How to Begin Application Rationalization?

how to begin application rationalization

It’s a new year, a new decade, and quite probably you’ve already noted the new top down impetus to drive organizational efficiency throughout the business. However, while resolutions are all well and good, addressing the unrelenting pace of change, spiraling technology costs and total operational dependency on IT requires more than just a month of good intentions. Application rationalization helps reduce unnecessary costs across the IT estate, improve productivity and technology utilization and eliminate high-risk/non-compliant technologies. But application rationalization is an ongoing process which requires a defined set of objectives and preparatory steps.

Tactics for Identifying Rationalization Candidates

Applications that provide low value and are poorly aligned to strategy are the obvious candidates for rationalization. Typically, these applications lack obvious support for business capabilities, incurring high costs, while offering little value.

Similarly, applications which have a poor business or technical fit are also appropriate candidates for replacement and/or rationalization. Application fit analysis can be used to inform “TIME” designations – Gartner’s methodology for application strategy, an acronym for Tolerate, Invest, Migrate, or Eliminate. 

In carrying out these investigations, functional duplication will be uncovered, demanding answers to the following questions: Why should there be more than one application providing the same functionality? Is there a justification for this, or can the application be standardized?

The final approach to identifying rationalization candidates involves looking for quick wins. Consider the lifecycle and usage information. Can little used and old applications simply be retired early with minimal impact on the business?

Rationalization Considerations

So, having established a long list of candidates for rationalization, a deeper drill down is required to finalize which applications should be removed. Key considerations include:

Complexity: How heavily integrated to the rest of the portfolio is the application? The number of interfaces/integrations the application has may result in wider implications than first seem apparent.

Replacement / Business Impact: How would the impact of retiring an application affect its current users? Is this acceptable? Interviews with the application owner and business users can help assess real business impact.

Data Implications: The nature of the data processed by the application may pose additional implications for retiring it early. Its role in protecting or storing any sensitive data can have huge implications for the wider business.

Cost Savings: How much is actually saved by retiring a given application? Arguably, the most important consideration of all, but an application should obviously not be retired early if doing so fails to result in a meaningful cost saving to justify the effort. Indeed, in some instances, the cost of retirement may be more than the savings made.

Application Scoring

A detailed questionnaire addresses a number of criteria to assess both business and technical fit, with resulting scores (and appropriate weightings) used to determine an overall scoring metric for each category. While different application scoring questionnaires exist for this purpose – typically developed by various industry or governmental bodies, consulting companies, and individual organizations – they typically focus the following areas:

Business FitTechnical Fit
Functional quality: How well does the application fulfill its core purpose? Technology alignment: Is required technology for the application aligned to technology standards and direction? 
Usability: How easy is the application to use? Supportability: Is the application easy to support & maintain?  
Accessibility: Is the application available across the required platforms? Interoperability: Does the application work well with other systems? 
Utilization: Is the application utilized by the business?  Scalability: Is it easy to scale usage of the application up or down, as needs evolve? 
Performance: Does the application perform to the required standards? Life expectancy: Does the application have a reasonable lifecycle? 
Information quality: What is the integrity, usefulness and presentation of data?   

These assessment criteria comprise some commonly considered elements of application scoring. At Orbus Software we do not mandate a particular method, but provide guidance and examples based on our experience.

Ultimately, application rationalization affects the bottom line, and without it businesses would not be able to scale or operate efficiently. By following these steps and supporting your initiative with the appropriate tooling, your organization will be able to gain efficiency, lower cost and improve business processes. The perfect start to a new decade.