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5 Ways to Maximize Your Applications Budget

Nov 22, 2011
By

CIOUpdate Contributor






by Alejandro Camino of Softtek

Two thirds of a CIO’s average software and services budget is spent on keeping existing applications up and running. This leaves the CIO’s team with very little room to create new IT solutions for its core business.

The following are five key ways a CIO’s team can maximize their applications budget:


No. 1: Know what you have - For decades IT has been focused on developing and supporting applications that perform specific business functions without paying a lot of attention to what happens with the portfolio as a whole. Many applications have been neglected for a long time under the assumption that new technologies will eventually replace them.

The truth is, in most cases, this has never occurred (at least not as envisioned) and a whole slew of dated anachronistic legacy applications and technologies are still part of today’s convoluted IT portfolio. In fact, the modern-day application portfolio of a mid- to large-organization more closely resembles a hodge podge of technologies, programming languages and databases than an efficient, streamlined platform developed to support business growth.

The problem is that few organizations have a clear map of how all aspects of this very complex technology environment interconnect and function with one another. Without such a map, few have the capability to address the problem. A complete, and frequently updated, inventory will provide the road map to drive decisions.

No. 2: Economies of scale - Many application portfolios tend to be serviced one application at a time or from a departmental perspective. This approach is cost inefficient and does nothing to integrate existing applications into a cohesive portfolio.

A short sighted “one-application-at-a-time” point of view enables sometimes faulty decisions that modernize, replace or retire specific applications incorrectly. Rather, by looking at the portfolio as a whole, the CIO’s team can help eliminate redundancy in application management activities and help eradicate duplicate applications.

Application modernization is not a panacea for rationalization. It is just one of multiple tools in the application portfolio management tool box.  By consolidating application service groups, one can achieve higher efficiencies from support teams, thus better leveraging relationships with service and platform vendors.

No. 3: Throw away dead weight - Most people claim that their job function is so unique, or that the process they support is so highly specialized that the applications, some of which have been in-use for 20 years, are irreplaceable and cannot be substituted by a commercial or cloud-based solution.

If you hear anyone say this, odds are that they are wrong.

Enterprise systems along with function-specific commercial software have reached a high degree of maturity. There is a great deal of collective knowledge embedded in today’s enterprise and function-specific solutions, whether they are for procurement, marketing, sales or logistics. In short, chances are “There is an app for that.”

No. 4: Stop micro managing - The fact that gigantic IT services groups exist in large corporations and that the prevailing model of outsourcing is still evaluated by time-and-materials spent, shows that most IT groups rely upon micro managing to drive outcome. This is often counterproductive.

Many organizations live by the mantra, “Do not outsource the core.” The problem is, however, that in today’s world the “core” is not a fixed position. The core is evolving for many organizations, and is becoming more specific in nature. 

E-mail systems are certainly a crucial concern for the modern enterprise. If the e-mail system is down, most organizations will suffer systemic disruption. Yet, does this mean that IT is better suited to manage the e-mail infrastructure than Google’s Gmail, or Microsoft’s Office 365? Most likely not, and e-mail is hardly "the core" for most companies.

No. 5: Challenge the status quo - If we examine the inventory of existing applications at a given enterprise or, better yet, if we look at the business functions these applications are supporting, there is an ever increasing chance that a solution can be found in the cloud.

During a conference I attended recently, the presenter asked the audience whether it was IT or the business users making the decision to hire cloud-based business solutions. Sixty percent of the audience indicated that it was the business, without involving IT.

Today’s application portfolio managers need to start by looking at the cloud whenever they are required to implement a new solution. If they do not do so, their business counterparts will.

With over 20 years of experience working for IT solution providers, Alejandro Camino has led Marketing and Communications for Softtek since May 2006. In this role, he is responsible for managing corporate communications across the U.S., Latin America, Europe and Asia. His team articulates value proposition and positioning strategies for the global ITO and BPO markets through Softtek’s go-to-market strategy.


Tags: budget, Softek, app rationalization,
 

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