Most enterprises accumulate applications over time through organic growth, mergers, and acquisitions. The result is often a bloated portfolio with redundant applications, high maintenance costs, and unnecessary complexity.
Application portfolio rationalization is the process of evaluating your applications and making strategic decisions about their future.
The Case for Rationalization
Hidden Costs
Every application in your portfolio carries costs:
- License fees
- Infrastructure (hosting, storage, network)
- Support and maintenance
- Security monitoring
- Compliance overhead
- Integration complexity
Diminishing Returns
As portfolios grow, problems compound:
- More integration touchpoints
- Harder to find skills
- Slower change delivery
- Increased security surface
The Rationalization Framework
Step 1: Inventory
You can't rationalize what you don't know about:
- What applications do we have?
- Who owns them?
- What business capabilities do they support?
- What are the costs?
- What's the technical health?
Step 2: Assess
Evaluate each application across dimensions:
Business Value
- Criticality to operations
- Strategic alignment
- User satisfaction
- Revenue contribution
Technical Health
- Architecture quality
- Technology currency
- Security posture
- Maintainability
Step 3: Classify
Based on assessment, categorize applications:
| Quadrant | Business Value | Technical Health | Action |
|---|---|---|---|
| Invest | High | High | Enhance and grow |
| Tolerate | High | Low | Maintain, plan modernization |
| Migrate | Low | High | Consolidate or repurpose |
| Eliminate | Low | Low | Retire |
Step 4: Plan
For each application, determine:
- Target state (keep, consolidate, replace, retire)
- Timeline
- Dependencies
- Resources required
- Risk mitigation
Step 5: Execute
Implement decisions through:
- Migration projects
- Decommissioning initiatives
- Modernization programs
- New implementations
Keys to Success
Stakeholder Engagement
Rationalization affects people. Success requires:
- Executive sponsorship
- Business owner involvement
- Clear communication
- Change management
Data-Driven Decisions
Base decisions on facts, not opinions:
- Actual usage data
- Real cost figures
- Objective assessments
- Documented dependencies
Incremental Approach
Big-bang rationalization rarely works:
- Start with quick wins
- Build momentum
- Learn and adapt
- Celebrate progress
Measuring Success
Track rationalization progress:
- Number of applications (trend over time)
- Total cost of ownership
- Time to deliver changes
- Security incidents
- User satisfaction
Conclusion
Application portfolio rationalization is an ongoing discipline, not a one-time project. By establishing regular evaluation processes and making strategic decisions about your applications, you can reduce costs, decrease complexity, and improve agility.