Rationalize your application portfolio for the digital age

The current technology landscape is witnessing an exponential rise in the number of IT applications being used in organizations. This is solely due to the rapid growth of NextGen technologies such as the Internet of Things, Big Data, and Analytics—utilized by almost all industry high-performers. These technologies have opened up a new array of application operations coupled with highly customer-focused services. That said however, one can hardly deny the fact that business growth coupled with creation of functional silos often leads to a disparate IT environment, with a lot of redundancies and overlaps in the IT application portfolio.

The major issue that cripples most business leaders is how to minimize these redundancies and overlaps in the application portfolio? Finding a solution to this can help organizations streamline their application operations.

While a holistic application portfolio assessment plays a vital role in removing redundancies, organizations often underestimate the importance of a portfolio rationalization assessment as it complicates various business and functional units in the short run. In fact, rationalization assessments can be beneficial in the long-run; as it optimizes the IT TCO and stages an application environment that is more simplified, modernized, integrated and focused towards future business goals.

How can organizations initiate a successful application portfolio assessment?

After understanding the overall business capability of an application environment, it is crucial to consider the different parameters in an assessment. The assessment will translate into benefits only if all these parameters are considered while determining the stability and performance of applications.

Mentioned below are few of them.

1. Business Focus & Acceptability

This variable covers aspects such as:

• The level at which the application meets its predefined business capabilities
• The ability to support future business needs
• The ability to understand and react correctly to abnormal inputs
• The acceptability of the outputs
• The utilization of the application across organizations worldwide

​2. Technical Maturity

Technical maturity determines how well an application is aligned to the IT standards and architecture of an organization. It also involves the maturity and the obsolescence-level of the underlying technology, and the efficiency achieved in its processing and execution.

3. Costs

The costs associated with the application typically covers the total application lifecycle costs; including the licensing, maintenance, as well as the allocated costs for the underlying hardware and software components.

4. Operational Risks

Operational risks involve considering factors such as the management complexities associated with the application, the degree of scalability provided, and the ease of application support.

Each of these should be decided based on characteristics such as the competitiveness of the industry, the organization’s risk-appetite, the volatility and life-span of the products/services offered.

5. Eliminating Errors from the Biases

When it comes to rationalizing an application portfolio, a wide array of biases must be considered; one of them being the evaluator bias. Organizations should make sure that the rationalization team do not include any of the application stakeholders.

The second type of bias is the rating bias. When an application owner is asked to rate his/her application on various parameters, he/she would normally tend to overrate the application. So, as a better approach, the questions should be more data-centric, such as “How many incidents in a month does this application face?” The evaluating team should then take the response data and normalize it across the application portfolio to arrive at a certain rating.

6. Categorizing the Applications & Formulating an Optimization Strategy

The final step in rationalization assessment is categorizing different applications according to their need for action—in order to build a stringent application optimization strategy. Gartner suggests the grouping of applications into four categories: Tolerate, Invest, Migrate and Eliminate. This grouping is based on the business value contributed by the applications’, their technical efficiency and safety.

Once the applications are categorized, organizations can formulate a rationalization plan.

As organizations aim to create business opportunities – while reducing cost of operations – IT is undergoing a rapid transformation. According to the leading analysts, nearly 30-40% of an organization’s total IT costs emanates from the application environment. In such a situation, application portfolio rationalization has become crucial for organizations; as it creates an integrated IT landscape that addresses the growing business needs.