Application Portfolio Rationalization: A Definitive Guide

The success of any organization depends on timely, data-driven business decisions and the incorporation of appropriate strategies. With enterprises today relying more on technology and various digital assets than ever before, efficient management of the organizational software environment has become an extremely important aspect for the public sector and government agencies. Application portfolio rationalization streamlines the IT portfolio and aligns it with an institution’s overarching goals. This strategy aims to provide a competitive advantage to the organization by reducing costs and making efficient use of the available IT resources. With AI tools at your disposal to automate the processes to support application portfolio rationalization and management, you can focus on optimization and continuous improvement of your IT portfolio. This blog will tell you everything you need to know about application portfolio rationalization, the associated benefits, and how agencies can successfully implement this strategy.

What is Application Portfolio Rationalization? ^[1][2]

Application portfolio rationalization is a process used by organizations to evaluate and optimize their business applications and IT systems. The objective is to boost the effectiveness and efficiency of the existing organizational software environment to improve performance, reduce costs, boost business agility, and build a strong foundation from which the system can evolve in the future. The process involves evaluating, prioritizing, and making informed decisions about retaining, replacing, consolidating, or retiring applications in the portfolio.

Benefits of Application Portfolio Rationalization ^[1]

Below are the key advantages of having an elaborate strategy in place to optimize the usage of IT systems, software, and business applications.

Lower IT Spend

Saving money on the existing IT environment is the primary benefit of conducting application portfolio rationalization. Most of these savings come from identifying and retiring underutilized, outdated, or redundant business applications. This saved capital can then be directed towards updating the IT infrastructure and incorporating cutting-edge technologies like AI, machine learning, and IoT.

Elimination of Unnecessary Expenses

A thorough application rationalization strategy is designed to optimize and organize an agency’s IT environment. This structured approach makes it easy to assess the future requirements of the system and plan accordingly, avoiding unnecessary spend.

Simplified IT Landscape

Most organizations are unnecessarily running many more cloud applications than they really require, leading to a highly complex IT landscape that is cumbersome to maintain and upgrade. A thorough optimization strategy can weed out unnecessary applications and processes, effectively streamlining the IT infrastructure.

Elimination of Redundant Applications

An application portfolio rationalization undertaking makes it possible to easily consolidate similar applications, eliminating redundancy and reducing IT spend.

Less Time and Money Spent on Training and Application Maintenance

Each business application being used by an agency demands support, either from vendors or internal staff, and this costs time and resources. A reduction in the number of applications being run translates to time and money saved by minimizing application support and training expenditure.

Building Successful Application Portfolio Rationalization ^[2]

Application rationalization requires a structured approach to be effective and successful. The following steps can guide you through the process.

Define your Goals

The first step is clearly defining the goals. These may include the reduction of technical debt, lowering IT spend, the modernization of the IT landscape, or an organization-wide application modernization. Prioritizing and quantifying these objectives will shape the progress of your optimization project.

Create an Inventory of all Business Applications

A thorough application portfolio rationalization can only be conducted if all digital assets are properly organized. Consolidating your entire application portfolio into a single inventory ensures that you have complete, accurate, and up-to-date application data at hand, which makes it easier to understand the existing application environment.

Recognize the Associations between Certain Applications and Business Aspects

Once the application inventory is in place, you can identify the operational aspects influenced by each application. This step provides a clearer picture as to which applications are crucial to the organization and which are not needed.

Conduct Surveys for Insights into Your Application Portfolio

To effectively streamline your application portfolio, it is essential to first understand it thoroughly. This involves involving all stakeholders in the process and posing pertinent and context-specific questions within your IT environment. Your application survey should be distributed among all stakeholders, and responses should be stored in a format that enables easy analysis of the data. Asking the appropriate questions and gathering the correct information from the right individuals are crucial steps to building a comprehensive application portfolio.

Examine the Results of the Surveys

A thorough analysis of the application survey results will provide a detailed picture of the existing environment and application landscape. The data contained within the survey results can help identify underutilized and redundant applications, establish which applications align with strategic goals and deliver the most value, validate the health of the application landscape, uncover cost-saving opportunities, and much more.

Craft your Application Portfolio Rationalization Strategy

After gathering and analyzing all the survey data, the resultant models can be used to shape your optimization strategy. This usually involves formulating strategic roadmaps for your application portfolio and its components, along with creating business cases to support more immediate investments.

Incorporate a Framework to Support Periodic Application Rationalizations

The application portfolio rationalization process shouldn’t be considered a one-time exercise. The organizational software environment should be reviewed and optimized periodically to ensure that the application portfolio is always up-to-date and as efficient as possible.

How Can AI Help Manage Application Portfolio Rationalization?

Application portfolio rationalization is an ongoing process, requiring you to continually monitor digital experience and discover, trace, and diagnose applications for updated insights. AI tools can help you automate the underlying support processes that can support continuous improvement to your IT portfolio.

A few examples of how machine learning or AI-based solutions can help automate and accelerate the application portfolio rationalization process include:^[3][4]

• Get insights into most common and recurrent incidents, events, and service requests from users.
• Perform code-level analytics to understand the cloud readiness and complexities within your application portfolio.
• Analyze mobile and web applications across multiple parameters.
• Perform cloud assessment to fast-track cloud adoption of different applications.

Although such use of AI in managing application portfolio rationalization is not yet commonplace, it has a great potential to transform how modern organizations streamline and manage their IT portfolio.

Conclusion

In the milieu of public sector organizations and government agencies, the demands are ever-evolving, the scrutiny is constant, and the resources are often constrained. What sets application portfolio rationalization in the public sector apart are its challenges. Compliance with stringent regulatory requirements, data protection, and the need to integrate with legacy systems are just some of the hurdles that government agencies face.

Application portfolio rationalization is not just a concept. It is a catalyst for excellence in the public sector. By optimizing their IT portfolios, government agencies can drive efficiency, reduce costs, enhance services, and ensure compliance with regulations.

The Infosys Public Services IT Portfolio Rationalization Solutions applies investment portfolio management principles to IT portfolios to assess the value generated as well as the return on investment of each business application. It helps to modernize the most essential assets. Reach out to know more about how your organization can get started with a comprehensive application portfolio rationalization.

References

1. https://www.leanix.net/en/wiki/ea/application-rationalization
2. https://www.umt360.com/guides/application-portfolio-rationalization/
3. https://www.ltimindtree.com/wp-content/uploads/2021/05/How-to-Leverage-Application-Portfolio-Rationalization-to-Increase-Business-Value.pdf?pdf=download
4. https://www.techtarget.com/whatis/definition/application-portfolio-management-APM#:~:text=Application%20portfolio%20management%20(APM)%20is%20a%20framework%20for%20managing%20enterprise%20IT&text=purpose%2Dbuilt%20AI%20for%20DevSecOps%20that%20supports%20automation%20of%20processes