Application Lifecycle Optimization

White Paper: Application Lifecycle Optimization
Application
Lifecycle
Optimization
Maximizing the Value of IT Investments
©2007-09 | Keane, Inc. | WP-ALO
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877.88.KEANE info@keane.com
EXECUTIVE SUMMARY
By proactively identifying, eliminating, or remedying poorly performing application assets, Applications

Rationalization helps companies reduce costs, target efforts to the areas of highest return, and maximize
the business value of their application portfolios.
TABLE OF CONTENTS
Abstract 4
Introduction 4
Phases of the Application Lifecycle 4
Application Cost by Lifecycle Phase 5
Application Business Benefit by Lifecycle Phase 6
Application Challenges by Lifecycle Phase 6
Relating Application Cost to Portfolio Cost by Lifecycle Phase 6
Identifying Opportunities for Optimization 6
Applications Management 6
Applications Rationalization 7
Applications Development 7
Application Lifecycle Optimization Success Factors 8
Moving Forward 8
ABOUT KEANE 9
TABLE OF FIGURES
Figure 1 Application Lifecycle Optimization 5

White Paper: Application Lifecycle Optimization 4
Abstract Investments, will help readers develop a business strategy. Despite the importance
An organization’s portfolio of software holistic strategy to maximize the business of this role, IT organizations rarely
applications is among its most value of their application portfolios manage them in a holistic, systematic,
valuable assets,representing years of and proactive manner. As a result,
accumulated knowledge and financial Introduction these portfolios are frequently
investment. Dynamic and constantly Since the generation of the first business under-performing assets. Much as
evolving, application portfolios must applications almost fifty years ago, active management can improve the
accommodate a steady stream of new application portfolios have evolved to performance of a stock portfolio,
business requirements as well as shifts become extremely valuable corporate proactive attention to application
in technology and business strategy. assets. They facilitate all aspects of portfolios enables businesses to
Each application within the portfolio corporate operations, service customers, achieve maximum value from their IT
represents a targeted investment with its manage supply chains, provide investments. Disciplined management
own challenges, objectives, and expected competitive advantage, and in cases of application portfolios allows these
rate of return. The primary role of an IT such as clearinghouses, reservations assets to achieve their full potential
organization is to manage the company’s centers, and certain types of financial by capturing greater benefit from
portfolio of applications in a way that services firms, the applications define production systems, freeing funds
supports changing requirements while the company. In short, applications are and IT resources to pursue high-value
maximizing the business value provided hard assets every bit as crucial to their opportunities, and providing the
by these critical assets. companies as foundries are to a steel foundation and flexibility to respond
Application Lifecycle Optimization manufacturer or aircraft to an airline. more quickly to changing business
is a systematic, proactive, and requirements.
Application portfolios are highly dynamic
investment-oriented approach for assets. They are continually growing and The following describes Keane’s
managing application portfolios. Each evolving as new applications are added, approach to building a high-performance
application within a portfolio travels technologies change, and business IT organization through Application
through a lifecycle that begins with objectives shift. The applications within Lifecycle Optimization. Based on its
its development, moves into active the portfolios are similarly dynamic and years of experience in applications
production, and ends with its eventual differ by value generated, operational management, Keane strongly advocates
retirement. An application’s needs, costs, and support requirements. They a strategy that addresses applications by
business value performance,and follow a defined lifecycle and have their stage in the application lifecycle.
opportunities for improvement differ different needs at each stage. This strategy optimizes the performance
by its place within these three lifecycle of the overall portfolio by actively
Every application portfolio contains a
phases. Every portfolio contains a managing each application by needs and
multitude of applications at differing
mixture of applications at various value, from birth to retirement.
lifecycle stages. Given this diversity,
positions within each lifecycle phase.
application portfolios are costly to build, Phases of the Application Lifecycle
Application Lifecycle Optimization
enhance, and support. And without For the purposes of Application Lifecycle
addresses the unique needs of the
careful tending, they run down. Low- Optimization, consider a portfolio
lifecycle phases through targeted
value applications proliferate, and as a community of applications of
strategies for applications development,
detritus accumulates from mergers varying ages and with different support
management, and rationalization.
and acquisitions business strategy requirements. Every application in
This white paper provides executives transformations, and technology the community follows the same basic
with an introduction to Application transitions. Effort is spent on activities three-phase lifecycle. They are born
Lifecycle Optimization. It describes the and projects that do not maximize through development, reach maturity
evolution of an application through the business value. Support costs rise in production deployment, and are
three phases of its lifecycle and how its due to inefficiencies and functional decommissioned when they are no
lifecycle position affects its investment redundancies. Short-term fixes and longer producing significant business
requirements, support needs, and failure to apply consistent standards and value. In Keane’s approach to Application
business performance. By demonstrating implement regular upgrades reduces the Lifecycle Optimization, these phases
the benefits of Application Lifecycle useful life of application assets. are called Applications Development,
Optimization and revealing the Applications Management, and
The primary role of a corporate IT
critical success factors for achieving Applications Rationalization.
organization is to build and manage
them, this paper, Application Lifecycle
corporate application portfolios to While generating minimal direct business
Optimization: Maximizing the Value of IT
support and enable the company’s value today, Applications Development
111
Applications Applications Applications

