Most medium to large companies have too big an IT portfolio for their business capabilities. Their tech stack has become overflowing with outdated, unused, and duplicate investments, resulting in complexity, inefficiency, and significant cost overheads.
Do you know how many different applications there are in your company’s IT portfolio? 100? 200? 500 or more? How well are they aligned with the capabilities of your business?
Are you aware of the yearly cost of managing those applications, and how much they hinder any development or transformations in your company?
Portfolio complexity manifests in many ways. Other aspects that should sound a warning bell are:
If these are issues at your company, it might be worthwhile to revisit the composition of your IT portfolio.
Most of the time the number of applications in a company’s portfolio could be greatly reduced just by minimizing the redundancies. After going through an IT simplification, many companies find they are lean, agile, and efficient and ready for transformation.
When the situation is dire, fixing things up here and there rarely suffices. Rather, it’s usually best to do a careful, structured, and holistic IT clean up and establish governance to keep your tech stack lean in the future.
In this article, we share our 3-step system to reintroduce simplicity to your IT infrastructure and keep that stack simple going forward.
There’s nothing unordinary about rising complexity within IT. On the contrary, it’s only natural for an IT infrastructure to get more complex with time if nothing is intentionally done to prevent it.
The major reasons for the rising complexity in an already fragmented portfolio are :
Internal and external developments push organizations to increase the size of their application portfolio, mainly affecting CRMs, ERPs, business applications, portals, content management systems, reporting tools, and application platforms. New technologies are introduced constantly, but less attention is given to cleaning up obsolete applications.
Mergers and acquisitions increase redundancy in the system as usually applications for the same business capabilities are added. When time pressure pushes on, it’s quite common to just quickly get the systems to communicate with one another, instead of pausing to look for the ideal integration approach.
And as we all very well know, mess begets mess. When you add the fact that most organizations don’t have a dedicated person or group to look at the portfolio from a wider perspective, you’re well on your way to clutter highways. The result is often a motley crew of platforms with home-grown, off-the-shelf, and partner solutions.
Although going through an IT simplification might seem like a daunting feat with no clear beginning or end (we know that closing the doors on the mess would seem much easier), the process is much more straightforward and rewarding than one would imagine.
Once shown the first blueprints of the current IT infrastructure and suggestions for simplifications, most of the executives we work with get excited about the upcoming several months.
Having someone assess the situation, point you in the right direction, and possibly even take care of the messy work, makes the whole process almost enjoyable. It’s almost like shining a light at the frightening figure in the corner of the room, and noticing it’s just a chair with a coat hanging on it.
Objections aside, the tangible benefits of an IT simplification are cataclysmic.
We’ve seen companies cut down their yearly application costs by 30%, and in some cases as much as 50 % as the result of eyeing their portfolio critically. Even in smaller portfolios, it’s almost guaranteed that duplicates, inefficiencies, and non-compliant systems will be found. Removing these will result in less money spent on licenses, hosting, standardization, and maintenance.
Even more significant is the benefit that a lean tech stack enables. Digital transformation – that is, the ability to answer to changing market and consumer demands with technology – can be significantly slowed down by a bloated infrastructure. For example, changes to a customer experience of an application may depend on the ability of the application to adapt voice, text, and touch interfaces.
Looking at it from this perspective, a simple portfolio can be the key to a company's growth, as opposed to a cluttered portfolio, which can eventually prove detrimental to the company's sustenance.
Now that we’ve established that looking under the hood of your IT is worthwhile, let’s take a look at the process that we recommend companies to go through.
TietoEVRY’s SIMPLIFY-IT offers a comprehensive portfolio analysis framework with tools, methodology, guidelines, templates and best practices to accelerate rationalization.
Simplifying your IT should always begin by creating an inventory of all applications in use. The goal is to get a picture of your portfolio in terms of stability, architectural maturity, scalability, and complexity. As a precursor to this, you should set up a strong governance model to ensure the success of the simplification process.
