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Application Rationalization

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The application portfolio is an essential aspect of any IT landscape. Ensuring that the portfolio is optimized to meet an organization’s operational and financial needs is the key to ongoing business success.

By reducing complexity, managing cost, and aligning applications with critical business capabilities, organizations can improve their overall effectiveness and competitiveness. A well-organized, up-to-date application repository is essential for all these initiatives. Complex spreadsheets just can’t do the job.

Below, we will explain the typical business drivers for application rationalization initiatives and how you can use SAP LeanIX to realize this use case. You will learn step by step:

  • why application rationalization matters to a business and IT team, and which data points you do need to kick-start this use case
  • how to scope the use case, evaluate the information in SAP LeanIX, and identify steps for rationalization
  • how to set up and track your application rationalization process and report relevant key performance indicators (KPIs) to critical stakeholders

Why is application rationalization a relevant use case?

For most of the organizations that are using SAP LeanIX, application rationalization is a key use case. The goal is to clean up their application landscape and achieve efficiency gains and reduce costs right away.

Application rationalization can also pave the way for other use cases. These initiatives are much easier to realize once you have an efficient IT landscape in place and all redundancies and inefficiencies have been removed.

We see the following typical business drivers that can be the starting point for an application rationalization use case. They are not mutually exclusive, and it depends on the individual circumstances and strategy of a company where the focus is at a given moment in time.

  • Reduce application costs per year, lowering total cost of ownership (TCO), and freeing up budget for innovation
  • Ensure the business can be more easily scaled by removing redundant, outdated, or ill-fitted applications
  • Minimize technology risk and debt by removing end-of-life and legacy applications
  • Align a business' target application portfolio with its talent skillset to ensure maximum efficiency and global company standards and architecture

What is application rationalization?

Definition

Application rationalization is the act of streamlining an existing application portfolio to improve efficiency, reduce complexity, make room for innovation, and lower the total cost of ownership (TCO) through a specific set of processes.

Application rationalization sets the basis for many cost-saving endeavors, including:

  • Eliminating redundancies
  • Project rationalization
  • Software license optimization
  • Application retirement
  • Server optimization
  • Data storage optimization
  • Standardizing common technology platforms

Benefits of the use case

Here are some facts and figures on how companies can benefit from application rationalization, based on SAP LeanIX customer experiences and research:

  • Achieve $50M savings with application portfolio rationalization
    (leveraging SAP LeanIX in a portfolio of 1,534 applications across four global business units)
  • Remove 30% of redundant applications and IT components within six months
  • Free up to $1.3M financial resource for innovation
    (by rationalizing IT landscapes and repurposing funds with SAP LeanIX)
  • Save $1.2M in application costs per year
    (by identifying which applications and dependencies to retire in SAP LeanIX)
  • Save up to $500K in two weeks by decommissioning 10 unused apps
  • 80% of SAP LeanIX survey respondents plan to carry out application rationalization in 2023

How do you achieve application rationalization with SAP LeanIX?

SAP LeanIX empowers companies to create a 360° view of their application landscape and identify candidates for rationalization in just a few clicks. Users can track the progress of application rationalization easily with an average project duration of six to 10 weeks from start to implementation.

Normally, you would start your journey towards application rationalization by building up your data repository in SAP LeanIX (check this and related articles). To run application rationalization, you need SAP LeanIX Application Portfolio Management and SAP LeanIX Architecture and Road Map Planning products from the LeanIX Enterprise Architecture suite:

  1. SAP LeanIX Application Portfolio Management for building your data repository and running assessments (steps 1-5 below)
  2. SAP LeanIX Architecture and Road Map Planning for adding lifecycle data to IT Component & Applications in scope (steps 1-5 below)

Step-by-step guide

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How do you achieve application rationalization with LeanIX?

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Next: Step 1. Understand your Strategy

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Step 2. Scope Applications

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Step 3. Enrich Data

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Step 4. Evaluate Data

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Step 5. Create a Roadmap

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Step 6. Start the Initiative

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Step 7. Track and Report

Resources

Updated 4 months ago