Development Management Rationalization
Business Value
Time
Goals Goals Goals
High strategic impact High operational efficiency Proactively replace, retire, or
Aligned with business Optimally supports needs upgrade applications providing
of business declining business value
On-time
Flexible Continuously streamline
Within budget
and standardize portfolio
Scalable
costs and increase flexibility
Reliable
Cost-effective
Challenges Challenges Challenges

No budget Inefficiencies Redundant applications
70% development projects Escalating costs Disparate applications

fail (Standish Group study) Poor process, management End-of-life applications
Poor project management disciplines Non-core technologies
Aligning IT investment with Poor performance metrics Inflexible systems
business strategy Reactive
Figure 1 Application Lifecycle Optimization
creates the assets that will be core to a the lifecycle. Applications in this phase strategic applications in the other phases.
company’s business strategy tomorrow. are in full production, generating
Figure 1 illustrates the different
These assets may be internally built most of a portfolio’s ongoing business
characteristics of each lifecycle phase,
applications or software packages. value. Moreover, their maintenance,
and how those characteristics influence
The three major goals for this phase are: enhancement, and support accounts
optimization goals. Strategies for
for as much as 70% of overall IT effort.
• Maximizing future business optimizing these phases appear in the
The goal of this phase is to achieve a
performance by selecting the subsequent sections of this white paper.
high degree of operational efficiency
highest value opportunities for new
in providing maximum value to the Application Cost by Lifecycle Phase
applications
business. The largest annual IT investment in a
• Ensuring the continuing viability of single application occurs throughout the
Applications Rationalization is the
those assets by building applications development and deployment stages.
final phase of the lifecycle, and having
that are effective and adaptable During Applications Management,
a unique strategy for addressing
annual costs consist of maintenance,
• Enhancing development ROI through applications in this phase is critical to
operations, and support. Although
cost-effective design and delivery. optimizing overall performance. At this
typically lower on a per-year basis, these
The latter two of these objectives are point in the lifecycle, applications are
costs accrete over many years, eventually
crucial for reducing a new application’s providing diminishing business returns
eclipsing development expenditures.
total cost of ownership throughout all and nearing the end of their useful
Annual costs rise towards the end of an
three phases of its lifecycle. lives. Without disciplined attention, they
application’s life, as it becomes more
under-perform their objectives and draw
Applications Management is the difficult to maintain.
funds and resources away from more
largest and most important phase in
Application Business Benefit by Identifying Opportunities for the rigorous processes, management
Lifecycle Phase Optimization disciplines, and tools to manage and
Business benefit arises only from The following provides an overview optimize their application portfolios
application use, thus no benefit is of Keane’s process for evaluating effectively. As a result, they face ever-
received until the application is deployed an IT organization and identifying growing portfolios, spiraling costs, and
in production. Thesebenefits peak during opportunities to optimize the increasing numbers of under-performing
Applications Management, and start to management of its application portfolio. application assets. Without metrics to
decline as the application ages. adequately measure IT performance
Keane typically begins its assessment
and calculate the level of business value
Application Challenges by Lifecycle by focusing on the Applications
delivered, IT organizations spend too
Phase Management phase of the lifecycle. This
much time reacting to problems and
Superimposing costs on benefits phase, representing applications that are
applying minor enhancements rather
illustrates the high level optimization in production, generates the greatest
than proactively adding value to the
objectives for an application during business value today and is the most
business.
each phase. Improving delivery time- costly to support based on allocation
to-market and decreasing development of budget dollars. Keane’s experience Keane recommends a three step process
and deployment costs in Applications with hundreds of client organizations for applications management. First, an
Development enables a company to gain also suggests that this phase provides organization should implement and
benefits quickly while enhancing overall tremendous opportunities to increase follow a rigorous set of IT processes and
ROI. In Applications Management, the value and reduce costs by implementing management disciplines that achieve
