The document discusses application rationalization and provides guidance on conducting the process. It outlines six key steps: 1) strategic alignment to define objectives and scope, 2) creating an application inventory, 3) assessing value and scoring applications, 4) designing the future state, 5) developing a rationalization roadmap, and 6) managing changes. Critical success factors include top management commitment, clear objectives, stakeholder participation, and robust application health analysis. Application rationalization is presented as a precursor to modernization efforts like cloud migration and helps optimize costs by eliminating redundant applications.

1. Application
Rationalization
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Compunnel
Digital

2. Table of Content
Introduction
What is Application Rationalization?
#1 : Strategic Alignment
#2 : Application Inventory
#3 : Value Assessment & Scoring
#4 : Future State Design
#5 : Rationalization Roadmap
#6 : Change Management
Why and When to Rationalize?
Critical success factors
Application Rationalization: a precursor to
modernization
Compunnel Digital : A Strategic Application
Rationalization partner
03
04
06
07
08
10
12
13
15
16
19
20

3. COMPUNNEL DIGITAL03 Application Rationalization
In today’s digital world, successful
businesses are the ones that have
fully realized the benefits of digital
transformation. To keep pace with
a rapidly accelerating business
and IT landscape, enterprises
have adopted an array of
applications in their portfolio.
From HR functions to operations
management, these applications
become a critical aspect of the
business; complementing an
organization’s digital
transformation efforts. As an
organization grows, either
organically or by acquisition,
thousands of applications are
added to the application portfolio.
Left unmanaged, overtime, the
Introduction
enterprise IT environment gets
complex- increasing support and
operational costs.
This is where application portfolio
rationalization or APR kicks in.
APR helps businesses assess
their complex IT environment to
determine which applications to
retain or discard.

4. COMPUNNEL DIGITAL04 Application Rationalization
What is
Application
Rationalization?
Gartner defines application
rationalization as “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.”

5. COMPUNNEL DIGITAL05 Application Rationalization
Application rationalization follows an iterative six-step
application readiness process
Business context
Success criteria
Key drivers
Strategic Alignment
Discovery & map dependency
Cataloging
Categorize Applications
Business & Technical Fit Analysis
Application Inventory
Nimble & modern application portfolio
Scalabilty & availability
Agility
Efficient use of computing resources
Cloud readiness
Automation
Future State Design
Best Practices
Accelerate change adoption
Effective Communication
Training
Change Management
Functional value
Data insights
Technology maturity
KPI, risks, continuity, quality
TCO
Value Assessment
& Scoring
Prioritization
Retirement
Modernization
Implementation strategy
Digital transformation
Rationalization Roadmap

6. Begin your rationalization
journey by aligning your
business, process, people, and
technology to the desired
business outcomes. At this
stage, an organization should
identify needs or requirements,
determine the scope, determine
resources (support staff, tech
teams, etc.) and establish
governance policies for
rationalization.
Consider all drivers for success
and develop a questionnaire
template that captures
application information including
costs. Bring in homology across
the organization by aligning
business (financial agility,
governance, investments,
insights), people, process, and IT
(cloud readiness, technology
upgrade, process automation)
towards APR. Most
organizations adopt the Capital
Planning and Investment
Control (CPIC) process that
provides an initial framework for
application realization along
with a baseline system and
corresponding product
component inventory.
Define business context, success criteria, and key
drivers
Recommendation
Strategic
Alignment
Step #1
COMPUNNEL DIGITAL06 Application Rationalization

7. Create your inventory catalog
that lists down all applications
that run on your existing IT
environment. The process
entails a detailed questionnaire
that entails information ask
pertaining to each application
and service. This eases the
application portfolio
rationalization process and
empowers decision-makers with
the right information.
Build the inventory catalogue of
existing applications or
technology. Map out the
inventory to business or IT
capabilities. Using readily
available tools, categorize the
applications to reflect their
functionality and working status
based on core applications,
functional overlaps,
non-strategic apps, low
vulnerability applications, dying
apps, dead app codes, rogue or
zombie apps. At every step,
involve all your stakeholders
such as vendors, IT managers,
end-users, etc. – collectively
termed as ‘program offices’.
Build an inventory of existing applications or technology
Recommendation
Application
Inventory
Step #2
COMPUNNEL DIGITAL07 Application Rationalization

