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Application Rationalization

Discover how Application Rationalization helps firms cut costs, optimize operations, and drive growth in the post-COVID era.

Why Application Rationalization

Since the pandemic, a rapid succession of events, along with economic and geopolitical shocks, has converged to create immediate and critical needs for organizations. These needs primarily involve identifying opportunities to reduce costs. Before COVID-19 and other high-risk events, several business and IT trends were already driving a renewed organizational focus on application portfolio rationalization. These trends include:

Business Optimization

Organizations are launching new consumption-based business models and in turn, are reevaluating their application portfolios.

Move-to- Cloud

Modern cloud-based architecture (pre-configured, new features availability, etc.) is changing application economics and provides flexibility, extensibility, and scalability with a predictive and adaptive cost structure.

Mergers, Acquisitions

Inorganic growth requires rapid integration of acquired companies to achieve M&A synergy objectives. This drives the need to rationalize and modernize the applications portfolio for the combined or divested companies.

Time-to-Market

Market forces are driving the need to have agility and faster time to market on product releases. As a result, the organizations are optimizing & streamlining the applications portfolio through automation & integration (APIs).

Business Operations and IT Cost Efficiency

The high cost of maintaining and running core processes and associated applications is driving the need to optimize application portfolios.

Modernizing Legacy Application

According to a Global survey, the top software investment priority was “update/modernize key legacy applications,” with more than 20% marking it critical and about 41% marking it a high priority.

Methodology and Timeline

We follow a seamless, application focused framework and methodology as explained below:

Here are the methodology and sample timeline that could be applied to achieve application rationalization as per the above framework.

Sample timeline:

Benefits of Application Rationalization

Rapid growth and digitization in organizations frequently result in redundant applications, each with its databases and middleware, due to poorly governed application portfolios and application architectures designed in isolation. To address this, many organizations engage in Application Portfolio Rationalization exercises. The primary goal of these exercises is to rationalize the current applications and increase the utilization of software licenses, thereby achieving lower IT operating costs.

Application rationalization addresses the following issues:

  • Delivering business requirements through isolated application development often leads to considerable duplication of capabilities across applications.
  • This not only extends the time to market but also increases the cost of delivering new requirements.The volume and complexity of the application environment are the primary drivers of IT costs.
  • Adopting a systematic approach to simplify the application portfolio can yield significant cost savings in the medium term and greatly enhance the responsiveness of IT services.

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