Application Portfolio Rationalization

White Paper: Applications Rationalization
Application
Rationalization
Reducing the High Cost of Low-Value Applications
©2007-09 | Keane, Inc. | WP-AR
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877.88.KEANE info@keane.com
EXECUTIVE SUMMARY
By proactively identifying,eliminating,and/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
The Application Lifecycle 4
How Applications Rationalization Can Help 5
Rationalizing the Benefits 6
Conclusion 7
ABOUT KEANE 8
TABLE OF FIGURES
Figure 1 The High Cost of Low-Value Applications 4
Figure 2 How Applications Rationalization Can Help 5
White Paper: Applications Rationalization 4
Abstract they universally contain a mixture of elimination of non-core technologies

Every company faces the challenge of high, low, and medium value-producing and platforms to produce even greater
maximizing their return on investment applications. Low-value applications savings. Improving applications with
in IT applications. However, the speed of accumulate over time through aging, residual value extends their useful life
technology advancements and the rapid mergers and acquisitions, technology and may even enable integration with
pace of today’s business environment shifts, and never-quite-completed other corporate initiatives, increasing
often force companies to rely on an replacement projects. These applications the flexibility to respond to new
application long after it has ceased to are disproportionately expensive to the business requirements.portfolios enables
provide maximum value to the business. level of business value they produce. businesses to achieve maximum value
Such an application becomes increasingly Worse, they draw funds and resources from their IT investments. Disciplined
costly to the business and impedes IT away from higher value-producing management of application portfolios
productivity because of its complexity opportunities. Even applications that allows these assets to achieve their full
and constant support requirements. are “profitable” in a direct expense-to- potential by capturing greater benefit
Add costly non-core technology and value calculation may be problematic in from production systems, freeing
redundant applications inherited from a big picture view. Their technical and funds and IT resources to pursue high-
mergers and acquisitions, and it becomes functional limitations affect a company’s value opportunities, and providing the
clear how application portfolios can ability to respond rapidly to changing foundation and flexibility to respond
quickly – and quietly – drain IT resources requirements, and make it difficult to more quickly to changing business
and corporate bottom lines. integrate with other initiatives. requirements.
By objectively evaluating an application Application aging is inevitable, but The Application Lifecycle
portfolio and measuring the cost of taking a proactive and disciplined Every application travels through a
each application against the business approach to low-value applications can lifecycle that runs from development
value it provides, companies can then mitigate their consequences, saving to retirement, as illustrated in figure 1.
“rationalize” applications that are resources and increasing the overall Each phase requires a different strategy
generating little or no business benefit – value of the application portfolio. to generate maximum value for the
and at the same time extend the lifecycle Applications Rationalization seeks business. In the earliest phase of the
of aging applications that can still to systematically and proactively lifecycle, an IT organization invests
provide a desirable return on investment.
This white paper will help executives
understand how Applications Applications Applications Applications
Development Management Rationalization
Business Value
Rationalization – a proactive, disciplined,

and investmentoriented approach to
identifying, eliminating, and upgrading
low-value applications – can help them
optimize their application portfolios. The
Time
paper also:
Goals Goals Goals
• Identifies the categories of low- Figure 1 The High HighCost of impact
strategic Low-Value Applications
High operational efficiency Proactively replace, retire, or
value applications typically found in Every application inAligned
the portfolio evolves throughOptimally
with business a three-phase lifecycle – development,
supports needs
management,and
upgrade applications providingrationalization
– providing varyingOn-time
levels of business value according to its position in the lifecycle.
of business declining business value
corporate IT portfolios Continuously streamline
Within budget Flexible
• Details the steps that comprise improve the business performance of Scalable
heavily in developing an application
and standardize portfolio
costs and increase flexibility
Applications Rationalization IT application portfolios by quantifying Reliable before receiving business value. At its
the value of each application withinCost-effective peak, a well-designed application will
• Demonstrates how Applications
the portfolio,Challenges
eliminating or retiring Challenges provide a high ratio of business value
Challenges
Rationalization activities lead to
redundant and end-of-life applications,
No budget Inefficiencies to IT costs. As the application
Redundant applications moves
reduced costs and enhanced business
and upgrading 70%applications that still
development projects Escalating costs into the final phase
Disparate of its lifecycle, its
applications
flexibility fail (Standish Group study)
produce value. By lowering costs and business value
Poor process, management starts
End-of-life to decline and its
applications
Poor project management disciplines
Introduction improving performance, Applications support Non-core technologies
costs rise. The eventual result is a
Aligning IT investment with Poor performance metrics Inflexible systems
An application is not an asset if its Rationalization directly
business strategyimpacts corporate
Reactive
low-value application. A company begins
costs exceed the value that it delivers. bottom lines. It frees budgets and IT staff to pay an increasingly high cost for the
Although IT application portfolios are, for new development and other value- value it receives until the point at which
as a whole, immensely valuable assets, adding activities. It also allows for the the application is finally replaced, thus
renewing the lifecycle. The following necessitates 111

