Application Portfolio Rationalization - Whitepaper
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The document discusses an application portfolio rationalization framework to help organizations analyze, transform, and optimize their application portfolio. It describes tools and mechanisms used in the rationalization process and a framework that assesses applications based on their functional and technical dimensions. Applications are given a weighted score on these dimensions to identify gaps. This is mapped on a rationalization map to recommend solutions like retaining, migrating, replacing, or upgrading applications. Case studies demonstrate value delivered in reducing costs and improving portfolio alignment for clients.
Application Portfolio Rationalization - Whitepaper
- 1. www.niit-tech.com Application Portfolio Rationalization Transforming your application portfolio NIIT Technologies White Paper
- 2. CONTENTS The Need for Rationalizing the Application Portfolio 3 The Scope of Application Portfolio Rationalization 3 The Nuts and Bolts of Rationalizing the Application Portfolio 3 - The Application Rationalization Toolkit – Tools and Mechanisms 3 - Framework for Application Portfolio Assessment 5 - Applications Weightage 6 - Rationalization Map and APR Analytical Model 7 - Analysis and Typical Outcomes 8 - Process and Tools 8 Benefits of APR 9 - Strategic IT Roadmap 9 - Application Modernization and Consolidation 9 - IT Platform Consolidation 9 Succeeding with APR 10 - Critical Success Factors 10 - Avoiding Bias 10 - Building Consensus 10 Our Credentials 11 Case Study 1: Transportation 11 - Business Scenario 11 - Value Delivered 11 Case Study 2: Manufacturing 11 - Business Scenario 11 - Value Delivered 11 Conclusion 12
- 3. TRANSPORTATION TRAVEL CARGO PACKAGING TRANSPORTATION TOUR TRAVEL GUIDE TRAVEL TRANSPORTATION CARGO CARGO LOGISTICS TRAVEL JOURNEY GUIDE TRANSPORTATION CARGO JOURNEY CARGO GUIDE LOGISTICS TRAVEL The Need for Rationalizing the Application Portfolio The Scope of Application Portfolio Rationalization IT teams of most businesses drive investments towards delivering With the global economy slowly stabilizing, IT organizations face an new reliable applications and new technologies. However, with unprecedented demand to maintain an effective application portfolio changing business needs, ongoing economic uncertainty, poor – a collection of software applications - to sustain growth and impact business-IT alignment, mergers and acquisitions, and compliance the bottom line. However, with the proliferation of applications over pressures, organizations over time become a hub of hundreds of time, organizations need to ensure that the application portfolio legacy, sub-optimal and sometimes redundant processes and health is continuously evaluated and applications rationalized in supporting incompatible order to decrease business failures and help determine the technologies, and an unmanageable application portfolio. Industry extendibility potential of specific applications. Rationalizing the statistics suggests that almost 80% of the IT budget is spent on application ongoing operations and maintenance, while only 20% is used for business-critical applications by rigorously assessing them in each future business needs. In order to have a balanced application domain. When executed right, Application Portfolio Rationalization portfolio, many organizations reduce IT spend by systematically (APR) leads to reduced Total Cost of Ownership (TCO) and identifying and decommissioning ageing applications to drive maximization of business ROI; realized through application operational efficiency, reduce the overall complexity and risks and elimination, replacement, consolidation or modernization. applications, information silos, portfolio identifies obsolete, redundant and contain costs. Application rationalization is not merely a task of cost cutting Organizations thus need to continuously analyze their application but is an initiative by the organization to transform a highly portfolio for its business value, potential to deliver more value, and complex and moderately effective application portfolio to an reduce cost of ownership. Such ongoing comprehensive agile and productive portfolio aligned with the business and IT assessments help CIOs and IT executives make strategic decisions needs of the organization. on how to rationalize the application landscape, reduce cost of ownership and improve speed-to-market. This paper describes a robust Application Portfolio Rationalization (APR) framework for understanding functional and technical gaps, and recommends opportunities to replace/transform, retain, The Nuts and Bolts of Rationalizing the Application Portfolio migrate, technically or functionally extend an application for The Application Rationalization Toolkit – increasing its usefulness. It also describes why we need APR, and Tools and Mechanisms critical success factors to execute. This paper also articulates a Organizations need a wide range of tools and mechanisms to keep comprehensive approach to APR by tailoring processes as relevant the application portfolio rationalization process on track. As a result and using a simple toolkit. of successful application portfolio rationalization engagements, we have a wide range of home-grown and industry standard tools and mechanisms that can help assess applications, analyze and communicate outcomes and the imperative for change, and make effective business decisions as a result. These tools are adapted for each requirement and are being evolved continuously. 3
