Delivering Business ValueLean IT

Do you Rationalize your Application Portfolio?

What do we mean by Application Rationalization?  Once again we have IT terminology that sounds impressive but is vaguely defined and interpreted differently by many different people and organizations.  If you look up the definition of “rationalization”, you will find that it means to justify.  How does this apply to applications?  Why would we have to rationalize applications?  After all, if they were not providing benefit, they would not exist.  Unfortunately, this is not a true statement.

Many applications were justified based on a defined business value when they were originally authorized.  The business benefits were defined and quantified, the costs were justified, functionality and technology were approved, and alternatives were dismissed.  This rationalization process occurred 10-20 years ago for most legacy applications.

Ironically, organizations look at people and positions periodically and justify keeping, eliminating, or outsourcing these positions but they rarely assess their application portfolio to re-validate the value and benefits from continued operations.  Everyone assumes that if an application is in production, it must still provide benefits.

In many companies and government agencies, IT has gone from being viewed as an investment to a cost that must be managed or even cut.  A significant part of the IT budget is spent operating and supporting legacy applications.  We would be derelict in our duties not to rationalize the continued existence of these applications.

How do we rationalize applications?  We start out by asking some basic questions for each application:

  1. Is anyone still using the application?  If so, are they getting any value?
  2. Is the application redundant?  If a replacement application was implemented, why was the older application not retired?
  3. What does it cost to operate and maintain these applications today?  This should include operations, IT support, and business support costs.  There are some roles that exist to provide input to computer applications that are not used by anyone.
  4. Does the existence of the application perpetuate obsolete technologies?  If a business critical application relies on unsupported technology, there is a big risk to the business if this technology fails and cannot be replaced.
  5. Is there a commercial application that can replace this application and provide superior capabilities?
  6. Does the application provide the capability and flexibility currently required by the business?
  7. Is the application in-production simply to provide access to historical data to meet a government mandate?  If so, what parts of the application are still required?

These are basic questions that should be asked for every application.  Decisions to replace, retire, or re-platform these applications must be based on the cost, risk, and value associated with the applications.  A high risk, high cost, low-value application should be eliminated while a low value, low cost, and low risk application could be ignored.  If an organization doesn’t periodically assess their application portfolio, they are probably wasting millions of dollars operating and supporting technology that provides limited value. sites list .

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