most likely won’t fit in them anytime soon. Old light bulbs, paint cans, and boxes of old medicine. Someone may want these in the future, so why should you throw them out now?

The same indecisiveness goes with applications. It becomes difficult to decide which to keep and which to retire when there’s always a reason to consider keeping them.

 

Now that you realize the importance, jump over to this blog post to learn the steps to application rationalization.

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