A growing number of today's digital enterprises have hundreds of applications deployed on their network, but most tend to actively use far less than their sprawling numbers. The result is application bloat, a significant and escalating problem that costs many enterprises millions upon millions of dollars a year. 

New.Year.Resolution.Rationalization.jpgAccording to Gartner, application rationalization is the radical reshuffling of an application portfolio as part of an application strategy, a plan that implements changes to applications to achieve a business outcome.

Application rationalization often occurs after an IT organization accumulates an unmanaged collection of applications through shifting business strategies or mergers and acquisitions. The cleanup can include replacing, retiring, modernizing or consolidating applications. Application rationalization must:

  • Assess the state, risk and technical viability of the application portfolio, including how well it meets business needs, and determine the options for remediation.

  • Identify business-sponsored and business-funded initiatives that require portfolio and process changes.

  • Identify vendors, methodologies and platforms for reliable, serviceable and highly available applications.

  • Prepare the legacy application portfolio for fast-emerging business requirements brought on by market changes such as cloud, big data, social and mobile.

An important goal of the rationalization is to eliminate redundant and non-value-adding applications, freeing up future budget for new, business-critical work.

What Application Rationalization Means to CIOs

A CIO must demonstrate persistent commitment to application rationalization as a top priority. This effort will include these actions, according to Gartner:New.Year.Resolution.jpg

  • Strategize and lead in governance. Develop a multiyear application strategy that will enhance business agility.

  • Establish a governance council to help guide portfolio decisions.

  • Ensure that policies balance competing interests and align with business strategy.

  • Obtain peer buy-in. Articulate the benefits of executing the application rationalization, as well as the costs and risks to the business.

  • Define metrics by creating a team that includes other business units to obtain unbiased data and define metrics on application cost and value.

  • Monitor the portfolio through regularly scheduled reviews. Demand regular updates on modernization projects.

IT leaders must shift their organization's attention from the traditional strategy of continuous acquisition toward modern continuous life cycle management of the application portfolio. Ideally, today's IT leaders at leading digital enterprises should conduct regular portfolio rationalization to create and maintain an objective framework for assessing applications, and deciding whether to retire, consolidate, replace or modernize them.

With strategy and planning, an organization can draft a charter to gain agreement on the vision and mandate behind the project, in alignment with business goals - creating opportunities for 2016 to be a year in which the enterprise will benefit from application portfolio rationalization.