Kickstart your 2022 Plans with Application Rationalization

[0:01] Mae: Hello everyone. Welcome to Open iT’s live webinar on how to kickstart your 2022 plans with application rationalization. My name is Mae and I am your host for today. Very shortly, our presenters Guy Phillips, our Senior Business Analyst, and Malou Albendia, our Senior Solutions Engineer, will be joining us. Before we get started, let me share with you some quick reminders.

[0:28] So all our attendees are in listen-only mode. Though lines are muted, you are still encouraged to ask questions. Simply type in your questions in the Q&A of this Teams Live platform located on the upper right corner of the screen. Our presenters will be addressing all questions after the presentation. If we don’t have the opportunity to answer all the questions or if there are any questions that need further investigation, rest assured that the question will be sent to them and we will reach out to you via email to answer those inquiries. And you may also send in late questions to rationalizeapps@openit.com. Now, let me turn you over to Guy Phillips.

[1:13] Guy: Hello Mae. Thanks all. Hopefully you can see me OK. I’d like everyone to recognise I’m wearing the same shirt as my photograph.

[1:22] Nice to speak with you. My name is Guy Phillips. I’m a Senior Business Analyst with Open iT and we are very grateful for the opportunity to speak with you today about application rationalization. We recognize that you are taking time out of busy schedules to come and listen to us, so we’re very grateful for that.

[1:42] Between Malou and I, we hope that today we can share some insights around application rationalization and importantly, optimization. And show that by using some readily available data that your organizations are probably already collecting, you can actually use that data to really help focus your rationalization and optimization efforts.

[2:03] A little bit about myself. I’m a geologist by background and spent 25 years at BP split pretty much 50-50 between first half of my career finding oil and gas, doing 3D geological modeling, and then the other part, managing the software portfolio of applications that I used in the first part of my career. In my time at BP, I spent an awful lot of effort and time managing that big technical subsurface portfolio, which tended to be high in value and low in volume, and some of the engineering apps that you look after, you probably recognize that metric.

[2:38] Those apps are very diverse in their functionality, certainly diverse in the number, and very diverse in the communities and types of people that use them, which made it complex but also very enjoyable.

[2:49] But the common thread across all of that is actually it all needed stewardship and proper management. My experience here is to talk to you about rationalization and help you perhaps better manage the portfolios that you’ve been asked to look after or that you already manage.

[3:07] In summary, it’s a quick conversation about apps routes and what you might do with it. Importantly, how to make a start and look at some of the tools which my colleague Malou will share.

[3:19] Question is, what is applications rationalization? And very simply put, as you can see in the blue writing there, it’s an activity that reduces an organization’s portfolio in size with the explicit intent of reducing those applications to improve efficiency and reduce overall costs. It’s really important to think about costs when we start with is actually the total cost of ownership. Which simply put is the total of all costs associated with it over time and for IT that total cost of ownership includes not just the software but all the hardware that goes along with it the IT management the support contract management database activities I mean pretty much anything that you can think of associated with the software tools needs to be in part of that total cost of ownership description.

[4:16] But it also includes the opportunity cost, which is a negative cost associated with downtime or training or retraining folk to move on to different applications and other productivity losses. It’s a big number. If you can reduce the size of your portfolio, you actually make contributions to those savings across that entire patch in a very, very positive way.

[4:41] When we talk about rationalization from a scale point of view, you can see that it varies enormously. Industry leaders out there are likely to take a very continuous, measured approach to application portfolio management that minimizes the need for major change, whilst less active organization might need huge sort of large bang, boom and bust type activities enterprise-wide projects with large investments of time and money and associated negative costs for that to actually just get those portfolios in shape.

[5:15] In terms of numbers, there’s plenty of data out there that suggests that an average enterprise organization would have over 1500 applications and many small to medium-sized organizations certainly apps in the hundreds. So in summary, generally companies are far more apps than is necessary and importantly they still continue to use far more apps than is necessary. That leads to increased costs as well as impacts on efficiency in terms of the end users and IT departments. But also you should be hearing that it also means that there’s plenty of opportunity.

[5:52] This isn’t my breakfast bowl, but if it was, it’s probably in the top left there. But it’s a way of trying to describe what might the problem statement look like and where might we like to get to.

[6:06] You might recognize some of these things. We’ve got hundreds of applications. We pay thousands, even millions in maintenance and service agreements or in subscriptions. We know we’ve got functional duplication where that’s where different apps carry out the same activity, quite often with different communities of users. We’ve got under-licensed licenses, modules, or plugins, poor end-user behavior, license hogging, license camping, however you want to call it. We might actually say we don’t really know who’s actually using our tools.