main objective is to protect and enhance proven applications management and at least Level 3 as measured by the
each application’s performance by program management disciplines. Software Engineering Institute’s (SEI)
finding ways to increase the application’s Capability Maturity Model (CMM). The
Applications Management
business value while reducing the cost SEI CMM has become the standard
Goal: Protect and enhance the business
of support and operations. Applications for world-class IT organizations, and
valueof the application portfolio, and
Rationalization objectives are to achievement of higher levels of process
achieve a high degree of operational
stem declining value where possible maturity is statistically correlated with
efficiency
through targeted improvements and by tangible business benefit.
proactively decommissioning costly, low- Applications management seeks to
The next step includes selecting and
value applications. maximize the business value of the
capturing meaningful metrics to
longest and most important phase of
Relating Application Cost to Portfolio evaluate IT performance and calculate
the application lifecycle. In the prime
Cost by Lifecycle Phase the business value delivered by the
of their lives, applications in this phase
When viewed at the portfolio level, applications in the portfolio. These
are in full operation and should be
overall IT expenditures per phase metrics will be used to target project
providing their peak business value to
follow a classic bell curve distribution. efforts, and will serve as a basis for
the company. The primary management
Although a portfolio’s costs reflect continuous improvement efforts.
objective for this phase is to maintain
the cumulative spending of all its Finally, application performance and
and enhance application quality and
applications, the number of applications maintainability can be continually
performance to maximize business
in each phase and the length of time an enhanced through root cause analysis,
benefit and increase application return
application spends in the phase influence preventative maintenance, targeted
on investment. Targeting resources and
the distribution. While individual fixes, and technical improvements.
process disciplines to the applications
cost is highest during Applications Bottom Line Results
that provide the greatest business value
Development, relatively few applications Since applications management covers
disproportionately increases the overall
are in this phase at any given time. the operational peak of an application’s
performance of the portfolio. Enhancing
Conversely, the vast majority of the life, improvements in this stage provide
operational efficiency lowers the cost
portfolio resides in the Applications highly leveragable benefits:
per unit of work completed, and frees
Management phase, resulting in higher
resources for higher priority assignments. • Enhances the business value provided
cumulative costs despite lower per-
Increasing application flexibility and by production applications
application expenditures. Applications
reducing time-to-market improves
Rationalization balances increasing per- • Increases application ROI by gaining
responsiveness to inevitable business and
application costs with declining numbers significant reductions in support costs
market changes.
of applications.
Unfortunately, many companies lack • Improves efficiency and IT performance
• Frees IT staff and budget for more straightforward, immediate, and easily were troubled or failed outright, an
strategic purposes quantifiable: alarming statistic. Projects fail for
numerous reasons, but inadequate
Applications Rationalization • Provides immediate and significant
project management is the most
Goal: Free resources and budget for cost reductions
significant contributing factor. Unclear
valueadding activities
• Frees IT staff and budget for more business objectives and lack of executive
Applications Rationalization addresses strategic purposes sponsorship doom many development
the under-performing applications in projects before they begin. Project
• Enables the consolidation of IT
the IT portfolio. It seeks to improve the objectives, requirements, and priorities
platforms
business performance of IT application must be business-driven to ensure
portfolios systematically and proactively • Extends life of value-generating
that the resulting application provides
by quantifying the value of each functionality
high value to the company. Technical
application, eliminating or retiring • Increases responsiveness to change by considerations are also important.
redundant and end-of life applications, improving application flexibility and Selecting the right technology and
and renovating applications that still scalability architecture for a new application
have residual value. provides it with the flexibility, scalability,
Applications Development
Over time, application portfolios Goal: Maximize the business value of and adaptability needed to support a