8. Assess the total cost of
ownership (TCO) to confirm
current-state TCO and identify
cost outliers. Score the
application based on functional
value, technology maturity,
success KPIs, and TCO.
Compare and match the
inventory and TCO for all
applications in the application
inventory. This helps business
leaders determine which
application to remove, reward,
review, refresh or replace.
Map the application inventory to
business or IT capabilities and
categorize it against the
application landscape. Analyze
the portfolio against an
evaluation criterion that
considers the business value of
the application, functionality,
data capabilities, technical
requirements, and TCO
requirements. Based on the
scoring, identify an application’s
lifecycle positioning and further
assess its value based on cost
savings, optimization effort, and
business effectiveness.
Match inventory to business or IT capabilities.
Recommendation
Value Assessment
& Scoring
Step #3
COMPUNNEL DIGITAL08 Application Rationalization

9. Application & Technology
Portfolio
Rationalization Criteria
Application Strategy
Application assessment model
rationalize and align application with
business functions.
Consolidate Invest Maintain Retire
Business Input
Redundancy, Value, Usage, Health,
Cost, Tech Alignment
Identify what the
applications do
(business function)
COMPUNNEL DIGITAL09 Application Rationalization
Assess the value to
the business
Identify total cost
of ownership (TCO)
Manage portfolio &
execute plan
Determine the
strategic direction
of the application
Technology Input
Identify what the
applications do
(capability)
Identify total cost
of ownership (TCO)
Manage Portfolio &
maintain roadmaps
Determine
technology
standards

10. Your application rationalization
framework should address the
future-state of your IT
environment. As businesses
grow, the application landscape
should support scalability,
availability, and agility of
operations. Assess future-state
TCO to factor in future hosting
options
Define future state guiding
principles and transparent
operating model vision to
engage all stakeholders. Propose
the appropriate actions to
transform from the existing
system into the desired ‘future
state’ using Gartner’s TIME
methodology – Tolerate (T),
Invest (I), Migrate (M), and
Eliminate (E).
Nimble and modern application portfolio
Recommendation
Future State
Design
Step #4
COMPUNNEL DIGITAL10 Application Rationalization

11. IT Portfolio Matrix
TOLERATE
Keep it
(Don’t do anything)
Invest in Modernization
Plan for
Migration/Modernization
Eliminate/Replace
ELIMINATE MIGRATE
INVEST
Operational Fit/Business Value
OperationalBurden/TechnicalRisk
TIME
Methodology to assess applications
COMPUNNEL DIGITAL11 Application Rationalization

12. Assess your applications to
reflect on the level of impact and
visibility it would provide to the
end-user. Prioritize these
applications and consider the
time to implement along with
the derived benefits of getting
from the current state to target
maturity.
Map out the rationalization
process as multiple waves
beginning with core systems
(wave 1) and moving to
supplemental core systems
Rationalization roadmap recommendation
(wave 2), non-core systems and
processes (wave 3), and finally
focusing on the legacy and
aged/outdated systems (wave
4).
Prioritize, modernize, and implement
Recommendation
Rationalization
Roadmap
Step #5
ObjectivesWaves
Wave 1: Core Systems These systems typically have high business value
and have direct impact/ visibility to the end user
and the business
These systems have high value potential or
complement the systems from Wave 1
These systems have a lower impact on the business
and may take longer to implement or may be already
in the roadmap for inclusion in the next gen system
These systems typically are at end of life and are
already slated to be retired, replaced or rebuilt
Wave 2: Supplemental
Core Systems
Wave 3: Non-Core
systems & Processes
Wave 4: Legacy and
Aged Systems
COMPUNNEL DIGITAL12 Application Rationalization

