Seven Steps for a Successful Applications Rationalization Initiative

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Over the years, organizations tend to acquire more and more applications, usually for good business reasons. However, they often don't have the discipline to remove older, obsolete, or duplicate applications - even when the applications are inflexible and unable to adapt quickly enough to changing business conditions. These older applications generally run on inflexible legacy systems and while their core functions are essential to running the business, they can be a major drag at the same time.

All too often, enterprises' applications portfolios are out-of-control, forcing them to waste previous resources supporting technology that has little or no business value.

Today, approximately 70% of all application costs are spent on maintenance and support. This "keep-the-lights-on" spending saps resources that could otherwise be used to innovate and help grow the business. In addition, many IT organizations are not even aware of all the applications running in the enterprise. They do not have a basic inventory or know how many instances of each product they own. To top it off, many do not know the relationship between applications and the supporting infrastructure. 

Applications rationalization is the first and most critical step in transforming IT environments to help drive innovation. Applications rationalization helps enterprises fully understand their applications portfolio and create an applications transformation roadmap, along with its supporting business case. This roadmap is then used to execute the transformation journey.

There are many benefits to rationalizing the applications portfolio. Conducting a complete inventory of applications enables companies to reduce duplicate applications and redundant capabilities. By reducing the number of applications managed and reducing the complexity of individual applications through appropriate modernization projects, agility is improved.  As a result, IT can free up time and resources to focus on innovation, enhance competitiveness in the market, keep up with the changing needs of customers and increase productivity.

Many IT organizations are making transformation plans with a new technology refresh cycle for moving to virtualization technology, to converged infrastructure, or even to cloud. These technology strategies will be more effective if first consideration is given to the applications that run on them through a rationalization initiative. For example, to take advantage of a cloud strategy, IT organizations need to know if their applications are even capable of being run securely in the cloud. They also need to know if the business value provided by an application is worth the investment to move it to the cloud and if the application should be modernized or replaced to support the cloud strategy.

While many strategic IT decisions tend to be about new technology, the benefits of moving to new technologies will be maximized by considering what can and should be done with the applications and infrastructure that are already in place.

Forward-looking organizations implement applications rationalization initiatives to help tame application sprawl. For an independent, unbiased assessment of the application inventory, costs, resources, and value, organizations should consider partnering with an expert applications services provider. This will enable a more objective evaluation of the applications portfolio with a view that is not hampered by internal employees trying to protect their turf.

Following are the steps for a successful rationalization initiative:

1. Map out the applications portfolio-Gather data throughout the organization to build a well-defined, complete, accurate, and vetted inventory of applications. This inventory includes IT owners for each application.

2. Determine the business alignment of each application-Map each application in the portfolio to business processes and to locations of use. This comprehensive mapping exposes redundancies and identifies opportunities for consolidation.

3. Determine the true cost of each application-Determine the real cost of each application in the portfolio, including costs such as infrastructure and operations (internal IT costs or external services), licenses, licensed software support, direct application support (internal IT employees or external staff), applications break/fix support, enhancements, and smaller changes.

4. Align cost and business value-Break down the application costs by the business functions they support to understand how much of the overall applications budget is supporting HR, manufacturing, etc.

5. Analyze the technical and functional quality of each application-Determine the "business value" by combining the functional quality and technical quality of each application.

First, survey the business users of applications to determine functional quality - how well is each application meeting the business needs for a particular business process at a particular location. Functional quality includes factors such as ease of use, data currency, integration, criticality of an application to the business process, and whether the application is used to satisfy a legal requirement.

Next, survey IT technical support staff to determine how well each application meets expectations for technical standards and practices such as reliability, scalability, interface complexity, data integrity, and support risk. This analysis helps determine where there is opportunity for change.

6. Create a target landscape and road map-Create a plan to consolidate and simplify the applications portfolio to reduce redundancies, improve effectiveness, and save on support costs. These initiatives should focus on improving both technical and functional quality, reducing annual support costs, eliminating redundancies, and filling possible gaps. The plan should also include a roadmap to get to the desired state.

7. Develop the business case-Develop a business case to demonstrate the business and financial value of transforming the applications portfolio in order to gain buy-in from the rest of the organization. The business case shows the impact on efficiency and effectiveness of business processes as well as the time it will take to break even on the initiative cost.

By following the roadmap, enterprises can reduce their total number of applications as well as the total inventory of infrastructure and management resources used to support them. They will gain a clear, unbiased understanding of their total applications inventory, applications related costs, and the business value of their applications. This leads to a more agile, Instant-On enterprise that can stay ahead of the ever-changing business landscape.

About the Authors:

Craig Buzan is managing consultant, Applications Services, HP Enterprise Services, and Larry Acklin is product marketing manager, Applications Services, HP Enterprise Services.