Fighting Rising IT Costs with Application Portfolio Rationalization

Jul 30th 2013 | Posted by Craig Bickel

IT budgets today typically include a large amount of Application costs.  Acquisitions, change in business strategies, business growth and new demand for IT services have contributed to significant growth in application portfolios.  Support needs to grow with the portfolio as new solutions are added and the overall complexity and risks increase.

This situation leads to two key challenges for IT and the Business:

  1. Rising costs - while most organizations believe they are spending on highest valued opportunities, this is rarely the case.  As the portfolio increases, spending gets spread across too many priorities and very few understand the true costs of each application.  In addition, complex infrastructure supporting applications are often shared across multiple solutions which further complicates the true costs. 
  2. Outdated Applications - companies rarely initiate programs to simplify or retire applications.  Why? It is hard work and usually means that one organization may have to give something up for the companies greater good.  However, just like life itself, applications have a life cycle or beginning and end.  A burning platform can arise as vendors discontinue support for applications, hardware becomes obsolete, and organizations lose specialized resources that maintain these applications. 

It is imperative that organizations adopt an Application Portfolio Management (APM) process to align their portfolio with business, strategic and technology priorities.

  • One of the best places to start an APM program is to conduct an application rationalization project.  This project focuses on building or enhancing an existing inventory of applications, but more importantly it establishes a framework for classifying business value and understanding application assets. 
  • During this process, applications are scored and ranked along with an initial set of issues and opportunities.    The ranking provides input to a strategic roadmap of which applications to invest, promote, retire, or enhance in some form (migrate, renovate, etc.)  in an effort to reduce complexity and focus resources on new capabilities.

An application portfolio rationalization forms the basis of an organizations application strategy and governance process that can drive business and IT improvement for years to come. 

For further reading click here: Application Assessment – Pharmacy Management System

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