Rationalization vs. Modernization?

A reader placed an interesting post on our Application Portfolio Management sister site. The question was whether application rationalization is the same as application modernization. There are various opinions on the topic, with many suggesting that rationalization is an IT activity distinct from and on par with modernization. I think that is more helpful to consider it to be a subset of modernization.

Traditionally, application modernization has been thought of as an IT activity that involves IT-centric manipulations of existing code bases. Rationalization was seen as outside of this classic view because it involved the wholesale purging of applications, rather than updating them. It also was seen as separate because it was often the first step of clearing the site to make room for more targeted application modernization actions.

But as application portfolios have become recognized as key enablers of business processes, this IT-centric view of modernization has begun to recede. Changes to the application portfolio are increasingly in response to overarching business pressures and are no longer isolated within the IT department. For instance, modifications could involve introducing more dynamic application architectures to respond to shifting business strategies. Or, the elimination of non-strategic applications to cut costs as business needs change.

This adapting of application portfolios to respond to business pressures is application modernization. We start by asking what business requirements we have and then selecting our IT activities from our basket of alternatives (SOA, outsourcing, redevelopment, rationalization, etc.) based on what will best address this need. This trend has accelerated with the adoption of application portfolio management capabilities that allow IT to govern applications as business assets.

By thinking of application modernization as a business-led activity first, we elevate the process and increase its results (and relevance) for management. By thinking of rationalization as an alternative within the application modernization schema, we ensure that APM-led business decisions determine which path we will take toward efficient and flexible application portfolios. Certainly rationalization is often the first path taken because it can generate immediate budget benefits, but IT management should view all modernization options as being on the table for any portion of the application portfolio.

Portfolio Management is Top Priority for 2009

A new posting on Application Portfolio Management was added to our sister site. This details the announcement by Baseline that Project and Portfolio Management is one of the top priorities for CIOs for 2009.

Forrester and Maintenance Cost Reductions

An interesting research piece on the 'application modernization' space was published this month by Phil Murphy at Forrester. He discusses approaches that development organizations can take to in order to slash application maintenance costs. You are likely familiar with statistics that show 70% and more of budgets being devoted to ‘lights-on’ activities. Clearly, savings in the application maintenance world can have a big impact by redirecting resources toward higher-value activities, like application modernization. And also by demonstrating IT’s commitment to cost savings.

This particular piece takes an insightful and inclusive approach, referencing many previous research pieces for APM and application modernization. On that point alone, this is a worthwhile reference paper. But in addition, it has other aspects that are of interest. In particular, the document looks at how dependency mapping can help.

As applications have grown increasingly sophisticated the interrelationships between various artifacts has become more complex. One program may depend on inputs from dozens of other artifacts, and its outputs may have downstream consequences for dozens of other artifacts. So, enhancements or modernizations to one program can have often unintended repercussions on the rest of the application portfolio. This can disrupt business processes and can lengthen the time required to make enhancements as analysts must research their application portfolio in exhausting detail – often without documentation or subject matter expertise.

The paper makes an important suggestion: use dependency mapping technology to uncover interrelationships between artifacts. This allows users to quickly trace all relationships, provide a list of potential impacts, and correct these impacts before they have negative consequences. While the paper recommends run-time mapping, it is important to consider static analysis. Because static analysis relies on tracing all logical paths from a target element, you can be certain that even infrequently used paths are recognized as dependencies. Run-time analysis will only spot less commonly run (but often more important) processes (like quarterly finance roll-ups) as they are run – which may not be often.

Dependency mapping using static analysis also has other benefits, notably from an architectural perspective. First, let’s say we are interested in simplifying our architecture due to the complexity that stems from our globally distributed development organization. We begin by abstracting our software based on how it is managed. So, artifacts that are managed by the same team are grouped together. This abstraction layer provides a summary of the various interdependencies.

We can then immediately see that there are too many dependencies between the software managed by India and Ireland. From a practical perspective, this means that each time India makes a change it may need to contact Ireland to avoid unexpected impacts. This could lead us to rearchitect / modernize our application portfolio or reallocate assets so that we can minimize these cross-geography dependencies.

Gartner on APM Best Practices

An excellent piece of research came out from Gartner this week. Jim Duggan’s research details methods to make Application Portfolio Management successful. A key aspect of the research centers around the need to manage from diverse perspectives. That is, to manage the application portfolio based on contexts that matter to the business. A post on our Application Portfolio Management sister site goes into greater detail.

Let’s outline why Application Portfolio Management is so important. IT has no shortage of priorities. But are they the right priorities? Are investments being made in the right way to support the needs of the business? It’s hard to select and justify projects unless you can validate that they support corporate priorities. And with the trend toward cost containment this is becoming a more important issue. In the same line, IT must be investigating where cost savings can be achieved by rationalizing systems that can be eliminated.

That is where Application Portfolio Management comes in. It is a process of measuring the value, cost, and risk of the application portfolio from perspectives that are important to the business. For instance, what is the cost of applications that automate a given business process – versus its value to the organization. Or, what is the software quality trend for our outsourcing partners.

There are two keys here. First, we are collecting metrics from diverse sources. It could be stakeholder surveys, code metrics (like function points or cyclomatic complexity), or cost data from an ERP system. The point is to collect the kind of measurements that will aid the decision making process. Second, we want to place our collected metrics into the right business context. That is, we want to collect and group the metrics such that they are organized by business concept. This allows us to make IT decisions in the context of the business goals that we are supposed to manage to.