Application Portfolio Rationalization: How IT Simplification and Standardization Ensure Business Growth

The business operations and IT budgets of most large organizations are still managed in silos. As a result, organizations are procuring and maintaining multiple systems with similar functionalities on diverse technology platforms. In this challenging environment, IT has to operate in a more agile, robust and cost-effective manner to address the multi-directional business growth demands.

While IT teams are working hard to deliver business results with their legacy platforms, business demands change at a very fast rate. Peer pressure along with constant market demands through multi-channel operations, customer self-service portals and mobility services have resulted in significant changes in business operations, as compared to a decade ago. Technology advancement has added further challenges to the mix as newer IT solution areas like cloud, Big Data, analytics, mobility and social media are driving businesses to transform themselves in order to increase revenue and retain customers.

Application Portfolio Rationalization
Application Portfolio Rationalization (APR) is a systematic and informed approach to assess and optimize the application landscape in order to address certain transformational business demands or meet certain strategic IT objectives like lowering TCO, standardizing technology, reducing complexity and improving risk control and information system compliance.

The key steps of an APR exercise would include the following:

  • Deciding on the assessment themes: An APR exercise needs to start with identifying the goals of the APR exercise, the business and IT benefits envisaged and the corresponding metrics that will need to be measured and monitored to ensure realization of the same. It is these themes that would drive the “what” and “how” factor of the APR exercise. The result of this step would be decisions on the key assessment dimensions and corresponding attributes, the priorities and the roadmap guidelines. These concepts are further explained in the following sections.
  • Quantitative and qualitative baselining of the portfolio state: Based on the transformation objectives, the requisite data fields are finalized for assessment. Data collection is one of the most important activities of the whole application rationalization exercise. It is essential to identify the appropriate data sources and assemble both fact-based data and subjective information (like user perception) to accurately measure the health of the overall application portfolio and identify the target application dispositions. Portfolio data is captured using tools and templates. Key stakeholders like business liaisons, application owners, the application IT service management team and enterprise architects get involved though interviews and workshops to share their perspectives. The challenges in data collection include multi-geo operations, lack of application ownership, lack of application information readiness and availability, and stakeholder acceptance of the overall transformation story. Overcoming these challenges is critical for the success of an APR initiative; we discuss them more in detail later in this paper.
  • Assessment of baseline information: Once the application portfolio data is collected and validated, the same needs to be analyzed using a comprehensive framework. The framework should be nimble and robust enough to be able to be customized according to enterprise level priorities and objectives of APR. During this phase, each application will be scored for core value and fitment from business and IT perspectives, IT risks in its continued operation and cost effectiveness in present state. This activity gives us a profiled and categorized portfolio based on the application scoring.
  • Decision analysis: This is the decision-making process, which makes deterministic recommendations, amongst alternatives, on portfolio dispositions. The assessment outcome is further assessed to ensure alignment with enterprise goals, enterprise strategies and IT principles, and final recommendations are made. At the end of the step, applications are categorized under the relevant recommendation buckets like retirement, consolidation, enhancement, migration, re-platforming, and so on.

APR enables a multitude of benefits to be realized across different levels within the organizations:

  • Business level: With system homogeneity comes process level standardization, leading to reduced complexity, improved quality of services and greater agility. This helps businesses maintain focus on growth and control and receive accurate, meaningful, consistent and timely information for improved and educated decision making.
  • Resources: Simplified and standardized IT operations need reduced or optimized skills and resources. This allows redeployment of skills, reduced head counts and overall improvement in resource utilization.
  • IT landscape: Standardized infrastructure enables faster upgrades and scalable platforms while bringing in easier support and maintenance capability.

It is always a CIO’s top priority to operate with standardized and simplified application architecture, with the optimized agility, robustness and flexibility to support not only present business operations and demands but also future growth plans. In order to reach that optimized state, however, one needs to take a systematic and informed path through APR. This process is required to simplify the existing application landscape and create a modernized state of IT that can be used as the benchmark to support future business and IT demands.

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