A Framework for Optimizing the Health of Your Application Portfolio
To remain competitive in these technologically disruptive times, enterprises must transform themselves digitally. As coined by Gartner, “the nexus of forces — the convergence of mobile, social, cloud and information” — has become the platform for digital business. Senior IT executives realize that enterprise applications must change in order to exhibit these forces. They also realize that enterprise IT may become a barrier to its business’ growth.
The Application Modernization — Rationalization Dilemma
However, according to a 2016-2017 Deloitte Global CIO Survey, around 57% of IT budgets are spent on sustaining operations. Another 26% is spent on incremental business change while only 16% is spent on business innovation. Changes in the maintenance of existing applications or incremental business, constitutes a large chunk of IT spending. According to a 2016 Capgemini study, large enterprises with over EUR 1 billion in annual revenue have an average of 650 applications deployed at any time.
According to the same study, 48% of CIOs from these large enterprises believe there are more applications in their portfolio than is needed — and the time spent on legacy systems is hindering investment in innovation. Without rationalization and the de-commissioning of redundant, low-value maintenance cost, IT spending will not be available for progressive initiatives.
Modernization and rationalization opportunities need to be paired. Recent research from Gartner also indicates that “application portfolio rationalization succeeds best when driven by honest information patterns in conjunction with the CEO’s mandate for improved business processes.” The key is for enterprises to maintain an ongoing application evaluation and rationalization process backed by enterprise corporate strategy, goals, and objectives.
An Application Portfolio Health Framework
Our customers have found the following layered framework and analytics solutions useful for optimizing the composition and health of their application portfolio. They have also been able to continually foster visibility and evaluation processes within their enterprise.
Framework for application portfolio and health optimizations
Tactical Application Health Insights: There is the operational need for common composite views, scorecards, and insights of application health and performance in all relevant service delivery, application performance, support costs, and risk KPIs. All stakeholders must agree upon and prioritize impactful remediation decisions across all applications. We cover this in more detail in the first blog in this series.
Strategic Application Portfolio Insights: There is the strategic need for continuous portfolio visibility across applications. IT can then begin building a process to evaluate the portfolio and make decisions about consolidation, upgrading, maintaining or pruning existing legacy applications. This paves the path for modernization while also optimizing resources.
The first issue that application owners, IT operations, and portfolio management offices often run into is keeping a common view of the portfolio across all stakeholders. This drives the need for complete portfolio visibility so that all parties can come to an optimal conclusion and consensus. This can take the form of factors, such as application usage, business and technical health, service delivery health, support burden and costs, business value, TCO/ROI ,and other risk factors such as upgrade and replacement needs due to increasing end of support (EOS), etc.
Taking action based on the retirement of applications is a big challenge. Senior IT Executives need 360-degree visibility of their applications portfolio with consistent insights that will enable rationalization, modernization, and cloud migration decisions, without relying on 3rd party consulting engagements.
Informational Assets and CMDB Health: IT initiatives, as well as strategic and operational decisions, need to rely on complete, correct, current and compliant underlying configuration item (CI) information in repository systems. Particularly important are CMDBs pertaining to applications, infrastructure, and accurate mapping relationships between them. This enables IT to make the most accurate IT change, outage, and problem impact analyses when executing IT operational activities.
Most large enterprises with CMDB implementations face a constant challenge in keeping these current and compliant with a combination of automated and manual processes. Often, when our customers embark on application health and portfolio visibility initiatives, they also take a parallel track to re-validate and institute processes that bring currency, completeness, compliance, and app-infra relationship maps to their CMDBs. They may do this for an initial smaller set of applications at the onset to tailor the initiative for success before expanding those processes more broadly.
Enterprises typically start on this journey across the framework by optimizing application health and delivery based on composite application health insights and health scores across application performance, IT service delivery metrics, and business impact. Enterprises need those unified views across incidents, problems, change success, application performance, and other vectors. Without these views IT operations effectiveness is reduced through slow, unprioritized decisions that lack true consensual alignment with business needs.
As a next phase, they leverage shared intelligence to foster a consistent process for making effective strategic application portfolio optimization decisions. These continuously shape the right portfolio of applications aligned with business needs. Enterprise IT needs those continuous and common analytical insights for the PMO, application and operational owners into the value, usage, risk, technical and business health, costs, ROI and TCO of applications to make portfolio decisions. This is also needed to justify and validate the decisions proved right in pre-post execution scenarios and course correct when needed.
Both above functions rely on complete and current information in CMDBs around CIs and CMDB health with accurate dependency maps. Then truthful impact analyses can be conducted for problems, outages, changes and portfolio risks. Analytic insights into gaps in CMDB health, completeness, currency and compliance allow all stakeholders to have an accurate picture of the underlying operational assets, specifically for the initially targeted applications for upgrading application portfolio health.
This is the second blog in this series proposing systematic approaches for optimal decision making around enterprise IT’s application health, rationalization and modernization initiatives. Read the first blog post of the series here.
Watch our OnDemand Webinar IT Portfolio Management Best Practices for Modernization & Rationalization to learn more!
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