accumulate low-value applications development investments long and useful life in a fast-changing
through aging, mergers and acquisitions, business environment.
Applications development is the crucial
technology shifts, andunfinished To gain the greatest benefit from
first phase of the application lifecycle.
replacement projects, as well as “odds applications development efforts,
Not only is this phase essential for
and ends” of isolated and incompatible Keane advocates that IT organizations
defining and developing the applications
systems. Likewise, applications decline invest in obtaining world-class
that are core to a company’s future
in quality as they age, when years development processes and building
competitiveness, but it also sets
of maintenance, enhancements, and project management expertise. These
the foundation for future portfolio
production patches degrade technical capabilities will increase project success
performance through the applications
and functional quality, increasing error rates while improving time-to-market
it creates and how it creates them. If
rates, support costs, and the difficulty and enhancing the quality of project
this stage starts with bad investment
of incorporating new changes. These deliverables. Further, IT organizations can
decisions or produces poor-quality assets,
older applications lack the flexibility obtain significant benefits by applying a
it is impossible to reap strong returns
and scalability to keep pace with new disciplined approach to identifying and
later. Important goals for this phase
requirements and business opportunities. prioritizing project opportunities based
include:
Applications Rationalization improves on tangible ROI opportunities.
• Identifying and investing in the
portfolio performance through a Bottom Line Results
projects that achieve the highest
four-step process. Portfolio analysis Investments in building the right
return, and ensuring that those
evaluates the business value, fully-loaded applications in the right way provide
projects are delivered successfully in
costs, current condition, and lifecycle considerable benefits throughout the
terms of quality of deliverables and
positioning of each application in the application lifecycle:
fitnes to business purpose
portfolio. The next step identifies and
• Improving a project’s time-to-market • Greater business value per IT dollar
eliminates redundant functionality. The
to gain business benefits invested by ensuring alignment and
third step finds and retires aging or non-
proper prioritization
core applications that no longer provide • Controlling development and
sufficient ROI to justify their continued deployment costs to increase its ROI • Extended application life and value-
use. The final step extends the life of generation capabilities with built-in
• Ensuring that applications are built
still useful applications through targeted flexibility and scalability
on a platform and with constructs
improvements and migration to newer
that promote maximum flexibility, • Enabling the company to receive
and more flexible architectures.
scalability, and maintainability business value sooner
Bottom Line Results
Development projects present significant • Reduced long-term cost of application
By reducing time and effort spent on
challenges for many IT organizations. operation and support
maintaining and supporting low-value
Studies by the Standish Group found • Increased strategic value of IT
applications, Applications Rationalization
that over 70% of development projects
provides benefits that are
444
Application Lifecycle Optimization Lifecycle Optimization experience, Keane portfolios. Keane’s Portfolio Optimization
Success Factors has identified the following critical Plan (POP) service offers specific
Given the high value of corporate success factors: recommendations on how to protect and
application portfolios, the benefits of enhance the business value provided by
• Accurate portfolio assessments
a proactive and systematic approach to your entire application portfolio, free
portfolio management are large and far- Effective optimization decisions resources and budgets for value-adding
reaching. These benefits are summarized require a regular and comprehensive activities, and maximize the return on
as follows: understanding of the state of the your development investments. During
application portfolio, including the this six to eight week engagement, a
• Improved business performance condition of each application, the level Keane business consulting team will
IT applications touch every aspect of of business value provided, and the cost perform a functional, technical, and
a company. Enhancing application of support and operations. strategic review of your application
performance enhances the performance • Effective program and project portfolio, understanding the state of its
of the business activities those management capabilities applications; finding under-performing
applications support. The result is assets; and identifying, estimating,
