Application Rationalization Key Initiative Overview

Refreshed 11 February 2015, Published 25 July 2013 - ID G00252063 - 3 min read

ARCHIVED This research is provided for historical perspective; portions may not reflect current
conditions.
By Analysts Bill Swanton

Initiatives: Application and Product Portfolio Governance

This overview provides a high-level description of the Application Rationalization Key Initiative.
IT leaders can use this guide to understand how to develop an application strategy that
rationalizes their legacy portfolio and prepares it for fast-emerging business requirements.

More on This Topic

This is part of an in-depth collection of research. See the collection:
■ How to Modernize Your Application Portfolio

Analysis
Figure 1. Application Rationalization Key Initiative Overview

Source: Gartner (July 2013)

Application rationalization is the radical reshuffling of an application portfolio as part of an

application strategy, a plan that implements changes to applications to achieve a business
outcome.

Application rationalization often occurs after an IT organization accumulates an unmanaged

collection of applications through shifting business strategies or mergers and acquisitions. The
cleanup can include replacing, retiring, modernizing or consolidating applications. Application
rationalization must:

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■ Assess the state, risk and technical viability of the application portfolio, including how well it
meets business needs, and determine the options for remediation.

■ Identify business-sponsored and business-funded initiatives that require portfolio and process
changes.

■ Identify vendors, methodologies and platforms for reliable, serviceable and highly available
applications.

■ Prepare the legacy application portfolio for fast-emerging business requirements brought on by
market changes such as cloud, big data, social and mobile.

An important goal of the rationalization is to eliminate redundant and non-value-adding

applications, freeing up future budget for new, business-critical work.

Consider These Factors to Determine Your Readiness

What Application Rationalization Means to CIOs
A CIO must demonstrate persistent commitment to application rationalization as a top priority.
This effort will include these actions:

■ Strategize and lead in governance: Develop a multiyear application strategy that willenhance
business agility. Establish a governance council to help guide portfolio decisions. Ensure that
policies balance competing interests and align with business strategy.

■ Obtain peer buy-in: Articulate the benefits of executing the application rationalization, as well as
the costs and risks to the business.

■ Define metrics: Establish a team that includes other business units to obtain unbiased data and
define metrics on application cost and value.

■ Maintain momentum: Monitor the portfolio through regularly scheduled reviews. Demand
regular updates on modernization projects.

What Application Rationalization Means to IT Leaders

IT leaders must shift their organization's attention from the traditional strategy of continuous
acquisition toward modern continuous life cycle management of the application portfolio:

■ Conduct regular portfolio rationalization reviews: Identify the applications with the worst
performance in terms of meeting business needs in a cost-effective and reliable manner.

■ Determine a recommended course of action: Create an objective framework for assessing

applications, and deciding whether to retire, consolidate, replace or modernize them.

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■ Build a business case: Articulate the costs and risks of each potential rationalization project,
including the opportunity cost of doing nothing.

■ Segment the applications into pace layers: Reduce the cost of maintaining foundational
systems of record, while allowing faster and cheaper delivery of differentiating capabilities. This
may require refactoring and service-enabling applications.

Conduct Your Application Rationalization Initiative Using ThisStructured Approach

■ Strategize and Plan: Draft a charter to gain agreement on the vision and mandate behind the
project, in alignment with business goals. Scope the project, and establish resources, budget and
governance systems. Integrate the project with strategic IT and business plans.

■ Architect Solution: Define the architecture, technology and standards for the project. Model
business requirements and detail specifications for solution delivery. Recommend how to
implement the project. Define process details and performance metrics. Communicate the plan.

■ Select Solution: Set requirements, and issue RFPs. Analyze market intelligence. Evaluate
vendor/service provider options. Choose technologies and vendors/service providers. Negotiate
service-level agreements and contracts.

■ Deploy: Staff and manage the implementation. Coordinate solution deployment. Create the
development and test environment, and run tests. Seek feedback from users. Monitor risks. Shut
down the old applications.

■ Operate and Evolve: Operate and manage the implementation. Revise in response to feedback,
risks and changing business requirements. Measure performance. Monitor use and compliance.
Develop skills and define best practices for users. Refine governance processes.

Document Revision History

Application Overhaul Key Initiative Overview - 22 July 2011

Application Overhaul Key Initiative Overview - 5 February 2010

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