Application Portfolio Rationalization

The Growing Cost of the Application Portfolio

In many organizations, applications are deployed and then run without an end of life strategy, leading to a constant proliferation of IT services that is costly to sustain over time. Older applications often require increasing levels of maintenance and support and many new applications deliver very similar functionality to existing services, but just on a new technology architecture.

Developing a framework for determining which applications are worthy of additional investment, replacement or retirement is critical to improving IT efficiency. Quantifying the Total Cost of Ownership (TCO) of a particular application or IT service is an important input to ensure rationalization decisions are backed by solid financial analysis.

Leveraging Cost Transparency to Drive Rationalization Decisions

Apptio’s IT Cost Transparency solution enables organizations to easily model the total cost of ownership of their applications. The solution includes a comprehensive list of cost drivers including infrastructure (servers, storage, facilities, etc…), software licenses, hardware depreciation and labor (architecture, development, operations, support, etc…) to provide a holistic view of application costs.

With Apptio, you can:

• Create an accurate model of fully-loaded IT Service or application cost
• Include utilization, usage, labor software license and maintenance costs and generated revenue for a utilization/value versus cost analysis
• Identify redundant or high-cost, low-value applications as targets for cost reduction
• Justify cost reduction projects with custom ROI reports based on actual cost data
• Optimize IT operational efficiency by addressing high-cost, low-value services or functions and monitoring the cost and performance of IT at a service or line of business level

Utilization metrics for software licenses can also be tracked to understand the relationship between cost and usage. The Apptio SaaS solution supports the ability to overlay the revenue metrics which are associated with a particular application (e.g. revenue per trade for a stock trading application) where available.

Standard reports and drill downs help identify key cost drivers and opportunities for cost savings or consolidation across the application services portfolio, or help identify applications which might be better outsourced to third party service providers.

Applying the What If analysis additionally enables IT to answer questions such as “How much can I save by consolidating or eliminating my high cost, low utilization applications?” IT can better forecast the cost of adding new applications and quantify the impact such as increases in infrastructure, hardware or software costs on total application costs.

Case Study: NSRI -- Leveraging IT Cost Transparency to Drive Application Rationalization

Like any large, Fortune 500 IT organization NSRI engineer and support a complex set of infrastructure that supports thousands of custom applications which are core to their business.

The inherent complexity of those IT services did not always equate to greater value – in fact it often detracted from business value as the complexity resulted in greater system downtime. NSRI struggled to quantify the total costs of their current services and the business value (reduced costs and increased utility and warranty) that would result from optimization efforts across their application service portfolio.

NSRI adopted the Apptio on-demand service offering to gain greater transparency into the costs of the IT Services and drive rationalization across their application portfolio. They rapidly created an accurate IT services costs model and then, using the analytical capabilities within Apptio, were able to trend costs over time to visualize the effects of increased business load on support of some of the older applications. This was combined with data on the financial impact of IT outages to provide a compelling business case for investing to decommission a set of services in their portfolio.

Benefits included:

• Rapid development of accurate costs models for their IT Service portfolio
• Quantification of the business impact of continuing to maintain and support aging services
• Identified key IT decisions that would bring $20M+ in increased productivity to the business

To read the complete case study, download it from our Customer Case Studies page.

Getting Started with IT Cost Transparency

In today’s tough economic climate it has become even more important to reduce IT costs and improve operational efficiency. Many companies such as Alaska Airlines, Blue Cross Blue Shield of Kansas City and NYK Systems Research Institute (NSRI) are turning to Apptio to optimize cost reduction in IT. To get started today contact us for a Free Demo and on-site Proof of Concept. Or to learn more download our solution whitepaper.