Application rationalization isn't just a cost-cutting exercise. Discover how continuous app rationalization works under different use cases.
Application rationalization is an essential, continuous process that every organization needs to consider. Still, our research suggests that only 15% of organizations conduct application rationalization initiatives on a regular basis.
What's holding organizations back from carrying out this essential work? Well, there's a lot more to success in application rationalization than there first appears.
A thorough application rationalization requires you to:
- fully understand the landscape of your application portfolio
- understand each of your organization's business capabilities and which tool is considered best-of-breed to support them
- gain clarity on what each individual application does and how it is currently used in your organization
- gather intel from your colleagues on who and how they use applications
- set the goals of your rationalization initiative and key metrics
- use creativity to design a target application portfolio map that achieves your metrics for you to work towards
Our LeanIX Enterprise Architecture Management (EAM) platform will support you in all of these tasks and empower you to work towards your goals from one interface. To find out more, see our solution page:
USE CASE: Application Rationalization
In the meantime, let's consider what an application rationalization actually is and why you should make it a regular exercise for your enterprise architecture teams.
What Is Application Rationalization?
Application rationalization is the process of optimizing and streamlining the portfolio of software applications that are used within an organization. App rationalization should be a continuous process to balance reducing costs to the minimum with ensuring your employees have the software tools they need to be effective.
As the requirements and use of your application portfolio changes over time, vendors release new versions and updates, and which tool is considered best-of-breed for each business capability is debated, you will need to maintain and adapt your portfolio to match and compete. Doing this at the pace of change can quickly leave your portfolio messy and full of redundancy.
This is why regular application rationalization is vital for keeping your portfolio optimal to empower your organization to succeed. Yet, while only paying for the software you actually need sounds simple, this can quickly become complex.
Metrics Are Key
To keep you on track, you need to have the goal of the rationalization and your metrics clearly in mind. Doing this should make it easy to determine what you need to know and take the guesswork out of decision-making.
It's easy to assume application rationalization is just about saving money by hacking away at your application portfolio, but other goals are equally valid. Upgrading licenses and investing in new tools is as much a part of app rationalization as taking out those unused 'zombie' applications.
Let's look at three of the main reasons for starting an application rationalization and how each of them will impact the way you go about the initiative:
1 Application Rationalization For Cost Savings
Application rationalization is most often undertaken to cut back on costs. While it may not be the only reason to carry out an initiative, it remains the main one.
Global economic turmoil is tightening budgets and organizations are being asked to 'do more with less'. In this climate, paying for applications you aren't using is far from optimal.
If this is your focus, then you need a clear metric as to how much you need to cut from your spend. This should give you a clear, numerical value to target, and make your application rationalization effort a simple, Tetris-like puzzle of fitting your essential tools, and however many bonus applications you can, into your budget.
Beware, however, being too brutal with this process. While canceling your contract with Zoom could save a lot of cash and free up a few calendars, for example, no-one will ultimately be happy when they can't effectively collaborate with their colleagues. The goal is to optimize value, not just save money.
2 Application Rationalization For Alignment
Application rationalization is crucial when it comes to mergers and acquisitions. When two organizations come together, there will inevitably be multiple applications in use for each business capability.
This isn't optimal for costs, but there is a more serious issue that can arise. If you leave each company using its own toolset, this can remove collaboration opportunities and retain silos that separate teams you have spent a great deal of money to get working together.
Looking to synergize, you may find that migrating either set of workers to the other tool could be seen as the establishment of hierarchy. Therefore, it may be more politically effective to migrate both sets of users to a new, third application as a 'blank slate' where all users are treated equally, despite the greater cost.
More generally, you may find that having an application portfolio made up of a disparate set of best-of-breed tools could be cheaper and more effective than having a single platform for multiple business capabilities. However, the benefits of synergy, analytics, and collaboration may make the increased cost of a single system worthwhile.
This is a classic case where cost optimization is not the goal of application rationalization. However, this isn't the only metric not related to budget.
3 Application Rationalization For Optimization
Application rationalization can sometimes actually be about increasing spend. Empowering your people with best-of-breed tools can maximize output and drive revenue to increase profit through greater investment.
For example, a LeanIX customer using our platform to undergo an application rationalization initiative discovered they had hundreds of unused premium Zoom licenses. By distributing these to employees, they extended their meeting capabilities and enhanced collaboration.
This can aos be of benefit to enterprise architects in gaining buy-in on an application rationalization. It shows that they are not attempting to take away useful tools from employees, but rather to empower them with the support they need in their work.
No Rationalization Without Clarity
Application rationalization is an essential, ongoing process that all organizations need to be conducting regularly, if not continuously. Yet, it's impossible without having a clear picture of your organization's application portfolio.
No matter what the purpose of your application rationalization is, the starting point will always be to understand your current and target state. Building a roadmap from where you are to where you want to be is essential.
The LeanIX Enterprise Architecture Management (EAM) platform empowers you to gather detailed information about your application portfolio from APIs, preloaded third-party information, and also from automated employee surveys. The platform prepares you with all the information you need and a sandbox in which to build your application rationalization roadmap.
To find out more, see our solution page:
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