Jan 10 2024
Data Center

How Application Rationalization Fits into IT Modernization

Rationalization maintains the overall hygiene of an application portfolio, creating a blueprint for modernization.

As state and local agencies pursue technology modernization, they must look beyond infrastructure upgrades. Transformation requires a deep dive into the applications themselves.

Agencies need to know what they’re running, eliminate duplication and ensure that applications align with emerging infrastructure models. This effort, known as application rationalization, is key to digital transformation.

What Is Application Rationalization?

Application rationalization can be a driving force in IT consolidation and modernization for state and local governments.

Sometimes referred to as application portfolio rationalization, this effort looks to reduce the size of an organization’s overall application portfolio. By eliminating redundancies and ensuring that applications run smoothly on modernized infrastructure, agencies can improve efficiency and trim operational costs.

With application rationalization, the top priorities are optimizing performance, reducing costs and aligning to business goals, according to Francisco Ramirez, chief architect for state and local government at Red Hat.

To that end, rationalization aims to determine which applications should be kept or retired. Application rationalization identifies those that need to be replatformed, refactored or reimagined in alignment with infrastructure modernization efforts.

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How Does Data Center Consolidation Apply to App Rationalization? 

Application rationalization can play a major role in helping governments streamline and simplify IT operations.

Reviewing, modifying and potentially eliminating existing applications “directly relates to potential infrastructure and data center consolidation,” Ramirez says. Both application portfolio reviews and infrastructure upgrades aim for improved performance at a lower cost. Modernization and rationalization “are tightly aligned from that perspective.”

In the process of application rationalization, “you may conduct an assessment of the underlying infrastructure that can directly play into the data center consolidation, and vice versa,” he says. “If you’re going through the process of data center consolidation, one of the things that you need to do before you consolidate your hardware resources is to understand what’s running on it.”

State and local agencies have good reason to consider rationalization as they look to solve the problems that can arise from legacy infrastructure.

“The greater the number of data centers in the public sector, the more they serve as a breeding ground for application sprawl — single-use, custom-built applications that tend to be a drain on resources,” says Hrishika Vuppala, senior partner leading the public sector technology practice at McKinsey. “Data center consolidation and infrastructure consolidation provide an opportunity to inventory and evaluate the entire portfolio through a lens of application rationalization.”

When organizations undertake that effort, “we would find that about 20 to 30 percent of applications could be phased out,” consolidated, or replaced — for instance by Software as a Service, he says.

EXPLORE: State and local agencies should seize the moment to enhance digital services.

How Does Application Rationalization Support Shared Services?

State and local governments are increasingly looking toward a shared services IT model, in which the same resources are used by multiple agencies or departments.

It makes sense for states to adopt shared services, as many functions overlap across agencies and departments. Often at the state and local levels, “multiple departments have applications that do a lot of the same things,” Vuppala says. “They verify eligibility, they manage and store documents, and they process payments.”

With an eye toward reducing redundancies and improving the citizen experience, “application rationalization and shared services are complimentary strategies,” she says. “When they’re implemented together, they contribute to more efficient, cost-effective outcomes.

Both application rationalization and the shift to shared services “aim to reduce costs and enhance the overall effectiveness of an organization,” Ramirez says.

“With shared services, the agency has identified potential areas where it can consolidate the services into a centralized, managed capability. There’s the standardization of business processes, reduced application redundancy and leveraging the integration of systems,” he says.

With application rationalization process, “those redundant applications and processes are identified and eliminated,” he says. “The shared services part can then focus on a streamlined set of applications and processes. You’re avoiding duplication of effort and resources.”

Why Is Application Rationalization Important? 

With the rise of the cloud, state and local governments are adopting new platforms and new delivery methods. It’s vital that they understand how their applications will fit into these new models.

“When you are introducing or adopting new technologies, the last thing that you want to do is invest in something that hasn’t been vetted to work with what you already have,” Ramirez says. “If you haven’t done application rationalization, there’s no guarantee that your current systems servicing your constituents are going to function the same, or at all.”

Application rationalization helps ensure seamless performance.

“If you’re looking at taking an application into the cloud, for example, you have to understand whether or not in its current build can function there. That’s part of the assessment process: understanding compatibility with that new technology,” he says.

Application rationalization “is a critical step when adopting new technology platforms and products,” Vuppala says. “It helps to streamline application portfolios, align IT with business goals and ensure a smooth integration of new technology into the existing IT landscape.”

She points to public health departments’ efforts to modernize data systems in the aftermath of the COVID-19 pandemic. “While doing this, it’s prudent for them to examine what exists today,” she says.

“They may find that several of their existing applications were built specific to diseases and health conditions,” Vuppala continues. “They could identify which ones can be consolidated, rationalized and ultimately replaced by more a modern approach that provides a much more holistic view of public health.”

LEARN MORE: Key drivers for IT modernization in state and local government.

What Guidance Should Agencies Consider in App Rationalization?

As government looks to rationalize application portfolios, strong governance is needed to ensure consistency.

“In state and local governments, many operations function in silos. There’s a lack of communication that sometimes occurs,” Ramirez says. With this in mind, “you need a clear governance framework that’s aligned to overall organizational goals and business objectives.”

Stakeholder involvement is critical here. “It’s very difficult to get buy-in if things are being forced one someone,” he says. “You need to identify the appropriate stakeholders, keep them informed, and make sure you’re getting their feedback and perspective. When you get people to buy into the process early on, the likelihood of success increases considerably.”

As for the specifics of governance, “We’ve found is that it’s helpful to develop guidance for how the value of application rationalization will be measured,” Vuppala says.

“Not all of the goals in public sector can be tied to a set of financial measurements that are consistently articulated and widely understood,” she says. “Instead, value could be measured by a different set of outcomes, such as resident satisfaction, ease of use, flexibility, efficiency and consistency.”

To that end, “it is critical to have a consistent impact tracking system. How many applications have been fully terminated after modernizations? What cost savings has this unlocked?” she says. “Having these value scorecards ensures accountability for the delivery of these programs and provides much more informative details about the state of a program compared to with typical status, budget and schedule tracking scorecards.”

As agencies look to rationalize their applications, holistic assessment engagement tools such as CDW’s Strategic Application Modernization Assessment can help them to analyze code, evaluate it against modernization goals, and provide a custom roadmap that leads to applications that are more scalable and easier to maintain.

These assessments help fuel digital transformation, ensuring that agencies take an infrastructure-centric approach to their applications.

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