application rationalization

APPLICATION RATIONALIZATION

By Carolyn Reid

CSR Consulting LLC

Application Portfolio Management

A thorough analysis of IT applications and systems in most organizations should reveal many

opportunities for savings and improved efficiencies. Application rationalization is a process in which

an organization’s IT assets are thoroughly reviewed and analyzed to develop a plan for

improvements across all systems. Application Portfolio Management (APM) is a process to maintain

and optimize the Portfolio of applications and systems.

The Business Drivers for Application Portfolio ManagementWhat are the issues and concerns addressed by Application Rationalization and Application Portfolio

Management? The table below shows the issues from the user, IT Management and software

management perspectives.

Figure 1: Issues Driving the Need for Application Rationalization and ongoing Application Portfolio analysis

Application rationalization looks at the business processes along with the IT systems, analyzing

procedural issues as well as system issues to determine what needs to be improved or fixed.

Takes too long to get informationData accuracy is suspectTechnology issues are affecting the efficiency of the business Processes. Cannot obtain reports needed in a timely manner.Manual data entry and re-entry is required.

IT Customer Complaints

The IT Asset inventory is too large to be maintained by the limited IT resources.The Business does not see the value added from IT investments - Results in IT not having sufficient funds to complete required improvements. Database Centralization is needed as data is entered in more than one place manually or kept in individual spreadsheets, or paper forms. Systems are not Retired prior to the point where they fail.

IT Management

Pains

Costs include unused licenses as the license tracking process is inefficient.Software is in use that is no longer supported by the vendor.Maintenance costs are out of control.Duplicate applications for the same purpose.Underutilized applications that should be eliminated.

Software Management

Issues

Application Rationalization

What Application Portfolio Management does for the businessApplication Portfolio Management extends the value of IT to the business by ensuring IT is making

an optimized contribution to the business. The improvements that result from the Application

Rationalization effort will be very visible to the business providing cost savings and providing

improved efficiency of business processes.

Application Rationalization optimizes the operation of the IT systems and applications, ensures data

accuracy and ensures compliance with regulations. From the business perspective, the analysis ties

IT to the business strategy and streamlines and improves processes.

How does Application Portfolio Management work?The following are critical to successful Application Portfolio Management and Application

Rationalization:

Clear and relevant IT strategic objectives that are tied to the business strategy,

Mutual (between IT and business) understanding of business value for the organization,

Buy-in to the analysis by the user community and the executive level of the organization.

InventoryThe first step in the process is to inventory all applications, systems and processes. Questions to be

answered for the entire application inventory include:

{ How are the applications being used and who uses them?

{ What processes does each application support?

{ What data is input and output to the application?

{ What is being spent to maintain, support, upgrade?

{ What is the business value of the application?

{ What strategic objectives does the application contribute to?

{ What are the technical requirements?

{ Determine level of customer satisfaction with the application or system.

{ Assess risk associated with the application or system.

{ Is the system managed and supported well?

Answers to these questions provide a clearer understanding of the state of the IT assets.

AnalysisApplication Portfolio Management requires thorough analysis of processes, operations, data and

systems to enable good decision making regarding plans for the IT systems and applications. The

relationship of each asset to process, function, capability and data input and output need to be

examined.

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As shown in the following diagram, tools used for the analysis include: Process flow diagrams, Entity

Relationship Diagrams for each application, Enterprise Architecture, functional and technical specs,

user lists, help desk data, application budget data, and IT asset data. Analysis of this information will

identify redundant capability, identify costly assets (high cost to maintain), determine underutilized

assets and highlight downtime issues. This analysis will be combined with the process analysis to

determine required activities to optimize the portfolio.

Figure 2: Input and Output for Application Portfolio Analysis Phase

With regard to process, the first questions to be answered: are the processes written and are they

accurate? Just like applications, processes need to be easy to use and follow. Feedback from those

who use the processes will determine which processes need re-engineering. A review of all

processes together will determine gaps, overlaps and areas where the process flow is not optimal.

This analysis will also determine opportunities for process automation.

Data accuracy and accessibility are essential to efficiency. Is data entered in more than one place?

This would indicate opportunities for integration of systems. Users need to confirm that data is easy

to find.

While data is gathered separately for applications and systems, processes and data, the information

must be cross referenced. It is important to look at the relationships between the processes,

applications and data. Which applications support which processes? What data is collected for each

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process? Are there labor intensive processes that can be automated? The Application Portfolio

analysis will determine improvements for processes, applications, database structure and data

collection. Decisions will be made to upgrade, sunset, combine and replace applications.

The analysis provided in application rationalization provides a great opportunity for IT to provide

business value in cost savings and improved efficiency. Establishment of an ongoing Application

Portfolio Management process ties IT to business as it clearly demonstrates the business value of

the IT strategic plan.

Figure 3: High Level Application Portfolio Management Process Steps

The diagram above shows the very basic steps of Application Portfolio Management. Once the

analysis is complete, recommendations are provided for all applications. Most of the

recommendations translate to projects which are then processed through the Portfolio Management

prioritization and onto the Project Management process. Application Portfolio Management is an

ongoing process requiring update to the inventory, information, analysis and recommendations as

capabilities are added and as applications are retired. In addition, the Application Portfolio must be

monitored and re-evaluated to ensure it is contributing to the business strategy.

An example of Application rationalization and establishment of Application Portfolio Management

can be seen in a case study in which the purpose was to develop an IT roadmap for a government

agency. First information/ data was collected. The applications were inventoried and each

application was assigned a Point of Contact as the person who “owned” the application. A survey

was prepared with a series of questions for the application owners. After reviewing the information

provided from the survey results, the team set up user meetings to discover issues from the user

community and discuss the survey findings. The surveys and discussions provided excellent

information for determining actions required to optimize the IT systems and applications. The

agency’s corporate strategies were tied to the initiatives developed from the analysis to prioritize

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Inventory Collect Information Analyze

Recommendations Projects Prioritize


projects required to complete the plan. This application rationalization resulted in a valuable IT

roadmap for the agency.

As this case shows, Application Portfolio Management can be used to develop a holistic IT solution.

The solution will provide continued cost savings and efficiency.

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