Virtually every employee, process and transaction depends on an overly complex business application environment that has grown organically over the decades with no overarching strategy. The environment is populated by ageing applications whose ownership, management and user base can be hard to identify. Sometimes these applications are serving inefficient processes that don't meet business demands. And all of this is managed by an already overwhelmed technology staff.
Furthermore, as the application portfolios expand, so do the maintenance and support costs, along with complexity and risk. Organisations are weighed down by technology maintenance costs that restrict the innovation necessary for growth. Today, only 30% of typical technology budgets are dedicated to business innovation. This is because the proliferation of sprawl has created silos in data centres that consume up to 70% of the technology budget for maintenance and operations.
Properly managing the application portfolio can result in many benefits, including improved control, the ability to make changes quickly, enhanced visibility into costs and increased confidence in technology to drive business growth.
So what can be done about application sprawl and the associated increase in costs, complexity and risk?
Let's first look at the root cause of the problem: lack of visibility and control over the applications portfolio, which may span custom, off-the-shelf and enterprise applications.
With minimal visibility into the applications, the technology organisation is not able to make precise, fact-based decisions for maintaining a properly aligned portfolio. For example, it can't identify what applications need to be kept, which ones are redundant and which ones can be retired. Some companies may have an inventory of applications, but they generally do not have a complete view of the portfolio or a mechanism to conduct regular updates.
With this lack of understanding the best a technology manager can do is treat every application equally, servicing and supporting them at the same level regardless of their cost or value. The results are a never-ending cycle of:
- Increased cost - The sheer level of work and costs required to keep the application portfolio up and running causes a drag on the company's financial performance. It also dramatically reduces technology's flexibility and their ability to innovate.
- Increased complexity and risk - The probability of technical issues or problems rises as the number and complexity of applications continues to grow.
- Limited ability to drive business growth - As long as the technology organisation spends 70% of its resources maintaining the status quo, it can't engage in strategic business initiatives or play its proper (and vitally necessary) role in facilitating success.
Visibility is critical to give technology staff a clear view into the application landscape. This line of sight helps staff understand how individual applications fit into the overall structure of the portfolio, as well as gauge the overall health and business value of each application.
Achieving this critical level of visibility requires a holistic approach to rationalising and optimising the applications. This approach is implemented in four phases:
- Phase 1 - Take an inventory of the applications, including the investments made in each.
- Phase 2 - Assign service tiers based on business criticality, priorities and operational requirements.
- Phase 3 - Classify applications based on overall supportability using consistent metrics.
- Phase 4 - Dynamic portfolio management for continuous visibility and flexibility.
By understanding the current investments in the portfolio in Phases 1 through 3, technology staff can determine how to calibrate investments for the greatest business impact, today and in the future. This clarifies where to invest in the most critical business applications, lower support levels on lower priority applications and scrutinise expensive or unwieldy applications.
Dynamic portfolio management in Phase 4 provides continuous visibility and flexibility to control the portfolio, optimise costs and drive change in the organisation. This ongoing management should include a robust suite of services, along with flexible service configurations and service level commitments. Tools that give predictive pricing and adjustable contracting can help tune investments easily without the hassle of renegotiation. It also gives staff full transparency into service volume metrics, price drivers and service performance.
By following this holistic approach, the result should be a flexible, scalable, transparent services-based operating model with measurable service performance linked to key business performance indicators. Armed with this new level of visibility and understanding, technology staff can make the best decisions for the business.
One option to consider is outsourcing the management of the application portfolio to an experienced service provider. Whether outsourcing management of the entire portfolio or only select applications, companies looking to select an applications services provider should consider these criteria:
- Choice and control - The option and ability to right-size support based on application metrics and client-selected services.
- Flexibility - Services and pricing that can quickly and easily be adjusted to align and support the business as it changes.
- Transparency - Portfolio- and application-level visibility with the ability to drill down into price, cost drivers, services and service levels.
- Operational excellence - Scalable global delivery capabilities and resources with predictable services backed by service-level commitments.
Visibility is needed to control the application portfolio, optimise costs and drive change in the organisation. This can only be achieved by knowing what's in the overall portfolio and the source of spending. Armed with this level of understanding, organisations can take control, make informed decisions and further drive innovation rather than focusing on maintenance. For example, technology leaders can free up resources to focus on the most value-added initiatives that utilise their skills and expertise.
Better visibility into the application portfolio translates into improved business performance. Once the portfolio has been rationalised and optimised, the technology organization can confidently make fact-based decisions to align with business priorities and support future business growth.