Application Portfolio Rationalization: Why Growing Enterprises Need it

Tech Falcon
Published on June 12, 2020

An agile IT infrastructure is the bedrock of digital transformation. With the rapid pace of business, enterprises over the years have accumulated hundreds, if not thousands, of digital tools in their application portfolio as part of various reasons, including strategic mergers and acquisitions, organizational changes, hardware upgrades, and also adoption of new technology.

It is very common to see a proliferation of applications in an enterprise as it continues to grow. In order to avoid chaos and clutter, these applications need to be managed and maintained effectively. Often, IT departments end up purchasing several applications without realizing that some of those applications are already part of their portfolio. This leads to not only clutter but also in many unused applications that are paid for. An unmanaged application portfolio can result in unnecessary expenses for an enterprise. By ensuring proper Application Portfolio Rationalization practices, this can be avoided.

Application Portfolio Rationalization is a framework to help enterprises to manage their IT software applications and other software-based services. It is a specialized practice that involves gathering data regarding every application the organization uses and deriving and measuring the business value that the enterprise is gaining out of them. Thus, the APM process enables the enterprise to assess relevance and business value of all existing business applications of information technology. This helps the IT department to decide whether to keep or discard an application.

As part of the APM process, the applications are assessed based on criteria like:

  • Cost of building & maintenance
  • Business value gained
  • Expected lifespan

Benefits of Application Portfolio Rationalization:

Lower Risk

A well-documented catalogue of all applications running within the enterprise helps it to avoid security and compliance breaches, which can in some cases cost a huge amount of money as fine.

Enhanced Efficiency

Ensuring there is no duplication in the existing applications is one of the first steps of the APM process. Also, possessing just the right number of application licenses can help streamline the application portfolio rationalization process. As a result, the organization experiences an improvement in overall efficiency.

Cost Savings

Organizations can realize substantial cost savings by eliminating applications that are lying idol in their application portfolio that are not contributing towards business performance.

Get rid of redundant applications

A well-managed application portfolio enables you to identify applications that are not needed. A lot of the time many application features are not necessary for business.

Proper Prioritization

Being able to identify the business value of an application or a group of applications contribute towards projects helps you prioritise applications based on business value.

IT Consolidation

With application portfolio rationalization, after the redundant applications are identified and wherever necessary removed, you can reallocate the infrastructure resources.

Business Processes Optimization

More and more business processes are becoming application dependent. When applications work well, business processes too work well.

Lower Technical Risks

When applications and licenses remain unmanaged, the overall IT security of your organization is at risk.

Smooth Cloud Migration

A lot of applications serve better when moved to cloud. But this can be identified only by a thorough assessment of applications. This assessment is done by Application Portfolio Management.


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