[6:36] Quite often, we don’t have time to manage those assets. Those are the problems potentially. Where we’d like to get to, a fit for purpose applications portfolio, right size license agreements paying for what we need and certainly for what we use, minimal functionality crossover with well-defined application workflows, and the right number of seats for our end-user communities.

[6:57] Poor end-user behavior kept to a minimum, a good understanding of license consumption, so we might want to allocate those costs out to different business units or to partner agreements that we have, if so desired. And we also have well curated decision support packages to help make those changes through good analysis, our experience and our knowledge.

[7:21] How do we actually get here? How do we actually end up with such a view if we go to the next slide on? Why do we have these sort of bloated or ballooned portfolios?

[7:35] You’ve got that kind of human endeavor of the pursuit of the latest and greatest technology but importantly without decommissioning so you end up with many many additional applications in the portfolio. And you’ve got mergers and acquisition type activity where two companies are brought together, often bringing their toolkits with them and never a kind of consolidated view to try and simplify that new playing field, if you like.

[8:02] You have companies that are project focused, so they take on new apps to continue that or deliver that piece of work. And then those applications reverberate around the organization until they’re dealt with. And the last thing is that people have fear of making change for the idea that it’s going to have a big impact on productivity. So all of those reasons lead to these large kind of portfolio of applications.

[8:26] Our goal here though is to highlight opportunities. We need to try and understand where is that functional duplication, and we need to also get at how do we get the most simplest workflow? How can we get our end users to use the toolkit in as efficient way as possible, and particularly around minimizing those interactions where you’re taking data input and output that a huge amount of time and effort is wasted there.

[8:51] And the importance of managing those apps appropriately is that well-managed portfolio brings efficiency improvements no matter where you look, whether it’s cost reduction, whether it’s through end user interactions. And what does that drive? Shareholder value. That’s really what everyone on this call ought to be thinking about. How do we deliver shareholder value? Let’s take a look at the next slide.

[9:16] What’s the size of this prize? Again, there’s a reasonable amount of industry data out there that suggests a well-managed application portfolio that’s been properly rationalized can save up to 30% in its total cost of ownership. And I’ve described what that TCO looks like. So depending on the size of your organization, that’s potentially an enormous price to go after. And given that applications costs can be up to 80% of IT budgets, it also recognizes that there are significant savings to be had.

[9:50] When we think about total cost of ownership savings, where do those come from? Well, it’s maintenance and service subscriptions and agreements, obviously. When you start to rationalize applications, you can start to remove hardware. You can get rid of legacy applications. You start to retire databases and you increase storage efficiencies. You move applications over to the cloud.

[10:11] You save on IT management, you save on IT support, retraining, and other productivity losses. All of this contributes to that total cost of ownership saving. That graph there shows, it’s an actual Open iT example, and it shows what can happen when you start to get rationalization right.

[10:30] It talks of maintenance and service costs in this particular example. But by reducing costs in year zero, a significant proportion of those costs are allocated to simply paying the maintenance service, paying money just to keep the lights on on that software portfolio.

[10:47] As a proportion, there’s very little money available for new software, which is actually where companies need to stay ahead. You can’t just rely on legacy applications.

[10:57] So in this example here, after a proactive rationalization process, those maintenance and service costs were reduced by about 36 percent. So that was the first slice of savings, which actually created space for new versions to come along and new applications as well to be brought in, and the associated improvements in efficiency. At the end of the second year, maintenance and service payments are in check, and perhaps we even see a slight downward trend here. Which actually is starting to build confidence in the application portfolio management team by those business stakeholders who tend to hold the budgets in this case. It’s actually creating space for new tools and new processes coming in. The takeaway here is that through a demonstrable track record that actually leads to trust from the business stakeholders and they’re keen to support these types of things.

[11:50] What can get in the way of rationalization? Complex portfolios, you know, they’re by their nature very difficult to manage and therefore identifying applications for rationalization can be problematic.

[12:02] Keeping track of every application in use or that’s paid for multiple contracts across multiple years makes it really difficult and tricky to stay on top of that.

[12:12] Understanding usage, I think we could all admit that we don’t have a huge amount of off our cuff understanding of how our applications are being used. Where are those records being kept? Understanding usage data or understanding usage without quality data is really difficult.

[12:32] Visualization, assuming that we can get access to the data, we’ve got to be good at visualizing the story in order to communicate with our stakeholders. And quite often, we’re up against pushback. It can have a negative impact in some people’s eyes. And so you get pushback from certain groups, certain functions, or even vocal individuals who say, I’m not prepared for you to take away my favorite toolkit.

