Though the economy is starting to take tentative steps toward recovery, most IT leaders are still in cost reduction mode. Many of them are postponing new systems and upgrades and spending less on hardware and software.
Oddly, I hear less about organizations evaluating their current systems and looking for opportunities to cut waste. Let's be honest. Maybe that's because it's easier to avoid making new purchases instead of taking an inventory of what is already owned and determining whether to keep it, consolidate it or get rid of it. (Believe me, I know. I am in the midst of a months-long project to clean out my basement.)
Yet application rationalization can save companies plenty of money. I found a short case study from Accenture's Web site describing how it helped the Navy's Commander, Navy Installations Command identify $20 million to $40 million in IT savings by, among other things, shrinking by 70 percent the number of business applications it used.
More compelling stories are included in an Oracle white paper on application rationalization. For instance, a Fortune 100 financial services company, while going through a merger, targeted 450 applications for retirement, resulting in $7 million of savings. A Midwestern Insurance company was able to immediately decommission 15 percent of its applications with no impact to the business. Not only did it reap significant savings, but it sliced the time it spends on application maintenance, creating time for more strategic activities. (Duplicating what I am trying to do in my basement, make more room for better stuff.)
Steve Schuckenbrock, president of Dell's large enterprise systems unit, talks up application rationalization in a Forbes interview, noting that Dell has cut its number of applications in half, to 5,000, and plans to "bring it down into the hundreds." Reducing apps allowed the company to eliminate 10,000 servers. It then virtualized much of the remaining infrastructure. Many organizations wrongly associate lots of applications with agility. Said Schuckenbrock:
... in good times we get sloppy and we allow people access to develop their own things, run it on their own servers and hook it into their own databases with their own analytics. All of that sounds great because it gives you the perception of speed. Then you find out you've got thousands of those, your servers are 15% utilized, you've got 10 different technologies in the stack, and while you've picked up some speed in the short term, every new idea is now a complicated integration project to bridge multiple, disparate things.
He recommends rationalizing applications and consolidating infrastructure to one set of tools and processes. Doing so can lead to "a massive reduction of labor and software costs." While this sounds simple, it can obviously be incredibly difficult to execute. Schuckenbrock said a framework like ITIL (Information Technology Infrastructure Library) can help.
The Oracle white paper (which contains only a low-key sales pitch and not until the very end) offers some suggested questions for evaluating applications:
I also like Oracle's list of seven specific ways application rationalization can boost efficiency and reduce costs. Among them: It facilitates the kind of transparency that should ease compliance management. It makes it easier to target business processes for improvement. It increases the odds that outsourcing agreements will be successful.