Build an Application Rationalization Framework

Build an Application Rationalization Framework

Manage your application portfolio to minimize risk and maximize value.

Analyst Perspective

"You're not rationalizing for the sake of IT, you’re rationalizing your apps to create better outcomes for the business and your customers. Consider what’s in it for delivery, operations, the business, and the customer." – Cole Cioran, Senior Director – Research, Application Delivery and Management

Our understanding of the problem

This Research Is Designed For:

• Application portfolio managers, application portfolio management (APM) teams, or any application leaders who are tasked with making application portfolio decisions.
• Application leaders looking to align their portfolios to the organization’s strategy.
• Application leaders who need a process for rationalizing their applications.

This Research Will Help You:

• Measure the business value of your applications.
• Rationalize your portfolio to determine the best disposition for each application.
• Initiate a roadmap that will showcase the future of your applications.

This Research Will Also Assist:

• CIOs and other business leaders who need to understand the applications in their portfolio, the value they contribute to the business, and their strategic direction over a given timeline.
• Steering committees and/or the PMO that needs to understand the process by which application dispositions are generated.

This Research Will Help Them:

• Build their reputation as an IT leader who drives the business forward.
• Define the organization’s value statement in the context of IT and their applications.
• Visualize the roadmap to the organization’s target application landscape.

Executive Summary

Situation

• Almost two-thirds of organizations report that they have too many or far too many applications due to sprawl from poorly managed portfolios (Flexera, 2015).
• Application managers are spending too much time supporting non-critical applications and not enough time on their most vital ones.
• Application managers need their portfolios to be current and effective and evolve continuously to support the business or risk being marginalized.

Complication

• The necessary pieces of rationalization are rarely in one place. You need to assemble the resources to collect vital rationalization criteria.
• There is a lack of standard practices to define the business value that the applications in a portfolio provide and, without value rationalization, decisions are misaligned to business needs.

Resolution

• Define the roles, responsibilities, and outputs for application rationalization within your application portfolio management (APM) and other related practices.
• Build a tailored application rationalization framework (ARF) aligned with your motivations, goals, and limitations.
• Apply the various application assessments to produce the information, which your dispositions will be based on, and adapt your ARF based on the experiences of your first iteration.
• Review, determine, and prioritize your application dispositions to create a portfolio strategy aligned to your goals.
• Initiate an application portfolio roadmap, which will showcase your rationalization decisions to key stakeholders.

Info-Tech Insight

There is no one size fits all.

Applying a rigid approach with inflexible inputs can delay or prevent you from realizing value. Play to your strengths and build a framework that aligns to your goals and limitations.

Business value must drive your decisions.

Of the 11 vendor capabilities asked about by Info-Tech’s SoftwareReviews, “business value created” has the second highest relationship with overall software satisfaction.

Take an iterative approach.

Larger approaches take longer and are more likely to fail. Identify the applications that best address your strategic objectives, then: rationalize, learn, repeat.

Info-Tech recommends a disciplined, step-by-step approach as outlined in our Application Portfolio Strategy Program

Step 1 "No Knowledge": Define application capabilities and visualize lifecycle stages

Application Discovery

1. Build in Application Portfolio Management Principles.
2. Conduct Application Alignment.
3. Build Detailed Application Inventory

Step 2 "No Strategy": Rationalize application portfolio and visualize strategic directions

Application Rationalization

4. Set Your Rationalization Framework
5. Conduct Assessment & Assign Dispositions
6. Create an Application Portfolio Roadmap

Step 3 "No Plan": Build a product roadmap and visualize the detailed plan

Detailed Disposition Planning

7. Conduct an Impact Assessment
8. Determine the Details of the Disposition
9. Create Detailed Product Roadmaps

This blueprint focuses on step 2 of Info-Tech's Application Portfolio Strategy Program. Our methodology assumes you have completed the following activities, which are outlined in Discover Your Applications.

