Application Portfolio Rationalization: Top Considerations for CIOs
5 Minutes Read
What do CIOs need the most to streamline their IT portfolio in today’s times? There are many answers. First is the dire need to cut operational costs in the novel economy, when businesses are still recovering from the ill-effects of the coronavirus pandemic. The second in line is to improve scalability and agility. Businesses should also mitigate cybersecurity risks and speed up their digital transformation efforts. Remember, accelerating digital business transformation has become the norm, and assessing the necessity and viability of an application helps an organization in staying competitive and innovative. As businesses move forward towards legacy application modernization, the ability to move with agility is mission-critical.
But how should business leaders rationalize redundant systems, modernize apps and capabilities, and get away with unnecessary dependencies? Keep reading to learn more.
Key Considerations to Rationalize Your Application Portfolio
Consideration #1 Eliminate Waste
As you begin with an application rationalization project, check for redundancies, and eliminate tools that your business does not need. Doing so will save your organization millions of dollars. While you discover redundant tools and systems that effectively do the same thing, their consolidation becomes critical. Instead of looking at the application, your IT team should review the business requirements employing a “bottom-up” process. The application under review should match your business needs. Applications that fail to match should be left to retire. It is a good practice to reduce your application portfolio, which ultimately leads to cost savings in support, purchasing, and infrastructure.
Digital business transformation initiatives demand you to strongly consider and kickstart these application rationalization programs. As you start your application rationalization program, create a catalog of the existing apps. Start the process of listing every app and some major information about each one before storing it in your documentation system. This exercise will result in mitigating the number of systems supported by your IT department and thus, the costs.
Consideration #2 Apply the Pareto Principle
While engaging in application portfolio rationalization, your IT team should deploy the 80/20 principle and figure out which 20% of applications play a key role in making 80% of your business functional. Some businesses have their IT teams conduct a methodical app and infrastructure stack assessment. A portfolio is developed for distinct business units, including engineering, sales, and manufacturing, as well as for the infrastructure stack that comprises of network, desktops, and storage.
Remember that all apps may seem important, but not all contribute the same towards your business top and bottom lines. Your IT team needs to prioritize spending on legacy application modernization, considering apps that help to fulfill your business requirements in the novel economy.
On the application front, the IT department of your organization should carry out technical and functional assessments. This helps to assess which applications are technically or functionally weak. Besides, look for apps and systems that demand immediate updates. The need for an update may arise to match the complexity and scale of your business, or because your vendor’s technical support is expiring soon or is no longer available.
Consideration #3 Decide What Should Stay
The application architect on your IT team is responsible for determining if your business has the right app for specific use cases and what changes IT should make to better support the business. Your apps should offer value to the business. Exercise more discipline when putting an app in place and capturing processes and ROI for future follow-ups. You should ascertain whether the investment paid off the way your IT team thought it would and how it brought added value. Besides, you must consider if you have the wrong system in place, or if there are any other issues to be determined.
IT looks at metrics, like how many users are on a system at present, the reasons they are using the system, and the locations for which the system is being used. It is recommended to discover apps that have 10 or more users at once and engages the user community at the same time. Ensure that your end-user community receives what they need.
The Process of Application Portfolio Rationalization in a Nutshell
Let the application steering group review the functionality of apps and check if your existing application portfolio meets your business needs.
Move as many apps to the cloud as you can, rather than continuing with on-premises installations.
Examine the business use case for your existing applications and assure that it aligns well with your overall tech strategy.
Let your application architect decide on buying new apps by employing the stage gating process. The IT department of your organization should consider the ROI and capture that as well as other things on your checklist.
Explore niche vendors possessing specific cloud functionality so that data flows freely amongst your connected systems.
Focus on not only shrinking your current application load but having the right portfolio to enable business functions.
Are you Ready to Revamp Your Application Portfolio?
Once you begin to revamp your application rationalization program, you should constantly invest in the roadmap of your business application portfolio. You need to comprehend well the effect of your application portfolio on your business. Note that allowing and enabling applications to multiply boosts your application costs, as well as related support and infrastructure costs.
Maintain an inventory of what you have and ensure it is categorized correctly. It is ideal to establish a governance process with the help of your application steering group as well as collaborate with the business and community stakeholders. Your stakeholders must understand to process of application portfolio rationalization and feel themselves to be a part of it.
Your IT department should be able to justify to your stakeholders that your business has the right apps delivering the maximum value, and not investing time on tools and systems that are not delivering any or much value. As you think about application rationalization and modernization, you should focus on the business result with an open mind. Measure benefits in terms of the amount of business or operating income impact the process has created.
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