Application Rationalization — Abstract:

Application Rationalization is a hot topic these days. Uncontrolled technology sprawl is one of the greatest impediments to growth and innovation in today’s digitally enabled economy. Redundancy, overlap, end-of-life, and unused applications needlessly consume the lion’s share of IT budgets.

Yet the traditional process of Application Rationalization doesn’t succeed in achieving the potential cost savings it should deliver. 45% to 65% of all application functionality is never used. Why? There are numerous issues including poor UI/UX, lack of training, lack of utility, and redundancy of features.

The bottom line is that all of this unused capability and duplication is costing you money. Your business is not getting the value you are paying for. The reason is simple: the traditional process focuses on the applications – not on the people who use them.

A different approach to Application Rationalization

Tollanis has a unique approach to application rationalization that starts with people and how they engage with applications day-to-day.

Even sophisticated automation, artificial intelligence and machine-to-machine applications, ultimately interface with the weakest link in your technology strategy—people. Your application strategy needs to start with people. That’s because they drive the majority of your costs. They also create the most inefficiencies, and offer the greatest opportunity for productivity and efficiency.

Key points:

KTLO

The opportunity and potential for app rationalization

IT budgets are stretched thin – there are never enough funds to pay for innovation and growth. Ongoing support and maintenance for your existing portfolio of applications continues to create added expense and business drag year over year. Sometimes in excess of 90% of budgets are used to simply “keep the lights on”.

Legacy application costs get compounded as the business adds newer, more modern applications that do the same work. The new applications might do the work better, more easily and cheaply.  Yet they are adding to the overall cost of your technology operations.

Do you really know what your legacy portfolio of applications is truly costing you and your business? If you’ve been operating for 10+ years, you can expect that your products, software and applications are all of begging for app rationalization.

The pandemic has deprioritized many projects. Resources are now needed to better support remote work, ecommerce and digital transformation. Businesses can’t afford to let the application costs continue to grow. Let unchecked they become completely manageable.

It’s time to clean house!

KTLO
Our seven-step process to application rationalization starts with the people in your organization to better understand their needs, goals and obstacles to operational excellence.

 

 

Steps to making your App Rationalization efforts a success:

KTLOStart with people and their needs

To reach your financial objectives, understand how your business applications are used.

Application rationalization ensures the software and tools being used for your customers, partners and employees, achieve the desired results. That they remain relevant. And most of all deliver continuous value.

Organizational change management focuses on understanding how:

        • Your people use the tools,
        • Your organization uses those tools and
        • You can maximize their impact upon your business.

It is the bedrock of success.

KTLOIdentify and understand the causes and sources of sprawl, duplication and legacy persistence.

M&A fueled growth

Mergers and acquisitions are one of the greatest creators of application sprawl and redundancy. Given the multitude of application options in the marketplace, no two organizations are likely to be identical. Nor will they be aligned on their application portfolios.

The duplication of applications, features and overlap is inevitable. Move quickly and performing an app rationalization early on in a merger or acquisition. This can achieve more that 60% cost savings in future operational support and application cost.

Conversely, not take early and decisive action, can create long-term cost implications. These will compound and create greater organization inefficiency and operational costs year over year.

“Freelancing” enabled by SaaS applications

Cloud-based applications and self-serve models allow business units and divisions to innovate at a dramatic pace.

They also give businesses the opportunity to bypass the traditional IT procurement process.  They also remove the IT bottleneck and forgo the lengthy integration and IT application acquisition process. As a result, businesses can move to market dramatically faster. They can innovate and respond with agility to market and customer demands.

Conversely though, this also creates a tsunami of applications, processes and application integration and redundancy across the enterprise.

De-prioritized projects

With failure rates in excess of 65%, organizations are littered with failed projects. Applications that are partially implemented or used by small sets of users are left behind. Sometimes, abandoned applications are purchased and left sitting on the shelf, never implemented.  But they continue to incur monthly software licensing and maintenance charges. Too often, application purchases get lost or forgotten in the chaos of an organization shift. Growth and change in priorities, or the urgency and focus of projects are also to blame.

Organizations need strong processes to continually identify dead projects. These processes should help to identify runaway costs for software purchases that are no longer relevant, needed, or used.

