Source: Gartner (July 2011)

An application overhaul is the radical reshuffling of an application portfolio that takes place as part of an application strategy, which is a plan that uses technology to achieve a business outcome.

Application overhaul often occurs after an IT organization that has lacked an application strategy accumulates an unmanaged collection of applications as a result of shifting business strategies or mergers and acquisitions. The cleanup of this mess can include replacing, modernizing or consolidating applications. A complete application overhaul must:

• Assess the state, risk and technical viability of the application portfolio, including how well it meets business needs.
• Identify business-sponsored and business-funded initiatives that require portfolio and process changes.
• Identify vendors, development methodologies and platforms for reliable, serviceable and highly available applications.

Overcoming organizational inertia and developing the business case is essential, as application overhaul will drive numerous changes in business processes, political power and "how we do things around here."

Consider These Factors to Determine Your Readiness

What Application Overhaul Means to CIOs

A CIO must demonstrate persistent commitment to application overhaul as a top priority. This effort will include:

• Strategize and lead in governance: Develop a multiyear asset management plan that will enhance business agility. Establish a governance council to help guide portfolio decisions. Ensure that policies balance competing interests and align with business strategy.
• Obtain peer buy-in: Clearly articulate the benefits of executing the application overhaul, as well as the costs and risks to the business.
• Define metrics: Establish a team that includes other business units to obtain unbiased data and define metrics on application cost and value.
• Maintain momentum: Monitor the portfolio through regularly scheduled reviews. Demand regular updates on modernization projects.

What Application Overhaul Means to IT Leaders

IT leaders must shift their organization's attention from the traditional strategy of continuous acquisition toward modern continuous life cycle management of the application asset base. This effort includes:

• Implement a structured application portfolio management program: Treat applications like the valuable assets they are, by inventorying them and using standard business metrics to assess their financial performance.
• Conduct regular portfolio rationalization reviews: Identify the applications with the worst performance in terms of meeting business needs in a cost-effective and reliable manner. These applications should be targeted for overhaul.
• Determine a recommended course of action: Create an objective framework for assessing applications, and deciding whether to retire, consolidate, replace or modernize them.
• Build a business case: Clearly articulate the costs and risks of each potential overhaul project, the proposed courses of action, the opportunity costs of no action, and the anticipated benefits timeline.

What Application Overhaul Means to Technical Professionals

Application portfolio management teams that seek to overhaul their inflated application portfolios should institute effective application governance. They should assess the value and risk of running legacy software, and prepare to strengthen and optimize the portfolios with the following actions:

• Rationalize: Use an application rationalization methodology to make decisions about which applications to overhaul.
• Modernize: Eliminate broken, poorly functioning and obsolete applications, and replace them with well-oiled business machines. Adopt a structured program for software legacy modernization.
• Simplify: Make applications easy to use, data more available and systems eminently serviceable. Strive for elegant simplicity.
• Standardize: Buy tools from fewer vendors. Employ proper software development life cycle (SDLC) practices. Build consistent APIs.

Conduct Your Application Overhaul Project Using This Structured Approach

• Strategize and Plan: Draft a charter to gain agreement on the vision and mandate behind the project, in alignment with business goals. Scope the project, and establish resources, budget and governance systems. Integrate the project with strategic IT and business plans.
• Architect Solution: Define the architecture, technology and standards for the project. Model business requirements and detail specifications for solution delivery. Recommend how to implement the project. Define process details and performance metrics. Communicate the plan.
• Select Solution: Set requirements, and issue RFPs. Analyze market intelligence. Evaluate vendor/service provider options. Choose technologies and vendors/service providers. Negotiate service-level agreements and contracts.
• Deploy: Staff and manage the implementation. Coordinate solution deployment. Create the development and test environment, and run tests. Seek feedback from users. Monitor risks. Shut down the old applications.
• Operate and Evolve: Operate and manage the implementation. Revise in response to feedback, risks and changing business requirements. Measure performance. Monitor use and compliance. Develop skills and define best practices for users. Refine governance processes.