What is application rationalization?
At the most basic level, application rationalization is precisely what it sounds like—justifying why your organization needs each of the applications it uses. In practice, there is a lot more to it. The process includes identifying and inventorying an organization’s application portfolio, analyzing costs and risks, and then determining what should be done with each app—remove, replace, retire, consolidate, or modernize. The result is a more efficient, cost-effective technology stack.
The rationalization process became prevalent in the early 2000s when the Internet became a key component of business operations. Organizations needed to rationalize each computing expense. As cloud computing and the “as-a-service” model dominate the current market, many CIOs and CISOs have returned to application rationalization to justify cloud spend.
There are several common use cases for rationalization for the modern enterprise:
- Mergers and acquisitions (M&As) – Blending, merging, or divesting the application portfolio of two companies is a comprehensive undertaking that requires a great deal of visibility.
- Deeply siloed organizations – A highly structured organization may not be fully aware of the redundancies present in its tech stack.
- Digital transformation projects – Companies migrating to various cloud services need greater awareness of their application portfolios.
Beyond these scenarios, any organization can enjoy the benefits of rationalization as a proactive step to engage in data-driven conversations around cloud spend and IT budgets.
Benefits of application rationalization
- Improve cost efficiency – Even a 1% reduction in applications can significantly reduce subscription fee costs, especially for enterprises that may utilize hundreds of apps. However, even smaller organizations can reduce costs by streamlining their application portfolio.
- Reduce complexity – A primary goal of application rationalization is to lower the organization’s number of applications, thereby streamlining IT support and management. In other words, rationalization declutters an IT environment.
- Eliminate redundancies – Especially in M&A scenarios, zombie applications (unused apps with little visibility) or redundant applications create unnecessary complexity.
- Align business objectives – A bird’s eye view of your application portfolio can allow your organization to make strategic decisions. Reprioritizing IT support toward mission-critical apps creates greater business agility and fosters alignment across the organization.
- Simplify training – Streamlining the number of applications an employee uses also simplifies an employee’s training.
- Identify security risks – Identifying zombie apps or shadow IT (apps installed without organizational permission) can help pinpoint security vulnerabilities. These unsupported applications often go unpatched and leave backdoors for bad actors who know to look for them.
Learn more: CBTS Application Modernization services bring your company into the digital age
Obstacles
Many obstacles stand in the way of successful rationalization endeavors.
- A lack of visibility – Shadow IT, zombie applications, and the sheer overwhelming complexity of an organization’s environment make it challenging to understand what applications are currently in the IT stack, where they are located, and what to do with them.
- Legacy applications and systems – Some organizations get stuck with a legacy application due to its mission-critical nature. For example, many healthcare providers must utilize proprietary software for diagnostic equipment, like an MRI. Modernizing legacy applications and infrastructure may be a logical next step after performing rationalization.
- Complex TCO and ROI calculations – Pinpointing an application’s exact cost and return on investment can be tricky.
- Resistance from staff –Employees may be reluctant to change established workflows, systems, or applications.
The application rationalization process
CBTS recommends a phased and iterative approach to rationalization.
- Readiness – Determine if your organization is ready to undergo the process. Assess the objectives and priorities involved with the primary stakeholders. Consider working with third-party consultants.
- Inventory – This is by far the most complicated step. Fortunately, automated tools can scan and report on your environment. However, you will want to have some measure of manual processing to help identify zombie apps.
- Assess value and interoperability – Once you have identified all the applications in the environment, determine the app’s value and compatibility with existing infrastructure and systems.
- Determine total cost of ownership (TCO) – A complete TCO must cover an application’s direct and indirect costs. Direct costs include licenses and subscription fees, while indirect costs include infrastructure to operate the application (like a cloud or on-premises environment) and training costs. TCO equations can sometimes get complicated—but remember that TCO does not need to be exhaustive to make informed decisions.
- Rank – Assign a score to each application based on the above criteria: value, interoperability, TCO, and ROI.
- Take action – Lastly, determine the fate of all applications. Consolidate, replace, remove, modernize, or reinvest.
Why CBTS?
Managing a successful organization requires a robust and efficient application portfolio. Every major organization is the sum of its applications, and by refining your organization’s application portfolio, you can increase agility, efficiency, and cost-effectiveness. However, application rationalization is a complex undertaking that requires a deep understanding of the business objectives, technical requirements, and the current state of the application landscape.
CBTS has years of experience and expertise, with a proven track record of helping our clients make sense of their technology stacks. Our all-inclusive application services include managed services, modernization, and migrations. We have a dedicated consulting team that can assist you through the rationalization process and further aid your digital transformation journey. CBTS is committed to providing the best services to our clients and ensuring that their technology is aligned with their business goals.
