Application Portfolio Rationalization

Declutter your application landscape

March 2016

Application Portfolio Rationalization (APR)

High IT complexity slows down business by limiting flexible

reaction to changed client expectations and requirements

Negative impacts include…

• Business growth limited through IT limitations

– time to market too slow

• Inconsistent user and client experience

• Media breaches, inefficient operations

• High and increasing IT cost

• Need to retain legacy know how

• Inappropriate CTB/RTB ratio

• Lack of coherent data

• High IT and business risk

• Decreasing quality of IT application support,

inacceptable service levels

• Need to maintain legacy know how

High IT complexity means…

• Applications & technologies

– Many

– Disparate

– Outdated

– Redundant

• Misalignment between

business need and IT

capabilities

“Good reasons” include…

• Managing IT in “silos”

• Incomplete M&A

integrations

• Lack of architecture

governance

• Rushed implementation

A long history of

“good reasons”…

…has led to high IT

complexity…

…which is negatively

impacting the business.

© 2016 Deloitte Consulting GmbH 2

APR Placement

Rationalization is often embedded into comprehensive strategy

or efficiency initiatives

© 2016 Deloitte Consulting GmbH 3

Window

of

Opportunity

Window

of

Opportunity

New CIO / COO

New Business or IT Strategy

Cost Cutting Initiative

Reorganization of Business / IT

M&A Divestiture

Evolved standard software

APR Focus and Roadmap

The strategic context determines the focus of APR and the

journey to achieve its objectives

APR Focus

• Enable adoption of emerging

technologies and service delivery

concepts

• Increase flexibility, agility, and risk

adversity

• Meet / align with business needs

• Meet strategic IT objectives

• Make room for innovation

• Increase flexibility, agility, and

risk adversity

4

short-term

long-term

APR

Roadmap

medium-term

© 2016 Deloitte Consulting GmbH

Retire low value

applications

Centralize

scattered

functionality

Standardize to

common platforms

and versions

Modernize high

value but aging

applications

Transform

towards SOA

• Develop Target

Architecture

• Calculate future

TCO • Cluster

applications (4R

Framework)

• Cost Benefit

Analysis • Application Score

Card

• Retirement

Business Case • Application

Inventory

• Calculation of

current TCO

APR Approach 1/2

Deloitte applies a 4-step approach based on a quantitative

method to evaluate application value

© 2016 Deloitte Consulting GmbH 5

Solution

Design

Target

Picture

As-Is

Analysis

Evaluation

1

2

3

4

• Functionality &

Architecture

• Maintainability

• IT-Security & Risks

• Reliability

• Scalability

• Infrastructure

APR Approach 2/2

Based on their Business and IT fitness, the applications are

mapped to the 4R-Framework

© 2016 Deloitte Consulting GmbH 6

Business-FIT IT-FIT

Strategic Value

Business value, flexibility, time to market,

strategy compliance, extensibility, number

of users and clients, transaction volume

Functionality &

Architecture

SW architecture, COTS vs. proprietary,

interfaces, modularization, complexity, plat-

form (HW, MW), operating system adapt-

ability / customization, suitability to purpose

Functional Fit

& Ergonomics

Functional scope, requirements coverage,

user friendliness, complexity, operational

efficiency, SLA compliance

Maintainability

Testability, flexibility, adaptability, coding

conventions, release and maintenance

cycles, maturity, years in production

Compliance Legal and regulatory compliance,

adherence to industry standards

IT-Security &

Risks

IT compliance, authorization,

authentification, technology risks, sensitive /

personal data

Financials Total cost of ownership, maintenance cost,

cost and effort of changes Reliability

Error tolerance, availability, stability, defect

rate, frequency of outages, recoverability

Risks Financial risks, strategic and regulatory

risks, business risks, operational risk Scalability Scalability (vertical, horizontal)

Quality Error number and frequency, performance,

user satisfaction, information quality Infrastructure

Expandability, degree of automatization,

support and service quality

IT

Fitness

• Strategic Value

• Functional Fit &

Ergonomics

• Compliance

• Financials

• Risks

• Quality

#9

#8

#7

#6 #5

#4

#3

#2

#1

High

Low

High Low

#15

#14

#13 #12

#11

#10

Rationalize

Business-Value

IT-C

on

dit

ion

Retain

Retire Re-platform

Application cost #n Application ID

4R-Framework

Business

Fitness

APR

Roadmap

Opportunities?

Next Steps?

© 2016 Deloitte Consulting GmbH 7