As Application Rationalization Grows Hotter In 2011 - Vendors Will Play Catch-Up

In his report on the top technology trends to watch in 2011 to 2013, my colleague Gene Leganza called out application portfolio management (APM) as one of a number of "planning and analysis tools to manage the future." Forrester clients seem to agree with Gene; in fact they aren't even waiting until 2011 - their interest has been building steadily throughout the second half of 2010.

One case in point: thousands of unique client hits in Q3 alone on a new report entitled Assessing Your Applications - Metrics That Matter Drive Better Rationalization Decisions. I noted similar levels of interest in the companion workbook, Forrester's Application Scoring Workbook, in Q3. Together they indicate that clients have a strong interest in educating themselves on how to streamline and rationalize their application portfolios.

The volume of client inquiry offers additional proof points but focused more on the "how to's" of APM, application assessments, and rationalization - this indicates to me that organizations are turning interest into action so they can adapt to anticipated growth as the economy recovers in 2011 and beyond. I expect firms that rationalize their portfolios will emerge as leaner, meaner, stronger competitors - ready to win market share from those that don't. Why?

  • Application portfolio costs are excessive. The ongoing operations and maintenance costs consume 65% of IT budgets on average - with some firms admitting that costs exceed the 90th percentile.
  • IT can’t explain why resource consumption is so high. Decades of accumulation in an effort to keep pace with business change have created duplication, waste, and bloat, yet IT can't tie the size, cost, and resource consumption characteristics to specific applications - we tend to treat it as one large bucket of cost.
  • Business leaders view the combination in an unfavorable light. IT expenditures that don't have clear business value are no longer getting funded, and business leaders are increasingly suspicious of IT spending habits and accountability.

So client organizations are turning their attention to the processes that will help them:

  • Inventory what they own.
  • Quantify its business value.
  • Quantify its technical and functional health.
  • Devise a plan to rationalize and streamline.

Vendors, opportunity is knocking - it is time to join the dance and stop watching from the sidelines. Some opportunities include:

  • More-robust APM tooling - with more robust data models, stakeholder surveys, and role-based views.
  • More-complete service offerings - assessment services within a repeatable framework and "leave-behind" repository.
  • Expose and share portfolio information - with PPM, operations, and service portfolio information tools.

Yes, there's a lot to do to fulfill the demand I see from clients - who's game?

Comments

IT Analytics and APM

Couldn't agree more - insight into resource and service consumption is critical when it comes to determining how to effectively rationalize applications and infrastructure. Few organizations have a true holistic overview of what they use, how it's being used and what, if any, value that service is delivering at the organization.

Doing this effectively is beyond a tool based approach. There's unlikely to be a single tool that would address these requirements and there also needs to be process on top of that tool... process that can be time consuming and costly to implement, and more costly to maintain.

An alternative, more effective and lighter touch approach is to use an IT Analytics service to take the data from all across the business, from IT to finance, to look at raw consumption data, asset registers and chargeback data and develop a service consumption model of the business. This develops a service catalogue, combined with data from finance, that can describe the cost of each application or service, and how it is being used across the organization. This view can be sliced and diced in any number of ways, role, line of business, user, grade.

Armed with this information, the business can begin to rationalize its application portfolio and continue to use the model to drive further rationalization and consolidation.

Application Development

The creative person who works as an application development should always think “out side the box”. It has always been seen that diverse organizations have diverse application demands. While creating the software we should always keep the origination and the business in mind.

Visualization is the Key

Couldn't agree more Phil. At iRise we've seen a steady increase in the number of organizations focused on application rationalization as a way to not only streamline cost, but become more efficient. The current M&A mania demands consolidation for many large organizations. But it's not just the applications that need to be consolidated - forward thinking IT leaders will look at consolidation as an opportunity to streamline business processes as well.

Rationalizing disparate business systems can be a challenge, however. IT groups have to wean business away from systems that are used by only a handful of people. And you can leverage technologies like sofware visualization to get everyone on the same page, cutting through the false argument that "my system needs are unique." Most times there is 90%+ overlap in redundant business systems and you can get the business comfortable by letting them see, touch and interact with proposed rationalized systems early in the process. iRise customers like GM and FedEx are getting rationalization projects done 50% faster by visualizing first, getting everyone on the same page and then leveraging the visualization as an exact guide for what to build. No rework. No change orders. And the business knows exactly what they are getting.

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Great piece on App

Great piece on App Rationalization. I have been doing for companies as a consultant in the IT Strategy space. The main challenge that I have seen over the years is to work through the company to agree on categorizing the applications based on the company value chain. Every process and functional area has a belief that their applications are the most strategic ones. Even when you get them to see it based on the value chain, the costs (software, hardware, professions, etc.) the clusters of applications and the underlying infrastructure has dependencies that ends to be resolved. But I agree with your point of view that they need TO GET HEALTHY and then STAY HEALTHY and that’s the value of APM.

-Ashu
http://www.ashubhatia.com/blog/