How to cut costs and create investment for your change agenda
Every business asks the question “how can I create both the funds and resources to drive real improvement?”
It is not just about reducing cost, but an opportunity to clear the decks and drive business change. Also, in many industry sectors we are seeing that the focus has been towards introducing digital technologies that drive real improvements and transformation. This insight takes a high level look at driving the implementation of ‘application rationalisation (AR)’, so funds and resources can be better used to support future change capability and investment.
1. Why implement application rationalisation?
• Application rationalisation could be a key driver of business transformation – freeing your resources to concentrate on “change the business” initiatives, not just keeping the lights on
• A significant amount of IT budget could be tied up supporting redundant or low value applications
• Leading industry research has found that application rationalisation initiatives reduce up to 25% of the total cost of ownership (e.g. license, maintenance, infrastructure and change costs)*
2. Where do you start?
Take a step back to review your current position and identify likely hotspots you may not have yet considered. The below diagram gives examples of what applications and costs may be relevant to your organisation.
3. What are the critical steps to put in place?
Our experience suggests there are critical factors in setting up application rationalisation programmes for success. It is all about getting the basic hygiene factors right and making it simple to deliver a successful change programme.
Active sponsorship – given the continual desire for new functionality and capabilities, senior sponsorship for the simplification agenda must be strong
Central funding – key to establish a central funding/business case which gives the programme a mandate and supports tough prioritisation calls
Manage as a portfolio – think about the benefits at the portfolio level. Avoid too many decisions at the “application by application” level
Architecture support – cross functional working is the key, with the architects setting the overall strategy and direction
Robust inventory – having clarity of ownership, strategy, the business capability it supports and cost will be essential to analyse and prioritise the right “targets”
Decommissioning capability – establish a service that can remove data, applications and infrastructure with a repeatable process. Efficiency in this space will reduce overall costs
Govern the future – ensure the application portfolio doesn’t ‘bloat’ by governing new change to include application rationalisation
4. Application rationalisation – qualifying the value
Project One have devised a set of simple diagnostic tools to help you review your application estate. Answer the questions to find out whether application rationalisation would be of value to your business.
Read how AstraZeneca, a world renowned leading pharmaceuticals company reduced the cost of their legacy application estate, making significant annual savings of over $25 million. CLICK HERE TO FIND OUT MORE