- 4. # Tool Purpose 1 Evaluation grids (4 quadrant (2 X 2) matrices) A series of prioritization and focusing tools using the four quadrant (2 X 2) grid with varying axes. These simple tools help in easy communication of alternatives and ratings/rankings. 2 Pareto Analysis Helps in ranking identified criteria or parameters, especially when attempting to focus on the most important and the most significant criteria 3 Architectural Trade-off Analysis Systematically evaluates architectural options against business and non-functional requirements, ensuring that the most critical are never compromised 4 Root-cause analysis Ensures that the real causes for any constraint or failure are systematically identified 5 Forced-Decision- Matrix (FDM) Builds consensus on the relative importance of the assessment factors, assigns relative weights and chooses between these factors 6 Process-Data-matrix (PDM) A simple method of assessing functional overlaps and interdependencies between business applications 7 Process flow-charts and swim-lane diagrams Critical business processes shall be mapped using swimlane diagrams to identify bottlenecks and dependencies 8 Questionnaires and checklists Used to elicit perceptual and factual responses from stakeholders and ensure a structured uniform response that can be consolidated and analyzed 9 Risk cue charts, risk radars Used to ensure complete risk analysis and mitigation planning, risk management and reporting 10 Architectural representations Industry standard architectural representations and analysis tool for communication, evaluation and consensus building. 11 Decomposition diagrams Used for disaggregating complex areas like process flows into dependent constituents for ease of analysis and communication 12 Use case diagrams Documents, validates and analyzes core processes supported by each touch-point as viewed by each target customer profile 4
- 5. Framework for Application Portfolio Assessment improve application health. The framework helps organizations in A robust framework for application portfolio rationalization (Figure1) analyzing and transforming the application portfolio, and generates provides solution strategies and necessary information on how to a final effective rationalized application portfolio. Solution for Applications as Aligned to Intiatives Replace/ Transform Identify target architecture/ COTS apportunities Migrate PMO Setup IT Governance Functional Extension Technical Extension Retain Manage Service Levels Improve application value Reduce Total Cost of Ownership (TCO) Code Cleansing/ Optimizations Modularization/ Componentization Standardization of technology stack Code Refactorin g Optimizations Functional Gap analysis Identify target Platform for Migration Platform Migration Transform application to Reference architectures Database Migration Implement COTS Re-engineering for enhanced functionalities Functional Consolidations/ integrations Solution Strategies Platform Standardization Consolidations (Functional & Technical) Platform M igrations Database M igrations Costs tion Implementa lement SOA Enab Figure 1: APR Framework Following application portfolio analysis, the framework helps in conduct functional or technical upgrades and consolidate making recommendations to retain, migrate, replace/transform, applications technically. 5
- 6. Applications Weightage Individual applications are assessed on each parameter to identify Our application portfolio rationalization framework takes into and understand critical functional and technical gaps. The functional account key parameters that assess the functional and technical and health of an application. Each of the technical and functional application’s positioning in its lifecycle, assess the opportunity for dimensions (see Figure 2) of an application is assigned a weight improvement, calculate potential impact and guide the actions based on its relative importance. needed to optimize the application’s business effectiveness. technical dimensions, when evaluated, identify each Source Code Business Fit Complexity Maintainability Scalability User Friendliness Maintainability Process Support Reporting Database Connectivity Deployment Stability Flexibility Compliance Security Performance Portability Functional Aspects Technical Aspects Figure 2: Applications Functional and Technical Aspects 6
- 7. Rationalization Map and APR Analytical Model total weighted value of the functional and technical dimensions Our approach to APR systematically identifies gaps in the (Figure 2) of the application. portfolioand generates a rationalization map (Figure 3) using the 90 App 1 Technical Gap App 4 App 3 60 App 2 App 5 30 0 App 10 App 8 App 6 App 7 30 60 90 Functional Gap Functional Gap Figure 3: Rationalization Map 7
- 8. The rationalization map is the outcome of the analysis process just migration, retention, replacement or functional and technical described. Nine quadrants identify opportunities for application consolidation as illustrated below (Figure 4). >30 >60 (Medium) <=30 (Low) >60(High) Technical Gap High Migrate Migrate Functional Extension OR Replace Medium Technical Extension Technical & Functional Extension Low Retain Functional Extension Low >60(High) Replace >30 >60 (Medium) Replace Medium Replace <=30 (Low) High Functional Gap Functional Gap Figure 4: Opportunity Domain Grid Analysis and Typical Outcomes Application Portfolio Management (APM) APM addresses the quality and functionality of all the applications business and IT objectives in use within an organization. The need is to manage the lifecycle of the application from the time the application started working to technology gaps the time the aging application was retired. APM provides key planning and management details such as applications age, reliability, technology and platform used and manage whether it fits the business needs for IT modernization programs. Progressive refinement from a high-level assessment and Process and Tools comparison with reference application roadmaps results in Tailoring APR Processes as required focused Application Portfolio Rationalization is not a static or one-time applications in use. decisions that improve the return on the exercise. It must be integrated into the workings of business and IT operations – specifically processes that are needed for planning, How this data is collected and assessed depends on the maturity investment, key decisions and review. The cross functional team of supporting information systems and availability of performance engaged for APR must leverage and tailor the following processes and cost data. for effective portfolio rationalization: 8
