4 essential questions to simplify your IT environment
Almost every organization that exists today has a goal to grow their business and make it more effective. Growth can be organic or a result of mergers and acquisitions or a combination of both, but growth can put tremendous pressure on the IT organization, its executives and supporting applications. Rising complexity often results in high costs to maintain and operate the environment and resources spent on maintenance and operations are resources diverted from innovation and support for new business opportunities - activities that actually create organizational value and competitive differentiation.
This was the situation one global conglomerate found themselves in when they reached a tipping point in 2007. The environment had become unmanageable. If asked they could not give a correct answer of what the portfolio did consist of and they couldn't provide an explanation of the value the applications provided for the organization. The environment was so complex that a minor enhancement within an application could take years to deliver.
They and many other organizations should ask these four questions if they want to simplify their IT environment:
1. Must we keep this application, or is its functionality duplicated elsewhere?
Without insight and control, it’s hard to initiate anything, or it is at least hard to secure that we initiate the correct things. An inventory feels like the natural place to start. Without the knowledge and insight to where we are today and what our application portfolio consists off the journey towards risk mitigation, agility, innovation and new business opportunities will be much harder.
An inventory will give an organization the high level view of what the situation looks like and answer simple but highly important questions like: How many document management systems do we have? Who exercise responsibility for each application’s development and maintenance, and what function does each application fulfil?
This type of inventory exercise is most of the times the start in a broader application portfolio management commitment. But it’s feels like THE place to start and we have seen results where organizations have reduced the number of applications with 45% in a as short time span as 18 months.
2. How much does running this application cost?
With an application inventory in place organizations should expand on the information model and gather more valuable information for each application. It is relevant to understand the actual cost of the application, what strategy it supports, what business units do use it, what platform does it run on and so on. The KPI’s for this will vary between industries and organizations…
With this additional information in hand the first stage of analysis can take place around the application portfolio. And if you think going from 600 applications to 147 is impossible initiating a few steps like this – you are wrong.
3. What percentage of this cost is spent on maintenance, and what percentage is spent developing innovative new features?
This is where we start to see that we actually can create some true business value. There are examples where as much as 90% are spent on maintaining and operating the existing application portfolio. Where does that leave organizations, how much room is then left for IT to actually support true value in form of innovation and new business development.
To be and stay competitive organizations need to evolve, adopt and react to change in the market and in addition being able to the best of their knowledge drive innovation. IT organizations are today a central part of this, either as core component or creating solutions to support the approach. But with all funds tied up in maintenance and operations there is no room left to drive innovation and create and support new business opportunities.
Organizations we have worked with have looked for a solution to help them quickly decrease complexity, provide greater insight into its application portfolio and support a more effective application portfolio management process over the long term. One example shows that this an organization before the initiative estimated that it spent 85 percent of the IT budget on maintenance. After, it estimates this number is closer to 50 percent, allowing a considerable shift of funds to support business innovation.
4. Is it over now?
Once the numbers of applications are reduced, cost significantly decreased, risk is mitigated, shift to innovation has occurred and business agility created – is it then over?
No, Application Portfolio Management is a path to continuous improvement and organizations should always strive to improve, make things work more efficiently, increase quality.
Furthermore, the APM solutions can be used to support and enhance many other kinds of initiatives as well, some of which are hot and rapidly getting hotter.…
For more information Join our on-demand webcast where we'll talk about The Total Economic Impact™ of IBM Rational Integrated Solution for Application Portfolio Management.
Or read two of our case stories for more detailed information: Global conglomerate and Financial Institution.
To help users understand how to improve transparency and cost efficiency within Application Portfolio Management (APM), IBM and Forrester Consulting are presenting a special webcast. IBM commissioned Forrester Consulting to examine the total economic impact and potential return on investment (ROI) enterprises may realize by deploying IBM Rational Integrated Solution for Application Portfolio Management.
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