• Collected your full application inventory (including Shadow IT)
• Aligned applications to business capabilities
• Determined redundant applications
• Identified appropriate subject matter experts (business and technical) for your applications

Info-Tech's four-phase methodology

Phase 1

Lay Your Foundations

• Define Motivations, Goals, and Scope
• Iteration and Engagement Planning

This phase is intended to establish the fundamentals in launching either a rationalization initiative or ongoing practice.

Here we define goals, scope, and the involvement of various roles from both IT and the business.

Phase 2

Plan Your ARF

• Establish Rationalization Inputs and Current Gaps

This phase is intended to review a high-level approach to rationalization and determine which analyses are necessary and their appropriate level of depth.

Here we produce an initial ARF and discuss any gaps in terms of the availability of necessary data points and additional collection methods that will need to be applied.

Phase 3

Test and Adapt Your ARF

• Perform First Iteration Analysis
• First Iteration Retrospective and Adaptation

This phase is intended to put the ARF into action and adapt as necessary to ensure success in your organization.

If appropriate, here we apply Info-Tech’s ARF and toolset and test it against a set of applications to determine how best to adapt these materials for your needs.

Phase 4

Initiate Your Roadmap

• Prioritize and Roadmap Applications
• Ongoing Rationalization and Roadmapping

This phase is intended to capture results of rationalization and solidify your rationalization initiative or ongoing practice.

Here we aim to inject your dispositions into an application portfolio roadmap and ensure ongoing governance of APM activities.

There is an inconsistent understanding and ownership of the application portfolio

What can I discover about my portfolio?

Application portfolios are misunderstood.

Portfolios are viewed as only supportive in nature. There is no strategy or process to evaluate application portfolios effectively. As a result, organizations build a roadmap with a lack of understanding of their portfolio.

72% of organizations do not have an excellent understanding of the application portfolio (Capgemini).

How can I improve my portfolio?

Misalignment between Applications and Business Operations

Applications fail to meet their intended function, resulting in duplication, a waste of resources, and a decrease in ROI. This makes it harder for IT to justify to the business the reasons to complete a roadmap.

48% of organizations believe that there are more applications than the business requires (Capgemini).

How can my portfolio help transform the business?

IT's budget is to keep the lights on.

The application portfolio is complex and pervasive and requires constant support from IT. This makes it increasingly difficult for IT to adopt or develop new strategies since its immediate goal will always be to fix what already exists. This causes large delays and breaks in the timeline to complete a roadmap.

68% of IT directors have wasted time and money because they did not have better visibility of application roadmaps (ComputerWeekly).

Roadmaps can be the solution, but stall when they lack the information needed for good decision making

An application portfolio roadmap provides a visual representation of your application portfolio, is used to plan out the portfolio’s strategy over a given time frame, and assists management in key decisions. But…

• You can’t change an app without knowing its backend.
• You can't rationalize what you don't know.
• You can’t confirm redundancies without knowing every app.
• You can’t rationalize without the business perspective.

A roadmap is meaningless if you haven’t done any analysis to understand the multiple perspectives on your applications.

Application rationalization ensures roadmaps reflect what the business actually wants and needs

Application rationalization is the practice of strategically identifying business applications across an organization to determine which applications should be kept, replaced, retired, or consolidated (TechTarget).

Discover, Improve, and Transform Through Application Rationalization

Your application rationalization effort increases the maturity of your roadmap efforts by increasing value to the business. Go beyond the discover phase – leverage application rationalization insights to reach the improve and transform phases.

Strong Apps Are Key to Business Satisfaction

79% of organizations with high application suite satisfaction believe that IT offers the organization a competitive edge over others in the industry. (Info-Tech Research Group, N=230)

Info-Tech Insight

Companies with an effective portfolio are twice as likely to report high-quality applications, four times as likely to report high proficiency in legacy apps management, and six times as likely to report strong business alignment.

