Six Steps to Rationalizing Your IT Portfolio

September 17, 2015

LMI Staff

CIOs use application rationalization to manage and modernize IT portfolios. This process aligns IT with business needs and mission. It also eliminates redundancies and centralizes data. On a wider scale, application rationalization improves

  • IT infrastructure (leveraging cloud and shared services),
  • user experience, and
  • enterprise-wide resource allocation.

When successful, you may use this process to reinvest savings towards mission critical goals. Use these six steps to guide your team.

1. Baseline Your Applications

Before you invest in or consolidate your IT, take time to understand your full portfolio of applications. Your actual number of applications might not be so apparent. Sometimes an application has different names, depending on who uses it. As you take a full inventory (which serves as your application baseline), also note the key stakeholders who interact with your systems: project managers, IT personnel, and end users.

2. Survey Business and IT Stakeholders

How do your stakeholders value the business and functional aspects of your IT? Create a standard survey that includes questions on whether or not applications align with business needs. If you collect data on an annual basis, year-over-year comparisons will help you measure the value of applications in a coherent way. Ask questions, such as:

  • Rate, on a scale of 1–5, the business and IT value of the application.
  • Does it help you perform your job? Is it critical to your mission?
  • Do you need to enter data twice?

3. Rate Your Applications

Use the Tolerate, Invest, Migrate, and Eliminate (TIME) methodology to systematically assess and measure applications.  

  • Tolerate—adequate for current business needs (legacy accounting system that keeps the “lights on”).
  • Invest—functionality needed for new business requirements or modernization.
  • Migrate—applications with capabilities that can be moved to a new application or platform.
  • Eliminate—no longer needed, or no longer used.

The initial TIME quadrant placement may not be perfect, but enables the next step.

4. Gather More Information

To be certain each application is assessed correctly, seek out more input and organizational knowledge. Conduct follow-up meetings to capture business and IT insights, and to validate the reasoning behind IT-related decisions. To make this process as efficient as possible, you can organize meetings to evaluate one quadrant at a time, or one business line’s applications at a time.

When conducting meetings, use questionnaires customized to TIME. Questions for “Eliminate” may ask, why does this application need to be eliminated, what are the savings and avoidances, what data needs to be retained?

Use the information you gather to map applications for the current year and four outlying years. For instance, an application might be in the “Tolerate” quadrant in the initial years before moving towards “Eliminate” in year 5. Projecting the value of your applications over time drives strategic thinking and budget discussions.

5. Generate Recommendations

Validate results with stakeholders, and then generate recommendations with IT leaders and business owners. Be sure to share those recommendations with key decision-makers in your organization (e.g., business line governance boards, investment review boards). In this way, business and IT decision-makers understand why more funding is needed for a particular application, how the funding will drive the strategic direction of the application, and why other applications need to be eliminated.

6. Share Results

Once the analysis is complete, make the results easily accessible to stakeholders who will be impacted by application rationalization. A web portal offers an excellent means for sharing TIME quadrants and the rationale behind each selected application. Sharing results builds credibility, fosters communication, and enables change. Remember to manage change in a way that helps people understand the value of application rationalization and why they must stop using some systems and start using others.

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