[12:56] Let’s look at a quick tool as how we might start to think about our rationalization and what might those steps to successful rationalization look at. Next slide, please.

[13:09] If we think about successful rationalization, I think the one thing I really want to emphasize is actually establishing the goal. What problem are we actually trying to solve here and what do we want to achieve? Are we looking for a maintenance and service spend reduction? Are we looking to reduce the number of applications? Are we looking to save a certain dollar value? If you as a team or individuals can articulate that, then it really sets the framework for how you might move forward.

[13:37] The first thing you’ve really got to do is collect data and Malou’s going to talk some more about this. The more data that you have, the more informed those decisions are going to be. Once you’ve got that data, you’ve got to assess, you’ve got to give it some sort of scoring criteria that helps you think about where do these applications sit in your portfolio? Will you continue to tolerate them? Are you going to invest in those applications? Should you be migrating to a new platform or a new tool? And which importantly ones are you going to actually eliminate?

[14:08] Once you’ve done that activity, you need to think about visualizing. Reports, charts, graphs, bringing that story to life, engaging with your stakeholders can actually help rationalization. Once you’ve done that, really, I think you’re on the leading foot with moving forward with those conversations.

[14:27] If I can share just a very quick anecdote from my previous employer. We invested 18 months in a long study using a huge amount of IT efforts and business resources to understand which applications underpinned which workflows and where do we have significant overlap. We really focused on the apps, focused on the users, focused on the organizations and the workflows. This was largely driven by conversation, workshops, emails, questionnaires. You’re probably very familiar with this engagement with the applications champions. That’s all really good stuff. I’m not telling you not to do that. It said that 18 months of activity and all of its costs could be so much more efficient if we actually focus those conversations and workshops based on insights driven by quality data.

[15:20] If we actually looked into the data that we’re already collecting, we could have really focused those efforts and had a far shorter start to finish goal. And I think the quality would have been exactly the same. So I think a focus on data is a great way forward. Next slide, please.

[15:40] Stakeholder buy-in, really, really key. After that analysis and visualization, you’ll have a few candidates that emerge. However, that low-hanging fruit is not going to make up the major savings.

[15:52] Stakeholder engagement is actually really critical for successful rationalization. Application owners, expert users all help to provide additional data to provide that quality analysis.

[16:06] And, you know, you need the support. Business owners and leaders got to support that rationalization initiative. It’s not an IT-driven process. It might be IT-led, but actually, unless you’ve got business support, it’s not going to go anywhere.

[16:20] And then once you’re into that kind of mode of operation, those deeper rationalization opportunities will be driven by business leaders and not IT departments. That cultural and behavioral change will be required to drive real value, but it’s doable. Next slide, please.

[16:41] Efficient portfolio maintenance. Once you’re getting to a rationalized portfolio, it’s really important to maintain momentum. You need that constant analysis of the portfolio to avoid that sort of boom and bust type cycle that can quite often happen and ripple through an organization.

[16:59] Effective and continuous management is key, absolutely underpinned by quality data and analysis. So very, very quick whistle-top tour through application rationalization. You’ve heard that little bit of the story and now I’d like us to hear from Malou who’s going to discuss some of the optimization insights that you will get or can start to get from some of the data that you probably already is in your organization. And without further ado, I’d like to introduce Malou, our senior solutions.

[17:32] Hi Malou.

[17:33] Malou: Hi, thank you Guy. So maybe I should introduce a little bit about myself. My name is Malou Albendia. I’ve been with Open iT for nine years. The first half I worked as a solutions software developer and then the second half a solutions engineer working with the customers in identifying the best solution for their business challenges. Now, especially for organizations that has not started with application rationalization, you can start with whatever data that you have. If there’s none, you have to start collecting it now. You have to ensure that you get good quality data because making sense of bad data is not only difficult, but it can only lead to wrong decisions.

[18:23] And we at Open iT will be happy to help you get started to collect the correct data, to visualize them, and to provide insights using this data. And as a comment to what you mentioned a while ago, Guy, that at BP it took 18 months you know for rationalizing or at least identifying duplicates on the functionalities of application but with the help of data we can reduce that amount of time spent. Now once you have the data available looking at the low hanging fruit is a natural next step. You can do this by looking at the runtime usage. I have listed here four points, but there are more things that you can do. The first thing is that you can identify unused licenses, and it could be a simple reporting, like listing all the applications that you have with zero utilization for the past, let’s say, past year. You never utilize this, we can remove that from our portfolio. Now, you have those applications with a little bit of usage, but not much. Second, what you can do is to calculate the efficiency of these applications. Third is reduce redundant software.