Rationalization comes at a justified cost

Rationalization can reduce costs and drive innovation

Projecting the ROI of application rationalization is difficult and dangerous when used as the only marker for success.

However, rationalization, when done effectively, will help drop operational or maintenance costs of your applications as well as provide many more opportunities to add value to the business.

Organizations lack a strategic approach to application rationalization, leading to failure

IT leaders strive to push the business forward but are stuck in a cycle of reaction where they manage short-term needs rather than strategic approaches.

Why Is This the Case?

Lack of Relevant Information

Rationalization fails without appropriately detailed, accurate, and up-to-date information. You need to identify what information is available and assemble the teams to collect and analyze it.

Failure to Align With Business Objectives

Rationalization fails when you lack a clear list of strategic and collaborative priorities; priorities need to be both IT and non-IT related to align with the business objectives and provide value.

IT Leaders Fails to Justify Projects

Adhering to a rigid rationalization process can be complex and costly. Play to your strengths and build an ARF based on your goals and limitations.

Info-Tech Insight

Misaligned portfolio roadmaps are known to lead teams and projects into failure!
Building an up-to-date portfolio roadmap that aligns business objectives to IT objectives will increase approval and help the business see the long-term value of roadmapping.

Don’t start in the middle; ensure you have the basics down

Application portfolio strategy practice maturity stages

1. Discover Your Applications
2. Improve
3. Transform

Disambiguate your systems and clarify your scope

Define the items that make up your portfolio.

Broad or unclear definitions of “application” can complicate the scope of rationalization. Take the time to define an application and come to a common understanding of the systems which will be the focus of your rationalization effort.

Bundling systems under common banner or taking a product view of your applications and components can be an effective way to ensure you include your full collection of systems, without having to perform too many individual assessments.

Scope

Info-Tech’s framework can be applied to portfolios of apps, products, and their related capabilities or services.

However you organize your tech stack, Info-Tech’s application rationalization framework can be applied.

Understand the multiple lenses of application rationalization and include in your framework

There are many lenses to view your applications. Rationalize your applications using all perspectives to assess your portfolio and determine the most beneficial course of action.

Application Alignment - Architect Perspective

How well does the entire portfolio align to your business capabilities?

Are there overlaps or redundancies in your application features?

Covered in Discover Your Applications.

Business Value - CEO Perspective

Is the application producing sufficient business value?

Does it impact profitability, enable capabilities, or add any critical factor that fulfills the mission and vision?

TCO - CIO Perspective

What is the overall cost of the application?

What is the projected cost as your organization grows? What is the cost to maintain the application?

End User

How does the end user perceive the application?

What is the user experience?

Do the features adequately support the intended functions?

Is the application important or does it have high utilization?

Technical Value - App Team Perspective

What is the state of the backend of the application?

Has the application maintained sufficient code quality? Is the application reliable? How does it fit into your application architecture?

Each perspective requires its own analysis and is an area of criteria for rationalization.

Apply the appropriate amount of rigor for your ARF based on your specific goals and limitations

Ideally, the richer the data the better the results, but the reality is in-depth analysis is challenging and you’ll need to play to your strengths to be successful.

There is no one-size-fits all rationalization. The primary goal of this blueprint is to help you determine the appropriate level of analysis given your motivations and goals for this effort as well as the limitations of resources, timeline, and accessible information.

Rationalize and build your application portfolio strategy the right way to ensure success

Big-Bang Approach

• An attempt to assess the whole portfolio at once.
• The result is information overload.
• Information gathered is likely incomplete and/or inaccurate.
• Tangible benefits are a long time away.

Covert Approach

• Information is collected behind the scenes and whenever information sources are available.
• Assumptions about the business use of applications go unconfirmed.

Corner-of-the-Desk Approach

• No one is explicitly dedicated to building a strategy or APM practices.
• Information is collected whenever the application team has time available.
• Benefits are pushed out and value is lost.

