Why app rationalization matters in the multicloud era

When your organization is moving to the cloud, the goal is to streamline and modernize applications that will reside in the cloud as part of your broader multicloud strategy.

This process, known as app rationalization, eliminates applications with outdated, overlapping and duplicate capabilities. The goal is to optimize application portfolio resources, reduce costs and provide a unified experience for employees across all business functions, such as sales, finance, HR and procurement.

Four years ago, NTT DATA gained first-hand experience with app rationalization initiatives when we had to bring together 50,000 people across 31 operating companies to create a single organization.

Here’s how we did it.

Consolidating 2,200 apps under a standard architecture

We had a lot of housekeeping to do to make it easy for our employees to work and collaborate using digital tools in a secure and trusted environment.

The newly integrated business had more than 25,000 servers and over 2,200 applications, with workloads hosted in about 50 data centers. This complexity resulted in an inefficient allocation of resources, making it hard to improve our security posture and gain visibility of our environment for governance and financial control.

We had to consolidate our application footprint under a standard architecture to make it easier to deploy and support new hosting platforms, optimize our cloud spending and tighten security.

So, we decided to embark on a cloud-first strategy with Azure Cloud.

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An opportunity to solve big problems

The app rationalization process is a significant undertaking that’s not without its challenges.

Our approach was to start by identifying the problems we had to solve, namely:

• Disparate systems and business processes: An essential initial step in app rationalization is to gain a deep understanding of the policies, processes and systems used by different organizational units. The outcome of this deep discovery involves mapping out these systems and determining what can be migrated to an interim or end-state platform.
  
  In our case, we had to define an interim platform because there were certain factors limiting our end-state rollout timelines. We did not want all our business units to keep using different platforms, so moving them to an interim but more unified state was a logical step.
• Spiraling costs: Different systems mean different support teams, different types of infrastructure and different licenses. By consolidating applications, organizations can reduce their support costs, optimize their infrastructure and provide a more efficient, unified experience for their employees, leading to increased productivity.
  
  Doing a deep discovery to map out our systems allowed us to identify these opportunities across our entire business.
• Security risks: Legacy systems come with security concerns, especially when older applications with end-of-life, issue-prone or unsupported components are involved. The rationalization process also offered us an opportunity to improve our security by phasing out applications approaching end of life.

6 lessons we learned

Once we had settled on a way to resolve these is as part of our journey to multicloud, our app rationalization process helped us go from 1,095 addressable applications in 2021 to 736 in 2022 and a projected 497 by the end of 2023.

Along the way, we have learned a number of valuable lessons:

1. Devise a clear strategy: Will you move directly to an end state of app rationalization or go through an interim state first? Having a clear strategy is crucial means employees are not subjected to abrupt or multiple changes in their work environment.
2. Get buy-in from (almost) everyone: People don’t part easily with the capabilities and applications that they have developed over the years. In such cases, alignment across the organization is vital if you are to realise the value of common platforms. Take the time to engage and convince functional business units until you get their support.
3. Phase it in: There is value in dividing the app rationalization process into stages based on business priority. First, map out and understand all on-premises applications that will form part of the project. Next, find a way to move these applications to the cloud as is. Then, make their architecture cloud-compliant.
4. Standardize processes: Having a common way of working for all employees streamlines operations and enhances employee experience. It is also easier to outsource standardized processes to a third party.
5. Consider legislative and data-residency issues: Compliance with legal and regulatory requirements, such as data residency, is a key consideration during rationalization efforts. This is especially true for larger organizations whose operations cross borders.
6. Negotiate license costs: Negotiating licenses globally in large organizations may disadvantage countries or regions that will pay relatively more because of differences in purchasing power parity. The lesson here is to negotiate licenses from the perspective of these countries and to select tools that are affordable across the board. This may even involve a two-tier licensing system.
7. Be disciplined in rolling out new capabilities: When transitioning from old “as-is” systems to new ones, give employees access to the “to-be” capabilities as soon as possible. This helps to avoid productivity loss when they lose access to older functionality.

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What comes after app rationalization?

Our experience has also helped us improve how we help our clients make the shift to cloud.

We see the application rationalization process as a continuous journey – a long-term program with several phases. During the initial part of the journey, a significant number of apps will be rationalized or decommissioned. However, the number of applications being decommissioned will quickly decrease with time, following a hockey-stick curve.

The work isn’t done once applications have been consolidated. Now that you have the firm foundation of a consolidated application ecosystem, you can start to modernize processes, harvest the data pools, deploy advanced technologies like AI, and make the most of your multicloud environment for better business outcomes.

This article includes contributions by NTT’s Anand Patil, Director: Business Relationship Partner; Sathish Krishna, Director: Client Projects; and Richard Banfield, IT Information Systems Director.