improved revenue, superior operational Application Lifecycle Optimization
and prioritizing opportunities for
efficiency, better customer support, requires discipline and adherence to
gaining significant benefits from
higher quality management information, standards and procedures. Effective
Application Lifecycle Optimization
and greater competitive advantage. project management ensures
initiatives. Focusing on providing
optimization efforts stay on track. It
• Improved IT performance measurable results, the team will
is the key ingredient for successful
quantify the expected business value
Effective application portfolio applications development.
of such opportunities and recommend
management increases IT efficiency, • Solid, high-quality processes appropriate next steps.
reduces costs, and frees up resources
and budgets for valuecreating Formal processes underpin all By the end of a Portfolio Optimization
activities. By enabling a higher return optimization efforts and guarantee Plan engagement, your organization
on IT investment, IT will become a true consistent, repeatable, and high-quality will have a clear picture of the current
strategic partner with the company’s results. Keane documents its own state of its application assets and
business areas, therefore enabling IT to world-class applications development, their ability to support and enable
respond faster and more effectively to management, and rationalization your company’s business objectives.
changing business demands. processes in its Frameworks collection of Recommendations cover all phases of
methodologies. the application lifecycle, providing a
• Significant cost reductions
• Meaningful performance metrics wealth of information about where
As described throughout this paper, to most effectively invest your IT
poorly managed portfolios are costly High-quality metrics provide a window
resources. Implementing these prioritized
and wasteful. By supplying the tools on portfolio performance and enable
recommendations will deliver immediate
to increase efficiency, eliminate under continuous improvement efforts. Metrics
results with quantifiable business
performing assets, and streamline are needed to assess and monitor
benefits to your IT organization and
IT platforms, Application Lifecycle business value, IT effectiveness, and
company.
Optimization provides considerable process performance. Working from
a baseline and a continuous feed The data in the Portfolio Optimization
bottom line savings.
of performance metrics, application Plan report provides a baseline
A company cannot gain these benefits portfolio managers can become effective for evaluating the execution of
through half-hearted or part-time business leaders by orchestrating these initiatives as well as a means
efforts. Because the requirements optimization strategies that meet for monitoring future portfolio
for each application are unique, the corporate goals. performance. Whether your objectives
optimization objectives for each lifecycle include lowering costs, increasing
phase differ from one another. Decisions Moving Forward efficiency, or better targeting scarce
made in each phase have ramifications Keane recommends a targeted portfolio
resources, a POP is a means of launching
for other applications and phases. analysis as a first step for companies
an Application Lifecycle Optimization
There are no simple, “one size fits interested in optimizing the business
program within your organization.
all” solutions. Through its Application performance of their application
About Keane
Keane partners with businesses In business since 1965, Keane is an

and government agencies to agile, midsized, full service IT services
optimize IT investments by firm with headquartered in the
delivering exceptional operation, United States and more than 13,000
maintenance, and evolution of employees globally.
mission-critical systems and
business processes. Keane helps For more information on Keane’s
clients realize the greatest value services, solutions, and locations,
from their IT investments by please visit www.keane.com.
leveraging an insider’s hands-on
understanding of the nuances and
subtleties of their applications,
processes and infrastructure
making the recommendations we
give more actionable, the work
we do more pragmatic, and the
results realized more measurable.
Corporate Headquarters
88 Kearny Street, Suite 1650
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Keane’s services, contact us at:
877.88.KEANE
info@keane.com
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White Paper: Application Lifecycle Optimization

By proactively identifying, eliminating, or remedying poorly performing application assets, Applications

Applications Applications Applications

Challenges Challenges Challenges

70% development projects Escalating costs Disparate applications

Figure 1 Application Lifecycle Optimization

Keane partners with businesses In business since 1965, Keane is an

For more information about

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