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Application Portfolio Rationalization: 7 Steps to Delivering Value

Application Portfolio Rationalization, sometimes referred to as AppRat, is an important part of modern strategic business.  As the name suggests it is the process of assessing and streamlining the current organizational software environment to improve effectiveness and efficiency, reduce risks and create a foundation for future evolution.  It is a necessary step to preparing for creating business agility, delivering optimal strategic portfolio management and optimizing difference making business approaches like enterprise architecture (EA).

But what is involved with Application Portfolio Rationalization?  What are the key steps to ensure it delivers the value you need?  To succeed, organizations need to follow each of these seven sequential steps.

  1. Plan for success
  2. Gather inventories
  3. Model the business
  4. Distribute surveys
  5. Analyze findings
  6. Plan & execute strategy
  7. Standardize & repeat

Let’s look at each of those in more detail to understand how they contribute to a successful rationalization of your application portfolio.

Plan for success

If you don’t know where you’re going, you won’t know when you get there.  That’s as true for AppRat as for anything else, and success comes from knowing what you want to achieve.  There will likely be a series of desired outcomes, some carrying more weight than others.  You may want to reduce your technical debt, modernize your application environment, migrate to the cloud, reduce costs and so on.

Those outcomes must be identified, prioritized and defined in terms of success criteria – a way of quantifying the outcome that you are looking to achieve.  How much technical debt needs to be eliminated?  How much do costs need to be reduced? Defining these categories and measures is essential as it forms the foundation of the process and informs the work you will be carrying out and the surveys you will be developing.

Gather inventories

You likely already have an inventory of your application portfolio.  In fact, you likely have multiple inventories, and that’s the problem.  Some may be contained in management tools, some in configuration management databases, and some likely in spreadsheets.  You need to be able to consolidate everything into one place, with consistent, accurate, complete and up to date information to be able to conduct a successful rationalization.

Tools like our 360 Enterprise Connect solution can help you achieve this and identify any information gaps that you need to address before moving forward.  This inventory is your baseline, your starting point, and it is essential it accurately reflects your organization’s application environment.

Model the business

Building on the information contained in your current inventories, this step allows you to gain insight into a number of business elements:

  1. Business capability – what the business does
  2. Value streams and processes – how the business operates and how it can be improved
  3. Information landscapes – what is important to the business, what is peripheral and what is ‘noise’
  4. Organizational landscapes – who is involved ad how do they collaborate to flow value across the organization
  5. Technology reference models – the IT foundation of supportive technologies for the applications

This step is essential.  It adds understanding to information, which begins the process of giving you the insight needed to move forward, insight that is then built on in the next step.

Distribute surveys

In order to fully understand you application portfolio you need to engage all stakeholders in the process, and you need to ask questions that are relevant and contextualized to your environment.  That means you don’t need a standalone survey tool; you need a solution that can develop surveys based on the data you already have – something that 360 Enterprise Connect can do for you.

Success in this element requires the ability to:

  1. Build surveys that will collect the information you need
  2. Distribute to all stakeholders including those outside your business (partners, suppliers, etc.)
  3. Capture and validate responses
  4. Store all survey data in a format that allows for meaningful analysis
  5. Track response rates, chase submissions and otherwise manage the survey process

It is essential that you ask the right questions to get the right information from the right people so that you can develop a complete picture of your application portfolio.  That picture comes with the next step.

Analyze findings

Before you rationalize your portfolio, you need to develop a complete understanding of the current environment based on an analysis of the survey results.  This analysis will allow you to understand:

  • Where functional redundancy does (and doesn’t) exist
  • How well current applications align with strategic priorities
  • The health of business and technical application environments
  • How applications are distributed across various functional, technical and capability portfolios

In addition, early analysis of survey responses can help you adjust the surveys if required to better align captured information with needs and address any gaps or lack of clarity.  And finally, this analysis should be able to support the creation of visual representations of the finding in the form of heat maps, or similar to make communication easier and more effective.

Plan & execute strategy

Once sufficient information has been captured and analyzed from the surveys, the models created by the analysis can guide your organizational response.  Depending in your situation that is likely to consist of strategic roadmaps for your application portfolio and constituent parts, as well as business cases to drive more immediate investments.

Future state models can be developed to help communicate and understand how the organization will look once roadmap items have been delivered on, and data can be exported to SPM and APM (adaptive project management) solutions for execution.  All of this can then be managed through powerful dashboard and exports to BI tools from directly within your application portfolio management platform.

Standardize and repeat

While AppRat isn’t something your organization will be doing every quarter, it also shouldn’t be assumed to be a one-time execution.  Applying the process on a periodic basis can help support evergreening of your application portfolio, and resurveying participants can help validate and update information as well as identifying trends that may require further actions.

Additionally, many of the outcomes that organizations seek to achieve through rationalization activities can add value on multiple occasions as the organization seeks to respond to ever evolving environments and emerging threats and opportunities.  This makes rationalization a valuable contributor to the larger, and related discipline of Application Portfolio Management.

The bottom line

If you’ve never rationalized your portfolio, or if you don’t know when it was last done, then you need to conduct the exercise now.  It will support everything else you do and help ensure you are investing your strategic dollars where they are driving the most value.  It will also help ensure that your priorities, roadmaps and strategic investments are being supported by your application capabilities, helping to drive optimal performance levels.

But to achieve the best possible levels of performance, you need a structured approach to application portfolio management – as we have set out here, and a tool that supports you every step of the way within the larger context of your strategic imperatives.  That’s what UMT360 gives you.

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