Application rationalization, defined
In essence, application rationalization involves reviewing every application and platform in a company’s technology ecosystem and validating their necessity. Following a standardized process allows an organization to inventory and analyze its portfolio and determine whether to remove, replace, retire, consolidate with another app, or modernize each application. The goal is to streamline business processes and reduce costs.
Application rationalization is frequently deployed in several common business scenarios:
- Organizations with rigid silos — Infrequent cross-functional communication can result in redundant applications.
- Digital transformation — Cloud migration and technology overhaul present a perfect opportunity to reevaluate application usage.
- Mergers and acquisitions (M&As) — Consolidating the technology ecosystems of separate organizations presents a critical logistical challenge.
Rationalization, however, is not limited to these use cases. It offers a valuable process for any forward-thinking business seeking greater visibility into its technology budget.
Benefits
- Cost-effectiveness — Subscription-based applications can be expensive, particularly over time. Rightsizing can decrease costs for businesses of any size, but the proportional benefit for smaller organizations is potentially higher.
- Simplification — With fewer applications and platforms to support, IT departments can operate more efficiently.
- Consolidation — Application rationalization provides an opportunity for a review process that can eliminate redundant programs, which is particularly valuable during M&As.
- Strategic alignment — The information collected during the rationalization process is helpful for gaining a high-level understanding of your technology environment and how closely it matches your overall business strategy. Rationalization can help you realign resources as needed.
- Streamlined training — Fewer applications mean fewer new platforms for employees to learn.
- Cybersecurity insights — Identify legacy or unsupported software, vulnerable applications, and shadow IT deployed by non-technology departments, and build a remediation plan.
Learn more: How app modernization helps businesses stay competitive
Challenges
As beneficial as application rationalization can be, most enterprises will nevertheless face logistical hurdles to the process:
- Organizational complexity — Depending on the organization’s size, sheer structural complexity can make it challenging to identify and validate every application being used within the ecosystem. Shadow IT and “zombie” applications—unsupported, low-profile elements—add to the challenge.
- Legacy technology — In some cases, a legacy application is acting as the foundation of an essential system. This scenario is common in industries that utilize specialty hardware, like manufacturing, which can only be managed by un- or under-supported proprietary software. While the situation may not be solvable in the moment, the information is helpful for aligning future IT strategies around modernization.
- Value assessments — Determining the total cost and added value of technology tools can be imprecise, especially when considering intangible factors such as quality of life, training simplicity, or cross-platform compatibility.
- Employee hesitation — Familiarity is easy. Switching to a new platform or process can create frustration and resistance among team members.
The steps to application rationalization
OnX Canada suggests approaching rationalization in stages, evaluating and repeating as necessary.
- Establish readiness — Identify key stakeholders and strategic objectives. Gauge the availability of the required tools and information for the rationalization process. Consider leveraging third-party expertise.
- Audit technology stack — Although software can help you automate this step, human review is necessary to locate shadow IT, low-visibility applications, and other rogue elements. Invest the time and effort to make as thorough a list as possible.
- Determine value — Create a rubric to add structure around less tangible value-adds. Consider an application’s compatibility with the larger technology ecosystem.
- Calculate total cost of ownership (TCO) — Include direct costs—subscription fees, software and seat licenses, and digital asset purchases, for example—and indirect costs, such as networking or specialized hardware. Even an imprecise estimation still offers valuable insight.
- Score and sort — Assign values and weights to each characteristic and generate a score for each application. This step provides a framework for ranking and comparison.
- Execute — Based on each application’s score and ranking, decide its future. Remove or consolidate redundant applications, develop a plan to modernize critical legacy systems, or invest in critical upgrades.
Partner with OnX for expert application guidance.
Businesses face competing priorities regarding their application portfolios. Robust applications are the core of a modern organization, but bloat increases complexity and inefficiency. Application rationalization is an opportunity to streamline and restructure your portfolio to meet your needs without holding your operations back. However, completing it successfully requires extensive knowledge of technical specifications, interoperability, and business use cases.
OnX offers application management and consulting services backed by decades of expertise. Leverage OnX guidance for application rationalization, modernization, or for a full digital transformation strategy. With OnX support, your organization can craft a technology strategy that matches your most ambitious business goals.
Contact OnX today to begin transforming your application portfolio.