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Application Rationalization Paper 092308 Doc Version
Application Portfolio Management
A thorough analysis of IT applications and systems in most organizations should reveal many opportunities
for savings and improved efficiencies. Application rationalization is a process in which an organization’s IT
assets are thoroughly reviewed and analyzed to develop a plan for improvements across all systems.
The BusinessDrivers for Application Portfolio Management
What are the issues and concerns addressed by Application Rationalization?
• Data is kept in multiple systems with no integration, no single source of the truth
Data is sometimes kept in individual spreadsheets or paper forms/ individual files.
Data is re-entered manually in separate databases, resulting in data accuracy issues.
• Applications/ Systems are not getting sufficient support.
• Maintenance costs are out of control.
• Legacy systems are not being retired per plan but rather when the system fails.
• IT Customer complaints:
Takes too long to get information.
Data accuracy is suspect.
Technology issues are affecting the efficiency of the business processes.
Can’t get the reports they need in a timely manner.
• IT Management pains:
The IT asset inventory is too large to be managed by the IT resources
The business does not understand the value added from IT investment – results in not
funding the centralization that is required to improve the system efficiency.
Databases need to be centralized.
• Software Management issues:
Unused licenses as the license tracking process is inefficient.
Software in use that is no longer supported by the vendor.
Software customizations result in costly maintenance.
Application Portfolio Management looks at the business processes along with the IT systems, analyzing
procedural issues as well as system issues to determine what needs to be improved or fixed.
Application Portfolio Management extends the value of IT to the business by ensuring IT is making an
optimized contribution to the business. The improvements that result for the Application Rationalization
effort will be very visible to the business.
What Application Managementdoesfor the business
Application Rationalization optimizes the operation of the IT systems and applications, ensures data
accuracy, ensures compliance with regulations ties IT to business strategy and streamlines and improves
The following are critical to a successful Application Rationalization analysis:
• Clear and relevant IT strategic objectives that are tied to the business strategy
• Mutual (between IT and business) understanding of business value for your organization.
• Buy-in to the analysis by the user community and the executive level of the organization.
You will need for the analysis: Process flow diagrams, Entity Relationship Diagrams for each application,
Enterprise Architecture, Functional and technical specs, User lists, help desk data, Application budget data,
and IT asset data.
How doesApplication Portfolio Managementwork?
Application Portfolio Management requires thorough analysis of processes, operations, data and systems
to enable good decision making regarding plans for the IT systems and applications. The relationship of
each asset to process, function, capability and data input and output need to be examined.
Questions to be answered for the entire application inventory include:
How are the applications being used and who uses them?
What processes does each application support?
What data is input and output to the application?
What is being spent to maintain, support, upgrade?
What is the business value of the application?
What strategic objectives does the application contribute to?
What are the technical requirements?
Determine level of customer satisfaction with the application or system.
Assess risk associated with the application or system.
Is the system managed and supported well?
Answers to these questions provide a clearer understanding of the state of the IT assets.
Analysis of this information will identify redundant capability, identify costly assets ( high cost to
maintain), determine underutilized assets and highlight downtime issues. This analysis will be combined
with the process analysis to determine required activities to optimize the portfolio.
With regard to process, the first questions to be answered: are the processes written and are they
accurate? Just like applications, processes need to be easy to use and follow. Feedback from those who
use the processes will determine which processes need re-engineering. A review of all processes together
will determine gaps, overlaps and areas where the process flow is not optimal. This analysis will also
determine opportunities for process automation.
Data accuracy and accessibility are essential to efficiency. Is data entered in more than one place? Users
need to confirm that data is easy to find.
It is important to look at the relationships between the processes, applications and data. Which
applications support which processes and what data is collected?
Results of the analysis will provide information required to make decisions regarding each application or
system. These decisions include: maintain, enhance, retire or combine. Once these decisions are justified
you have business cases for new projects with the next natural step in the process being project
prioritization to determine what is done next. Application Portfolio Management is an ongoing process
requiring regular re-evaluation of the portfolio to determine the business value and tie to strategy.