You’ll want to gather information about all the applications and tech stack your organization uses in one place. List all ERP applications, Custom Applications, CRMs, Portals, and other hardware and software in a simple spreadsheet or a database, and detail what they are being used for.
Usually getting this information involves a semi-automated process, not only asking from the IT department but also looking at application logs, deployment environments, and talking with people from different parts of the organization. Different departments rarely know what’s going on outside their organizational walls in terms of the tech they use.
Collecting information in one place will help notice unnecessary, duplicate, and outdated applications, understand their dependencies, and identify the opportunities for simplification. After the definition phase, you should have a clear picture of what applications your company uses, for what purposes, and what the future roadmap looks like.
Next, you’ll need to dive deeper to understand how these applications serve your business. In this stage, it’s useful to bring all key stakeholders, typically the business and IT managers of each business line, around the same table.
Understanding end-to-end business processes is key for identifying applications and redundancies that could be let go of so that core business capabilities are not harmed. This necessitates careful analysis.
A useful tool at this point is the Business Capability Model (BCM). All enterprises, both large and small, function using a series of inter-related business capabilities.
To complement the BCM, you’ll want to create technical views of the IT portfolio to visualize and understand the dependencies between different systems and applications. These views together should give you an idea of what your core business capabilities are, and what systems are needed to run them, also hinting what could be safely discarded.
TietoEVRY’s Simplify-It framework adopts discovery across 5 different dimensions like Business, Applications, Platforms, Infrastructure, and Operations to enable a comprehensive analysis of the portfolio.
The last step of planning the IT simplification is analyzing what could be discarded, and creating a roadmap for the forthcoming simplification process carefully incorporating inflight projects.
Doing a cost-benefit analysis will shed more light on the possible benefits, and get internal buy-in for the project. A good cost-benefit analysis details how much revenue is created by each line of business, and how large their IT spending is.
Looking at the ratio between these two, you’ll get an idea of how much could be potentially saved with simplification efforts. Paying more to simplify than you’re looking to save is hardly worth the effort.
Once you’ve taken these steps, you should have a clear enough picture of what your current tech stack looks like, what your core business capabilities are and what tech they’re dependent on, and where are the most glaring opportunities for simplification lie.
As we all very well know, thinking about change and planning for change are only the first steps – there comes the time to act upon the plan that was made. At this point, applications are retired, consolidated, maintained, and modernized.
When you’re nearing the end of the process, it’s a good idea to give some thought for the future: How will you keep your tech stack lean from now on? What precautions will you take to avoid adding unnecessary applications to your IT infrastructure? It is important to align simplification streams with the inflight initiatives to create a robust roadmap and reference architecture for the enterprise, which can prevent fragmentation of the application portfolio.
Some good practices we’ve encountered are defining a roadmap, enabling information flow across department borders, and creating a governance model to keep the roadmap and reference architecture current and live.
By following this system you’ll have an optimized IT portfolio designed to run your business smoothly. A streamlined portfolio won’t slow down your efforts to develop your business, but actively support changes.
For IT portfolios consisting of 200 to 500 applications, IT simplification from planning to execution can be done in 24 weeks. For small to medium-sized portfolios the time can be as little as 10 to 16 weeks.
For us, the best part of the process is seeing our customers let go of their excess IT baggage, and achieve better business outcomes because of it. Consider it – maybe it’s not another new application you need, but a proper assessment of what already exists?
TietoEVRY 20 years of experience in portfolio analysis, platform consolidation & application simplification, and large scale consolidations and divestments. Contact us to learn how much you could save with an IT simplification. Simplify-IT is a framework, methodology, and toolbox for carrying out portfolio simplification in a fast and efficient manner.
Alexander is a technology thought leader with over 30 years of experience in the IT industry. He is responsible for strategizing enterprise solutions and transformational initiatives. Alexander has conceptualized the SIMPLIFY-IT framework and driven several large-scale platform consolidations for global customers including several Fortune 100 companies in the USA.