13. Create a climate for change that
details the need for change and
benefits individuals and the
organization. Develop a strategy
that enables, engages, and
empowers an organization to
remove barriers to change.
Change management is a
difficult process that involves
multiple stakeholders. It is
important to sustain the change
and make it stick to ensure
productivity and process
efficiency. We recommend a
three-step process for effective
change management:
Best practices to accelerate change adoptiont
Recommendation
Change
Management
Step #6
COMPUNNEL DIGITAL13 Application Rationalization

14. Use effective communication plan and tools to drive change,
remove obstacles, and encourage ideas, activities, and
actions. Conduct regular trainings and encourage feedback
and participation. Recognize and reward short-term wins.
Enable & engage organization
2
Once your change management process is in place, it is
equally important to sustain the change efforts. Don’t let up!
Reemphasize the process/system and inculcate
productivity-oriented behavior with efficient process
management and evaluation.
Sustain the change
3
COMPUNNEL DIGITAL14 Application Rationalization
Prepare your organization for change and discuss the
urgency of the change and benefits to individual and
organization. Create strategies to help the change effort and
convey what the future will look like. Management support is
critical for effective implementation. Thus, engage influential
team members to lead the change from the start.
Create a climate for change
1

15. Why and When to
Rationalize?
As organizations grow, their IT
environment gets complex with
all the digital applications
acquired over time. Due to this,
the platform is plagued by data
silos and unstructured
applications that do not work
together anymore. Business
leaders are left to tackle the
behemoth with questions of –
Should I take these one at a
time to go digital? Or take a step
back and look at the complete
picture, taking a calculated risk
and decision to orchestrate TCO
and future changes
minimization.
Typically, application
rationalization is seen as a
one-time effort that is usually
done before any major IT project
such as cloud migration.
Delaying or waiting for adds to
the difficulty of application
rationalization. Application
rationalize is a defined strategy
to consolidate, eliminate
redundancy, overlaps, technical
debt, and reduce maintenance
costs.
The radical reshuffling of an application is performed when:
Multiple applications are providing the same functions
Recent mergers and acquisitions
The app environment gets too complex to maintain
Inefficient system maintenance lead to business
disruption
COMPUNNEL DIGITAL15 Application Rationalization

16. Critical Success
Factors
An effective APR activity will
evaluate the business, the
impact and risks, and provide an
objective insight into the best
applications. In order to
maximize your APR initiative,
one needs to identify and
implement an APR framework
that aligns with your business
objectives.
Drivers for
Success
Top
Management
Commitment
Clear Objectives
for Rationalizations
Active Stakeholder
Participation
Robust Application
Health Analysis
Right mix of
Skills
Clarity and Confidence
on Financial Data
Budget and
Resources Availiability
Process for
Continued Evaluation of
Portfolio
COMPUNNEL DIGITAL16 Application Rationalization

17. Clearly define business objectives and expectations to
minimize costs and delays in the rationalization process.
Define your objectives to be specific, measurable, achievable,
realistic, and time-framed.
Clear objective for rationalization
2
Define a clear communication strategy that continuously
engages program offices and places data at the center of the
APR process. Involve all stakeholders from vendors to supply
chain managers, to distribution channels and devices. Use
different forums to enable and engage all stakeholders.
Active stakeholder participation
3
Develop a questionnaire model (surveys or interviews) to
capture data based on strategic, business, technical, and
cost dimensions. These help in analyzing overall application
health at any given point of time.
Robust application health analysis
4
COMPUNNEL DIGITAL17 Application Rationalization
A successful APR initiative requires the support and
commitment from top-level management. This is essential to
create an effective APR strategy that aligns with key
organizational goals and objectives. As APR projects is an
iterative process and could run for months, it is essential to
have the backing of senior leadership (CIOs, CFOs) for
migration efforts.
Top management commitment
1

18. Establish a complete guideline to sustain the process of
continued portfolio evaluation. The process should factor in
stakeholder involvement along with costs, timelines, and
resource requirements.
Process for continued portfolio evaluation
7
Set up a cross-functional team with the right mix of skills,
knowledge, and domain expertise for successful application
rationalization. A diverse skill set aids team collaborations
and provide greater insights for quick alignments.
Right mix of skills
5
A major roadblock or reason for APR failure is the cost
overruns are the project extends to months. Thus, it is critical
to assess the cost and resource requirements before setting
on the APR journey.
Budget and resources availability
6
COMPUNNEL DIGITAL18 Application Rationalization