buying software or services Rationalization effort is to analyze the
categories of low-value applications are from an undesirable partner. Supporting state of the applications within the
typically found in corporate IT portfolios. non-core technology is costly, difficult, IT portfolio in order to understand
and tedious for IT staff members, but their current condition, quantify their
Aging Assets
is necessary unless that application cost of operation and support, and
Applications decline in quality as
functionality can be migrated or retired. measure their value to the business. This
they age. Years of maintenance,
information identifies each application’s
enhancements, and production patches How Applications Rationalization Can
lifecycle positioning, calculates the
by a variety of programmers inevitably Help
opportunity for improvement, and
degrade technical quality, increase Applications Rationalization addresses
determines the actions needed to
error rates, elevate support costs, and low-value applications from a business
optimize the application’s business
intensify the difficulty of incorporating point of view. Using objective measures,
effectiveness. It creates a prioritized
new changes. Declining technical quality it identifies the under-performing assets
action list to maximize the benefit of
frequently leads to declining functional within the application portfolio and,
rationalization investments. Portfolio
quality as applications fail to keep depending on their situation, restores
analysis becomes a continuous process,
pace with new business requirements, them to profitability or decommissions
regularly monitoring the state of the
resulting in lost business opportunities. them to save funds and free resources. It
portfolio as its applications and business
provides executives with the information
Redundant Functionality objectives evolve.
they need to eliminate “pet” applications
Application portfolios often contain
that pull staff, budget, and attention Eliminate Redundant Applications
many versions of the same functionality.
from higher value objectives, and the Goal: Reduce costs and support efforts
Mergers and acquisitions frequently
services and expertise to cost-effectively
bring duplicate applications with Redundant applications are costly
extend the life and increase the ROI of
near-identical functionality, and users to support and provide little or no
still-valuable applications. Applications
are known to keep “pet” applications incremental benefit over proper use of
Rationalization encompasses four major
even after their replacements have a single application. This step identifies
tasks as described below and illustrated
been deployed. Redundancy wastes overlapping functionality and determines
in figure 2.
resources, increases the risk of errors, and the strongest application which is to
“clutters” the production environment, Analyze the Portfolio remain. If necessary, it harvests discrete
which negatively impacts organizational Goal: Target your efforts to the areas of functionality from the redundant
flexibility and scalability. highest return applications and incorporates it into
the strongest application to ensure
Disparate and Incompatible The first step in an Applications
functional coverage. Equally important
Applications
Over time, application portfolios
accumulate “odds and ends” of Tas k Goal
isolated and incompatible applications.
These applications may require costly Target efforts to the areas
Analyze the portfolio
specialized skills and new software of highest return
and/or hardware to operate, making
them difficult to fit within common IT
architectures. Eliminate redundant applications
Non-Core Functions
Changing corporate priorities leave Reduce costs and support efforts
remnant applications that support de-
emphasized corporate strategies. While Retire end-of-life applications
these applications may still deliver to
their intended purpose admirably, they
no longer justify a high level of support Maximize the residual business
Renovate worthwhile applications
value of the applications
Non-Core Technologies
Sometimes valuable application
functionality resides on costly, outdated, Figure 2 How Applications Rationalization Can Help
or no-longerstrategic technology, or it
to a newer application. Once worthwhile the consolidation of IT platforms.

