Cutting costs: Application Rationalization

5 steps to start optimizing your application portfolio

All companies, from SMEs to multinational enterprises, struggle with balancing investment in applications. With the dizzying array of options, it can often be difficult to know where and how to spend limited financial resources. These five steps will get you started optimizing organization’s application portfolio, improving IT outcomes, and increasing the cost effectiveness of IT initiatives.

1. Look at the whole enterprise - It is extremely important that IT leaders seek to align IT objectives with broader business goals. Look at how applications will affect costs, productivity, sales, and user experience for the entire company, and use that to inform app investment decisions. Many IT departments take an insular approach to applications, considering only how they will affect the department. However, this doesn’t reflect today’s reality. IT is a major component of almost every business, and it must work closely with the entire company to achieve positive results.

2. Set prioritization criteria - There is no way to optimize your company’s application portfolio without first setting criteria for prioritization. In order to do this, leaders must consider several factors. Cost, reusability, strategic importance, regulatory requirements, and a wide range of other issues must be evaluated based on your individual company’s needs and goals. Take time to carefully analyze how each of these factors will affect your organization and prioritize applications based on your analysis.

3. Think long term - Although one application may appear more cost effective or functional today, it is important to take a long term view when making decisions. Maintenance costs, usability, upgradability, vendor support, and SLAs can all have a major effect on the total cost and value of a particular application. Don’t overlook these factors.

4. Control shadow IT- One important part of taking a company-wide view of application optimization is looking at shadow IT. Many CIOs feel they aren’t responsible for what happens outside of their own department, but it can have a major impact on them despite this. When users inevitably come back to IT with problems related to their own shadow initiatives, it becomes IT’s problem. That’s why it’s important for IT leaders to understand that although you can’t, and shouldn’t, stop shadow spending, you can help control it. IT leaders can guide other business leaders and point out potential security, performance, or compatibility challenges. By working with other leaders, rather than against them, CIOs can make greater strides towards more efficient business wide IT.

5. Continually review the portfolio - It is important to remember that portfolio optimization is always a work in progress. As technologies and the company’s needs change, so should your portfolio. CIOs must regularly review applications to ensure that they are still driving business goals and retire those that aren’t. It is also important to stay aware of current trends and advancements to take advantage of new developments.

Building a robust application portfolio optimization strategy requires cross departmental collaboration, dedication, and a deep knowledge of current technology and company needs. This can often be challenging for IT leaders, but the benefits can drive business goals and make IT more efficient and more cost effective. Taking the time to develop an effective, informed strategy for your application portfolio is a critical step for any CIO.

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