19. Application
Rationalization:
A Precursor to
Modernization
Before moving to the cloud,
application rationalization is
essential to determine which
method to adopt for migration.
APR is a required exercise for
portfolio management and
before undertaking any IT
modernization initiatives. The
iterative and continuous
process of APR would help
organizations reduce costs and
maximize their application
portfolio potential.
COMPUNNEL DIGITAL19 Application Rationalization

20. Compunnel Digital
: A Strategic
Application
Rationalization
Partner
At Compunnel Digital, we take
care of complete application
portfolio management – from
application rationalization to
modernization, to digital
innovation. A central part of
Compunnel Digital’s APR
framework is data. As a best
practice, our framework
captures data at every point of
the application rationalization
process. Answering pertinent
questions of ‘how are you
capturing any or all the data that
touches your business’. We
profile and analyze the entire
application landscape to identify
opportunities for optimization
and savings by:
Software license optimization
Infrastructure optimization
Application and Project rationalization
Data storage optimization
Replace/Retire aged and low-value applications
Eliminating redundancies
Standardizing common technology platforms
COMPUNNEL DIGITAL20 Application Rationalization

21. Our customers see a 10 to 20
percent savings potential by
adopting our structured
application rationalization
framework.
At Compunnel, we address
change management as an
essential component of
rationalization and not just a
technical exercise. By adopting
an integrated change
management approach,
Compunnel develops a change
management & communication
plan for all its clients. We
recommend agencies to train
their staff on migrating to new
environments, develop the right
skills to use new tools, and
inculcate the concept of
change. Benefits of application
rationalization with Compunnel
include:
Comprehensive application portfolio assessment
Improved application and security compliance
Detailed migration plan aligned to key business outcomes
Prioritized execution plan for optimal benefit
Cost-effective cloud application modernization strategy
COMPUNNEL DIGITAL21 Application Rationalization

22. COMPUNNEL DIGITAL22 Application Rationalization
About the Authors
Senior Vice President, Cloud Practice, Compunnel Digital, Karthik Natrajan
possesses more than 30 years of experience in global technology operations.
Technologist at heart, Karthik engineers a collaborative learning platform that
bridges the gap between formal and informal learning methodologies. Extensively
experienced in designing, architecting, and building viable IT solutions to address
complex business needs, Karthik is ever ready to put himself in challenging roles.
Not only has Karthik been accountable for emerging technologies and trends,
architecture and standards, and technology strategy, but also, played an
instrumental role in developing mobile, social, and collaborative learning solutions.
Karthik Natrajan
Sr. Vice President Cloud Practice
Vishal Rustagi is Vice President, Digital Engineering and leads digital transformation
services for Compunnel Digital across US geography. He has more than 18 years of
experience and holds master’s in business administration (MBA) in Systems & IT
from IMT Ghaziabad. He has led various digital transformation journey augmented
with next-gen capabilities (social, mobile, analytics and cloud) across all digital
touchpoints.
Connect with Karthik
karthik.natrajan@compunneldigital.com
/in/karthikeyann/
Vishal Rustagi
VP, Digital Engineering
Connect with Karthik
vishal.rustagi@compunneldigital.com
/in/karthikeyann/

23. Compunnel Digital is a leading global IT services and consulting company,
providing a wide range of services and solutions in digital, technology,
strategy, consulting, and operations. Integrating unparalleled experience and
specialized skills across industries, Compunnel Digital strives to work at the
intersection of design, innovation, and strategy to ensure digital
transformation success. Compunnel Digital helps businesses deliver real
results by enabling them to run better, change faster, and grow bigger.
Compunnel Digital capitalizes on highly flexible business processes, seamless
Global Delivery Network, and an unparalleled domain and industry expertise.
Headquartered in New Jersey, Compunnel Digital has been ranked in Inc.
5000 as one of the fastest growing companies. Compunnel Digital has been
consistently ranked as one of the “Great Places to Work”, according to Inc.
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