- 9. Investment Planning Investment planning is budget allocation for running, changing or transforming the business. It covers all the costs of rationalization 28.8 and provides the following two inputs: 14.4 12 - Target application portfolio revalidation to ensure that it is aligned with the business objectives. - steady-state the application portfolio - Trade off analysis to support critical decisions - Assessment of business risks during transformation Project Management mitigation strategies Application Modernization and Consolidation Organizations run numerous legacy applications built on outdated technologies, and hardware and software platforms that are no business change towards new technology platforms and next by addressing rationalization objectives in projects. The challenge is early identification, management and mitigation of risks while ensuring optimum utilization of people resources, both internal longer supported. Such legacy applications are difficult to maintain and operate, and limit an organization’s ability to support evolving organizations identify and prioritize difficult to maintain and operate legacy applications for potential modernization and consolidation. and contracted or outsourced. Before modernizing and migrating legacy applications to newer, less expensive and more efficient technology platforms, we help identify Benefits of APR Strategic IT Roadmap Organizations must build a strategic IT roadmap to align with business priorities. These roadmaps are built with the help of a cross functional team including Architects, and Business and IT leaders using specific evaluation criteria such as alignment with business goals, IT or/and business strategy and objectives, budget availability, total cost (license, implementation, training, and support), technology maturity and longevity, people skills and motivation, and complexity and stability of business processes supported. The IT roadmap reflects a segmented, logical, affordable and achievable plan for application disposition — to decommission, remediate, re-platform, consolidate or enhance applications. The actionable roadmap thus defines an effective framework to identify applications that can be eliminated, consolidated or replaced with more cost-effective solutions. Opportunities to leverage every existing application to the full are explored. Investment in complex business logic and data is protected by modernizing existing opportunities while modernizing the legacy applications, thus simplifying the applications estate. IT Platform Consolidation strategy in order to meet the goals of the business. NIIT multiple applications on-to more flexible technology platforms, accelerating time-to-market, reducing operational costs and facilitating multi-channel capabilities. gaps, changes, and benefits specific to each phase in a transformation from current state to future state. A good roadmap contains the following details: 9
- 10. Succeeding with APR changes, Critical Success Factors to succeed the top management must therefore: sometimes impacting people and structure, job responsibilities and authority, not just technology changes. In order To realize the business value from an application portfolio Align the rationalization project with the organization vision and rationalization exercise the following critical success factors goals, and must be managed: Clearly convey top-priority objectives including training and strategies to align stakeholders with them. Rationalization programs require outcome oriented governance A cross-functional team of technology and domain experts including from the top level management to address prioritization and funding. business and technology architects, application team, and domain Investment allocation and high level review of the program is specialists is essential for the success of the application portfolio important for application rationalization. rationalization exercise. An effective cross functional team will ensure that high performance and reliability is built into the entire application portfolio. Solutions can be rapidly designed, built and implemented to solve complex problems if they have been thought through from both, the technology as well as business criteria. Avoiding Bias Application Rationalization can be performed at several different levels, depending on the business need and the time available. People involved must strike a balance between the top-down and the bottom-up perspectives on what is important for their company. Stakeholders such as application managers, end users, business owners, IT managers, and technical architects must actively participate in the application portfolio rationalization and optimization process. This is often a collective perception exercise and requires a wide cross-section of respondents to be fair and balanced. Executive stakeholders constantly monitor key performance indicators such as total cost of ownership, costs and applications performance, and business user performance to measure overall application portfolio effectiveness, improve governance and align business with