Determining the Real Value of an Enterprise Application

Michael Vizard
Slide Show

Why Enteprise App Portfolios Get Bloated

Check out new research from HP and Forrester.

One of the primary challenges that IT organizations face these days is that too few IT people are being asked to support far too many enterprise applications.

The simple solution would be to start justifying applications. But the people that fund these enterprise applications are not always rational about which applications truly provide the most value to the enterprise and resist any effort to retire their favorite app.

The only way the IT department can overcome those objections is by first performing a careful inventory of the company's entire application portfolio, then trying to determine which ones actually have real value for the business. To help with that process, Hewlett-Packard has come up with a structured method called the Application Value Ratio.

According to Rajesh Radhakrishnan, vice president of Applications Portfolio & Engineering for HP Enterprise Services, the Application Value Ratio process involves HP consultants interviewing business users about how they use a particular enterprise application and the perceived valued they derive from it. HP then consults with the internal IT organization to figure out what the real costs of managing and supporting that application are to come up with a value rating for the application.

Radhakrishnan concedes this process can sometimes be contentious. But when it comes to modernizing an enterprise application portfolio to reduce total costs, most companies need help finding a place to start the conversation.

But enterprise applications are like cars; the older the application, the more expensive it gets to keep it running. And like a lot of car owners, business people tend to get overly attached to an existing application that they think is working regardless of the cost of running it. It's the job of the IT department to show them that a new, or at least substantially enhanced one, generally performs better.

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