Iterative Approach

• Carried out in phases, concentrating on individual business units or subsets of applications.
• Priority areas are completed first.
• The APM practice strengthens through experience.

Sponsored Mandate Approach

• The appropriate business stakeholders participate.
• Rationalization is given project sponsors who champion the practice and communicate the benefits across the organization.

Dedicated Approach

• Rationalization and other APM activities are given a budget and formal agenda.
• Roles and responsibilities are assigned to team members.

Use Info-Tech’s Application Portfolio Assessment Diagnostic to add the end users’ perspective to your decision making

Prior to Blueprint: Call 1-888-670-8889 to inquire about or request the Application Portfolio Assessment.

Info-Tech Best Practice

The approach in this blueprint has been designed in coordination with Info-Tech’s Application Portfolio Assessment (APA) Diagnostic. While it is not a prerequisite, your project will experience the best results and be completed much quicker by taking advantage of our diagnostic offering prior to initiating the activities in this blueprint.

Use the program diagnostic to:

• Assess the importance and satisfaction of enterprise applications.
• Solicit feedback from your end users on applications being used.
• Understand the strengths and weaknesses of your current applications.
• Perform a high-level application rationalization initiative.

Integrate diagnostic results to:

• Target which applications to analyze in greater detail.
• Expand on the initial application rationalization results with a more comprehensive and business-value-focused criteria.

Use Info-Tech’s Application Rationalization Tool to determine and then visualize your application portfolio strategy

At the center of this project is an Application Rationalization Tool that is used as a living document of your:

1. Customizable Application Rationalization Framework

2. Recommendation Dispositions

3. Application Portfolio Roadmap (seen below)

Use the step-by-step advice within this blueprint to rationalize your application portfolio and build a realistic and accurate application roadmap that drives business value.

Central to our approach to application rationalization are industry-leading frameworks

Info-Tech uses the APQC and COBIT5 frameworks for certain areas of this research. Contextualizing application rationalization within these frameworks clarifies its importance and role and ensures that our assessment tool is focused on key priority areas. The APQC and COBIT5 frameworks are used as a starting point for assessing application effectiveness within specific business capabilities of the different components of application rationalization.

APQC is one of the world's leading proponents of business benchmarking, best practices, and knowledge management research.

COBIT 5 is the leading framework for the governance and management of enterprise IT.

In addition to industry-leading frameworks, our best-practice approach is enhanced by the insights and guidance from our analysts, industry experts, and our clients.

Our peer network of over 33,000 happy clients proves the effectiveness of our research.

Our team conducts 1,000+ hours of primary and secondary research to ensure that our approach is enhanced by best practices.

A public utility organization is using Info-Tech’s approach for rationalization of its applications for reduced complexity

Case Study

Industry: Public Sector

Source: Info-Tech Research Group

Challenge

• The public utility has a complex application portfolio, with a large number of applications custom-built that provide limited functionality to certain business groups.
• The organization needed to move away from custom point solutions and adopt more hosted solutions to cater to larger audiences across business domains.
• The organization required a comprehensive solution for the following:
  • Understanding how applications are being used by business users.
  • Unraveling the complexity of its application landscape using a formal rationalization process.

Solution

• The organization went through a rationalization process with Info-Tech in a four-day onsite engagement to determine the following:
  • Satisfaction level and quality evaluation of end users’ perception of application functionality.
  • Confirmation on what needs to be done with each application under assessment.
  • The level of impact the necessary changes required for a particular application would have on the greater app ecosystem.
  • Prioritization methodology for application roadmap implementation.

Results

• Info-Tech’s Application Portfolio Assessment Diagnostic report helped the public utility understand what applications users valued and found difficult to use.
• The rationalization process gave insight into situations where functionality was duplicated across multiple applications and could be consolidated within one application.
• The organization determined that its application portfolio was highly complex, and Info-Tech provided a good framework for more in-depth analysis.
• The organization now has a rationalization process that it can take to other business domains.