IT. They must evaluate business driven application requirements to identify and prioritize applications within their portfolio. In order to ensure a finely tuned application portfolio that makes the most of the existing systems and incorporates new functionality, the decision should be based on the relative importance (criticality) and priority as deemed by the organization’s objectives rather than on the personal needs. This multi-dimensional assessment must be protected from personal bias and the bias of authority. Tools to ensure an unbiased assessment therefore become very useful. Building Consensus People at different levels analyze applications using different criteria Most application portfolio rationalization programs fail due to unavailability of budget and resources to either do the exercise properly or to implement the recommendations. In order for a program to be successful, organizations must understand and assess the budget and the resources requirements before taking on such an exercise and then to take full advantage of the recommendations to achieve desired benefits within reasonable time. and assign differing weights to even similar criteria. Developers and team leads see the breadth, depth and scope of an application while project managers analyze how applications integrate with several other applications and decide the ones that are necessary. CIOs assess applications at the business unit level and decide the value that each application provides to the enterprise, and so on. It is important to generate multiple perspectives but also to build consensus on the conclusion and roadmap so that the resultant recommendations will be supported. It is essential to gain top management support for the application rationalization program because of the multi-dimensional change it often implies. The APR roadmap requires business environment 10
- 11. Our Credentials Case Study 1: Transportation 28.8 Business Scenario 14.4 12 Case Study 2: Manufacturing Business Scenario Value Delivered Value Delivered 11
- 12. Conclusion Companies across industries have disparate IT applications and face overwhelming challenges to improve operational efficiency, reduce complexity and Total cost of Ownership. As more and more applications continue to be developed, mergers and acquisitions happen, the application portfolios landscape changes and the need to rationalize the portfolio that best meets business requirements at regular intervals, increases. A framework that can retain existing portfolio’s residual business value and reduce functional overlap can dramatically change the dynamics of the application portfolio rationalization program. A robust framework acts as a guiding tool to assess and rationalize the portfolio and quickly determine whether the applications are functionally and technically In addition, once the organization clearly visualizes the state of their application portfolio, they must build a strategic IT roadmap, modernize and consolidate legacy applications or move applications to flexible technology platforms to avoid application portfolio deterioration over time. Lastly, the application portfolio developed should be maintained and assessed regularly using effective teams of skilled technology and domain experts, and top management support to better serve a company’s business objectives. Continuous assessment and maintenance will help organizations realize rationalization opportunities by streamlining existing portfolio’s business value. healthy to support an organizations business strategy. It maps the analysis made with the cumulative application portfolio, and identifies potential applications that can be retired. 12
- 13. About NIIT Technologies NIIT Technologies is a leading IT solutions organization, servicing customers in North America, Europe, Asia and Australia. It offers services in Application Development and Maintenance, Enterprise Solutions including Managed Services and Business Process Outsourcing to organizations in the Financial Services, Travel & Transportation, Manufacturing/Distribution, and Government sectors. With employees over 8,000 professionals, NIIT Technologies follows global standards of software development processes. Over the years the Company has forged extremely rewarding relationships with global majors, a testimony to mutual commitment and its ability to retain marquee clients, drawing repeat business from them. NIIT Technologies has been able to scale its interactions with marquee clients in the BFSI sector, the Travel Transport & Logistics and Manufacturing & Distribution, into extremely meaningful, multi-year "collaborations. NIIT Technologies follows global standards of development, which include ISO 9001:2000 Certification, assessment at Level 5 for SEI-CMMi version 1.2 and ISO 27001 information security management certification. Its data center operations are assessed at the international ISO 20000 IT management standards. India NIIT Technologies Ltd. Corporate Heights (Tapasya) Plot No. 5, EFGH, Sector 126 Noida-Greater Noida Expressway Noida – 201301, U.P., India Ph: + 91 120 7119100 Fax: + 91 120 7119150 Americas NIIT Technologies Inc., 1050 Crown Pointe Parkway 5th Floor, Atlanta, GA 30338, USA Ph: +1 770 551 9494 Toll Free: +1 888 454 NIIT Fax: +1 770 551 9229 Europe NIIT Technologies Limited 2nd Floor, 47 Mark Lane London - EC3R 7QQ, U.K. Ph: +44 20 70020700 Fax: +44 20 70020701 Singapore NIIT Technologies Pte. Limited 31 Kaki Bukit Road 3 #05-13 Techlink Singapore 417818 Ph: +65 68488300 Fax: +65 68488322 Write to us at marketing@niit-tech.com www.niit-tech.com D_51_231213 A leading IT solutions organization | 21 locations and 16 countries | 8000 professionals | Level 5 of SEI-CMMi, ver1.2 ISO 27001 certified | Level 5 of People CMM Framework