“In tight economic times, Applications applications are restored, additional Consolidating applications on newer
Rationalization provides significant value can be obtained by integrating platforms enables IT organizations
cost savings that flow directly to otherwise disparate applications within to eliminate considerable hardware,
the corporate bottom line and frees the company’s strategic architecture. software, support, and operational costs.
resources for projects that would Much of this highly defined work is
• Frees resources
otherwise be deferred.” suitable for assignment to offshore
development facilitates to lower cost and Applications Rationalization introduces
further increase ROI. efficiencies that free staff and budgets
is the clean-up and migration of data for purposes that provide greater
Rationalizing the Benefits
from the redundant applications to the business value. Rather than supporting
IT organizations typically focus so
remaining application. The last activity applications that provide marginal
intensely on the development of
in this process is decommissioning the business value, IT organizations can
new applications and the operational
extraneous applications. focus their attention on developing new
management of production applications
applications, supporting business-critical
Retire End-of-Life Applications that they miss the benefits they could
applications, and tackling other value-
Goal: Reduce costs and support efforts receive from addressing the low-value
adding activities.
An application reaches the end of its applications within their portfolios.
By providing a method for proactively • Enhances flexibility
useful life when its cost of operation
and support approaches or exceeds the identifying, eliminating, and/or Fewer and higher quality applications
business value it produces. Without a remedying poorly performing application are easier to maintain and enhance,
portfolio analysis to measure costs and assets, Applications Rationalization increasing an organization’s ability to
value, an end-of-life application can offers benefits that are straightforward, respond to or initiate business changes.
drain IT resources for years before it is immediate, and quantifiable. Investments Moving application functionality to
noticed and retired. In cases where the in Applications Rationalization are newer and more scalable architectures
original business purpose still has merit, easily justified. In tight economic times, provides IT organizations with the
the best strategy may be to develop it provides significant cost savings that flexibility to extend the application
a new application operating on a less flow directly to the corporate bottom as needed to support new business
costly and more strategic platform to line, and it frees resources for projects requirements. Integrating restored
replace the aged one. If the application’s that would otherwise be deferred. In applications and their data with
functionality is no longer core to the abundant times, it provides the resources other systems provides greater access
business, it is decommissioned. and flexibility to respond more rapidly to corporate information and gains
to business opportunities. The major operational efficiencies. By streamlining
Renovate Worthwhile Applications benefits of Applications Rationalization an application portfolio and cleaning
Goal: Maximize the residual business fall into the following categories. applications “clutter”, organizations
value of the applications
• Saves money decrease the complexity and cost of
Where appropriate, targeted integrating new applications and
improvements can extend the life Applications Rationalization achieves
increase the strategic flexibility to pursue
and restore the value of an under- significant cost savings by eliminating
new business opportunities and mergers
performing application. Migrating an underperforming application assets,
and acquisitions.
application from a non-core technology lowering the operating costs of retained
application assets, and enabling • Extends the life of valuable
to a newer, more strategic platform
functionality
extends the application’s useful life by
enhancing its flexibility and scalability IT applications provide their value
“By the end of an Applications through the business services they
while saving the cost of supporting the
Rationalization Assessment, an perform. By improving application
older platform. Improving the technical
organization will have a clear picture performance, Applications
quality of an application enhances its
maintainability, reducing costs, and of the current state of its application Rationalization allows the company to
improving extensibility. Depending on assets and a wealth of information gain more of this value over a longer
an application’s functional quality, its on how to enhance their business period of time, increasing the return on
business value can be improved through value while reducing costs and freeing original investment in the application.
functional enhancements, or pertinent resources for more strategic initiatives.”
functionality can be extracted and moved
Conclusion strategic review of your application the current state of its application assets
Keane offers an Applications portfolio, understanding the state of its and a wealth of information on how
Rationalization Assessment as a first step applications, finding under-performing to enhance their business value while
for companies interested in optimizing assets, and identifying, estimating, and reducing costs and freeing resources for
their application portfolios. This targeted prioritizing opportunities for gaining more strategic initiatives. Implementing
portfolio analysis provides specific significant benefits from Applications Keane’s prioritized Applications
recommendations on how to reduce Rationalization initiatives. Focusing on Rationalization recommendations
the high cost of low-value applications providing measurable results, the team will provide immediate, quantifiable
and maximize the business value of will quantify the expected business value results, maximizing the return on
your application portfolio. During this of such opportunities and recommend your improvement investments. These
eight to twelve week engagement, a appropriate next steps. benefits are not limited to Applications
Keane business consulting team will Rationalization; the assessment report
By the end of an Applications
perform a functional, technical, and offers a foundation for launching
Rationalization Assessment, an
an ongoing application lifecycle
organization will have a clear picture of
optimization initiative and a baseline for
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
San Francisco, CA 94108
For more information about

Keane’s services, contact us at:
877.88.KEANE
info@keane.com
keane.com

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White Paper: Applications Rationalization

By proactively identifying,eliminating,and/or remedying poorly performing application assets,

Abstract they universally contain a mixture of elimination of non-core technologies

Rationalization – a proactive, disciplined,

renewing the lifecycle. The following necessitates 111

to a newer application. Once worthwhile the consolidation of IT platforms.

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

For more information about

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