Application Rationalization Key Initiative Overview

Archived Published: 25 July 2013 ID: G00252063


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This overview provides a high-level description of the Application Rationalization Key Initiative. IT leaders can use this guide to understand how to develop an application strategy that rationalizes their legacy portfolio and prepares it for fast-emerging business requirements.


Figure 1. Application Rationalization Key Initiative Overview
Research image courtesy of Gartner, Inc.

Source: Gartner (July 2013)

Application rationalization is the radical reshuffling of an application portfolio as part of an application strategy, a plan that implements changes to applications to achieve a business outcome.

Application rationalization often occurs after an IT organization accumulates an unmanaged collection of applications through shifting business strategies or mergers and acquisitions. The cleanup can include replacing, retiring, modernizing or consolidating applications. Application rationalization must:

  • Assess the state, risk and technical viability of the application portfolio, including how well it meets business needs, and determine the options for remediation.

  • Identify business-sponsored and business-funded initiatives that require portfolio and process changes.

  • Identify vendors, methodologies and platforms for reliable, serviceable and highly available applications.

  • Prepare the legacy application portfolio for fast-emerging business requirements brought on by market changes such as cloud, big data, social and mobile.

An important goal of the rationalization is to eliminate redundant and non-value-adding applications, freeing up future budget for new, business-critical work.

Consider These Factors to Determine Your Readiness

What Application Rationalization Means to CIOs

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

  • Strategize and lead in governance: Develop a multiyear application strategy 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: Articulate the benefits of executing the application rationalization, 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 Rationalization 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 portfolio:

  • 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.

  • 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: Articulate the costs and risks of each potential rationalization project, including the opportunity cost of doing nothing.

  • Segment the applications into pace layers: Reduce the cost of maintaining foundational systems of record, while allowing faster and cheaper delivery of differentiating capabilities. This may require refactoring and service-enabling applications.

Conduct Your Application Rationalization Initiative 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.

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