“Always done it this way”

Perhaps one of the greatest contributors to applications redundancy and sprawl is the reluctance of users to move away from a legacy application and its associated business processes. Cost is a major driving factor for replacing, retiring or integrating / rationalizing applicants. However, more often than not, organization change management and people issues, contribute heavily to application rationalization.

As applications age and become more customized over time, users’ familiarity and affection for them grow.

This process deepens the users “need” for the application and makes retirement, rationalization or replace increasingly more difficult. User resistance and outright defiance to migrate can leave some organizations saddled with legacy applications and processes. These are often so out-dated they no longer even have a technical support specialist who understands the code!

When organizations reach this tipping point, application rationalization can become so cost prohibitive that replacement is no longer even an option.  It’s time to take a radically different approach!

App Rationalization

 

Application rationalization rankingAssess based not only on technical merit but also strategic value and TCO.

When tackling application rationalization, business and technology leaders need to collaborate closely. Working together, they need to identify a set of criteria focused on the most pragmatic and cost-effective approach to achieving organizational objective and business goals.

Your customer, employee and application use cases will drive the selection and focus of the applications you need to retail. Conduct a comprehensive total cost of ownership analysis. This analysis will help drive the decision-making around cost benefit of features and costs of operations. Some applications that may meet customer and employee demands and requirements may simply be too costly to operate or support in the future.

The classification phase of the application rationalization process
Once you’ve analyzed and ranked your applications, classify them according to technical and strategic relevance, while taking into account total cost of ownership.

 

Application rationalization classificationClassify and rationalize: Optimize, augment, retire and replace.

To develop a concrete rationalization strategy for applications, conduct a comprehensive assessment. This assessment identifies and categorizes applications. This will require significant elements of organizational change management. Additionally, it is essential to collect total cost of ownership information of each application. During classification and rationalization, categorize user experience and user interface information by developing personas and use cases. These are based upon the end-user population. Create your classification and rationalization model by identifying both customer and employee use models and personas in conjunction with total cost of ownership.

Ultimately, the end product is a heat map that identifies the applications that are most beneficial to retire and replace. This process will also serve to identify optimization and augmentation / integration opportunities.

Application rationalization planApplication rationalization is change management

There is nothing rational about it. People are emotional beings, attached to their current ways of doing things and to their toys. This is why the cornerstone to any successful Application Rationalization effort, begins with people. Understanding the user population, their needs, requirements and use models helps to identify the best way to mitigate and overcome objections.

People hate change – so make it fun/beneficial. Engaging the user population in the process is critical. Communication needs to be informative, truthful and firm. The change gap will typically be the hardest part of migration and adoption. Make the process pleasant and non-threatening. This will provide the greatest chance for success.

Many initiatives have failed because the end users refuse to change or adopt the new solution. This also holds true for product launches in the market place. Organizations need to approach their internal and external stakeholders with the same approach they would use for marketing efforts.

Understand and address the concerns and motivations.

Create a solid plan based on benefits to the user – start with the why behind the change and the WIIFM (What’s In It For Me) for the people, not just the budget.

Application rationalization optimizationHave a plan in place before you clean house.

Have a clear plan before you begin this journey. Rationalization, integration, and retirement of applications require a detailed plan. Create one by taking into consideration all elements of the current application use models. This includes the human, financial, technical, go-to-market and customer factors.

A good plan also involves having an objective and clear perspective. Build an application rationalization project team that has little to no vested interest in which applications are retained, retired or integrated.

While end-user input is critical in the process, the decision-making must be objective. A dispassionate third party can make those tough but objective decisions.

Application rationalization monitoringContinuously monitor post rationalization performance and adoption.

Identify resistance and manage accordingly. Create a continuous feedback loop as part of you vendor management and overall technology strategy.

To head off problems before they begin, continuously identif emerging trends, as well as changes in business and market direction. Take early action in developing plans for retirement, or elimination before the application has a deeply embedded user base. Doing so will save the organization significant costs in the future.

 

Stephen Smith – Founder and CEO of Tollanis Solutions, is a serial entrepreneur and career CIO, leading technology change for Fortune 500 organizations in healthcare, home building, retail, automotive and financial services.

 

App Rationalization