For CIOs and IT Directors, the application portfolio is often a complex and sprawling landscape of legacy systems, redundant applications, and underutilized software. This can lead to increased costs, security risks, and a lack of agility. Application portfolio rationalization (APR) is a strategic process for analyzing your application portfolio to identify opportunities for consolidation, modernization, and retirement. This guide provides a leader’s perspective on how to approach APR to reduce complexity, to lower costs, and to build a more agile and efficient IT landscape.
At its core, APR is about aligning your application portfolio with your business objectives. It’s not just about cutting costs; it’s about ensuring that your application portfolio is supporting your business strategy and that it is enabling you to be more agile and innovative. The first step in any APR initiative is to create a comprehensive inventory of all of your applications. This should include information about each application, such as its business owner, its technical health, and its total cost of ownership (TCO). For a deeper dive into the importance of a comprehensive inventory, see our guide on IT asset management best practices.
1. The TIME Model for Application Portfolio Rationalization
The TIME model is a popular framework for categorizing your applications and for making decisions about their future. The four categories in the TIME model are:
- Tolerate: These are applications that are providing business value but that are not a high priority for investment. You should continue to maintain these applications, but you should not invest in any significant enhancements.
- Invest: These are applications that are critical to your business and that are a high priority for investment. You should continue to invest in these applications to improve their functionality and to extend their life.
- Migrate: These are applications that are not providing significant business value and that should be migrated to a more modern and cost-effective platform.
- Eliminate: These are applications that are no longer providing any business value and that should be retired.
2. The APR Process
A successful APR initiative typically involves the following steps:
- Create an Application Inventory: Create a comprehensive inventory of all of your applications.
- Assess Your Applications: Assess each application based on a variety of criteria, including its business value, its technical health, and its TCO.
- Categorize Your Applications: Categorize each application using the TIME model.
- Develop a Roadmap: Develop a roadmap for each application, outlining the actions you will take to tolerate, to invest, to migrate, or to eliminate it.
- Execute Your Roadmap: Execute your roadmap, working with your business and IT teams to implement the changes.
3. The Benefits of Application Portfolio Rationalization
The key benefits of APR include:
- Reduced Costs: By eliminating redundant applications and by moving to more cost-effective platforms, you can significantly reduce your IT costs.
- Reduced Risk: By retiring legacy systems and by modernizing your application portfolio, you can reduce your security and compliance risks.
- Increased Agility: By simplifying your application landscape, you can be more agile and can respond more quickly to changing business needs.
- Improved Business Alignment: By aligning your application portfolio with your business objectives, you can ensure that your IT investments are supporting your business strategy.
| Category | Action | Business Outcome |
|---|---|---|
| Tolerate | Maintain the application with minimal investment. | A stable and reliable application with a low TCO. |
| Invest | Continue to invest in the application to improve its functionality. | A modern and innovative application that is a key competitive advantage. |
| Migrate | Move the application to a more modern and cost-effective platform. | A more agile and efficient application with a lower TCO. |
| Eliminate | Retire the application. | Reduced costs and a simplified application landscape. |
Conclusion
Application portfolio rationalization is a critical strategic process for any enterprise that wants to build a more agile, efficient, and cost-effective IT landscape. By taking a structured and data-driven approach to APR, you can reduce complexity, to lower costs, and to align your application portfolio with your business objectives. The journey to a rationalized application portfolio is a marathon, not a sprint, but with the right strategy and the right partner, you can build a more intelligent and competitive business. For a deeper dive into modernization strategies, see our guide on legacy system migration strategies.
