Why CIOs Should Rethink Applications Management

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A modern digital infrastructure provides the foundation for successful corporate strategies. While hardware receives a considerable amount of attention, applications tend to be largely ignored. CIOs generally don’t even know which software is currently installed within the company or to what extent this software supports the company’s strategy. It’s high time to rethink applications management.

Organizations depend on a healthy set of enterprise applications to succeed. After all, applications enable employees to get the job done. And yet, most CIOs struggle with severe applications-related limitations while their organizations expect improved performance, greater agility and measurable results. In many organizations, applications are outdated or are not fully supported by current hardware or are not aligned with the business model or are simply not flexible enough. In a recent survey, half of the IT staff questioned stated that lack of support of new digital business models was the key motivation for application portfolio modernization. Almost the same number of people questioned mentioned that they were looking to reduce the diversity of their application portfolio and to decrease costs.

Disarray in the application portfolio

Years of adding software with overlapping functionalities have created portfolios that are crowded with obsolete or redundant applications. This trend is made worse by growing application complexities, the emergence of new technologies, and disparate and often incompatible software. Unless the application landscape is rigorously maintained and updated, sprawl is bound to occur. Over the years, the IT team loses sight of these applications, and the problem continues to grow: Scarce resources are tied up, security updates are no longer installed, redundant functionalities make life more difficult for staff, and operating costs eat into the IT budget.

Mergers and acquisitions are also inclined to clutter the application landscape if IT integration does not receive enough attention or is poorly timed or lacks adequate financial planning. This situation results in application redundancies that make collaboration complicated and require increased support effort.

The organic growth of a company can also serve as a nucleus for the growth of an application portfolio. When a new regional business unit is established, the local team will likely bring its local IT solution on board. As the company subsequently expands into further geographies, each newly added region will introduce its own local solution, generating unchecked diversification and sprawl—and although all applications are intended to serve the same purpose, they will unnecessarily occupy resources and drive up licensing costs.

In some cases, at least part of the blame for application sprawl goes to the IT organization itself. If the IT organization fails to provide the company’s staff with the required software or if processes are cumbersome and time-consuming, business departments will take the initiative and go their own way. Over the years, this will result in a shadow IT that is difficult to control.

Given the above scenarios, it is not surprising that companies spend 60 to 80 percent of their IT budget on just keeping the lights on. Where this is the case, companies are challenged to initiate the digitization of business processes and introduce new digital business models that are at the heart of a successful strategy. Consequently, there is little leeway for such organizations to realign their IT so they can gain from the opportunities of new technologies and applications.

Applications need maintenance

The shortcomings described above can be remedied if CIOs attribute more attention to applications and establish comprehensive applications management—whether their organization has completed its digital transformation journey or not.

Robust applications management puts CIOs in control of the company’s entire application landscape, enabling them to quickly respond to changes and to better align IT with the company’s business. A realigned application portfolio also helps improve security and business continuity. Application realignment contributes significantly to reductions in maintenance and operating costs—savings of up to 50 percent are not uncommon.

Companies that have already begun or completed their digital transformation will also benefit from robust applications management. Unless these companies take a systematic approach to software maintenance, the maintenance-to-innovation ratio will inevitably shift at the expense of innovation. This shift will diminish the return on investment of the company’s digital transformation.

Proven applications management methodology

There are two fundamental techniques that occur—one before and the other after the transformation effort: Dynamic service delivery brings its strengths to bear before the transformation, while data-driven portfolio management does so following the transformation.

Dynamic service delivery includes underlying methods and tools to optimize the costs associated with applications and pave the way for business change processes. At the core, a scalable provisioning model assigns services by application, based on business needs. When business needs change, the service level for each application can be adjusted and tuned. This approach also provides cost transparency for each application.

The second method, data-driven portfolio management, implements an ongoing process for collecting data, analyzing metrics, and identifying improvement opportunities. Using this technique, organizations can maintain an inventory of applications and their individual support metrics. They can score and classify each application, which provides the necessary structure for analysis. This approach can be leveraged for the close monitor of applications to spot usage trends and perform root cause analysis.

These techniques and methods enable organizations to effectively and continually balance the maintenance-to-innovation ratio. Companies that have undertaken the transformational journey can leverage the approach discussed above to keep their applications in optimized balance. Others can use these techniques to gain visibility and control, reduce costs, and stabilize a challenging applications environment to prepare their organizations for a more efficient and successful applications transformation.

CIOs can use the insight gained through these methods to better control their application portfolios and accelerate positive change. They will be in an excellent position to build a compelling case for their application innovation project. To date, nearly a third of CIOs have failed in this task. Backed by robust applications management, IT stakeholders are well-prepared for strategy discussions with senior management. Leveraging proven techniques and applying them at strategic and tactical levels is the key to creating and maintaining a healthier application portfolio that fully supports the company’s business strategy.

Learn more in the Rethinking applications management white paper.

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Chris Alexander, consultant, has 20 years of experience in IT applications management services as a consultant and in corporate management. His experience includes application support, development, transformation, and vendor management. Prior to joining Hewlett Packard Enterprise, Alexander was responsible for the applications management organization at a large multinational company.

Michael Marzullo is the HPE world-wide application management services offering manager and was a key architect in HPE’s Next Generation Application Management Services solution. He has 17 years of experience in IT applications management, including an extensive background in service delivery, application management consulting, and solution design.