[19:45] And again, you have the information. Now you have the visibility of applications you used. And if you have two providers, same overlapping functionality, you can compare those two and standardize on the applications you have more usage over the other. Of course, you would have some pushback because maybe some of the users are more knowledgeable in using one of the application over the other. But again, you can use this data to drive that conversation internally to standardizing the application and reducing redundant software.

[20:30] And fourth on my list is to analyze usage pattern. You can look at usage trend, you can look at the usage behavior of your users. You might have some users camping on the licenses, extending the usage multiple days consecutively and what you can do is, you know, report on this and try to see what you can do to eliminate those kind of behavior.

[21:03] Now, this is a good report to show you the benefit of having multiple measurements, multiple data points, and having a good visualization to get an insight. Because if you only look at one measurement saying that, well, we need 44 out of that 1000 licenses, well, that’s an optimization as well. But you can optimize it even more by adding another measurement on your report. That is, how long did we use this 44th licenses? And if you look at there, you actually use the 44th license for only five minutes of the time for the whole nine months. Right. But this is, again, a business decision that you want to make. Would you like to cover 100% of the time? Then you would have to pay for a very expensive five minutes of usage.

[22:01] Or you can also have a service level agreement only covering the 99% of the time, which would need only 33 licenses or 95 for only 29 licenses.

[22:18] Analyzing usage patterns. Again, identifying peak usage. Here, you can use different visualizations, but a very good visual that can provide us insight is a heat map. In this heat map, we can easily identify that the peak hour starts at around 7 a.m. and then ends at around 4 to 5 p.m. But one thing that we can notice on this is that there are even usage on the weekends, late hours, early mornings, there are usage.

[22:58] It is a good indicator that you have users that camps on the license. They check out the license and then keep it running for the whole time. It’s also a good indicator that you have users that hogs the licenses, meaning they have multiple licenses at the same time. When it comes to optimization, these are the behavior that you would like to see and to identify.

[23:25] To make sure that this has happened. You can drill down on the usage data and see the user level. In here, this is not about singling out a single user, but just identifying the usage behavior. And you can use this to have a conversation with these users and say, do you really need this much licenses? Do you really need two licenses at the same time? They might be. They might be working on several projects, but again, to know that you have to start with something to have this data collected and to present them into visuals that would give you that insight. Here you would see that you have you know different types of users you have users that open an application, close it when they don’t need it, but you also have some users that just keep the application running until the next day. Of course, this would really drive the usage that you have higher. After having this information you can do different things you can alert the users informing them about their usage and you can also do license harvesting for instance so there are different things.

[24:50] So far what I’ve shown is like the start very basic activities you can do in order to start the optimization and ultimately application rationalization. But later on, if you would like to further the optimization, you need to select a solution that can provide you better analysis, better optimization. And I have four points here that can help you in that. The first one is the completeness of the solution. You have to make sure that the solution you choose can cover and can support you with different types of application and vendor regardless of how they are licensed. You might have concurrent applications, you might have named users or pay-per-use. You should be able to cover all this type of license agreement. You should be able to collect data regardless of the installation. They might be on-premises with License Manager or they might be cloud application. You should be able to have that. Aside from metering, the solution that you choose should be able to help you do automatic optimization. What I’m saying is that if the application is inactive, can your solution suspend the session or terminate the session to help you in automatic harvesting. So that’s one point.

[26:35] The second is depth of metering. And that is identifying whether a license or an application is actively used or not. So far, in the previous reports that I’ve shown you, we’re looking at how long the applications are used, by whom, when. But then we would like to know deeper. We know that the application is running, but is it actively used or not? Having this additional information can really help you in the optimization.

[27:01] Breadth of analysis is the third one, and that is knowing and having the capability to simulate different agreement can really help in the optimization. Optimization is not just about cutting down the number of licenses that you have but also mixing and remixing the type of licenses that you have. You might want to move from one agreement to another you might want to have a combination of license model and that is one another thing that you would like to consider.

[27:41] And the fourth one is customer service excellence you would like a provider that can support you not only with the support, but also or technical support, but also with analysis of data provider that can help you in supporting different types of vendors in different types of license agreement. So with this four indicators you should be able to select the best solution that can help you in optimization and in rationalization. And I’m very happy to say that in Open iT, we have these four covered as part of our solution.

[28:23] Guy: That’s great, Malou. Thank you very much. It goes back to me. Yeah, I think between Malou and I, I think we’d like to summarize by saying that, you know, whether it’s rationalization or optimization, and the whole point about this talk was kickstarting 2022, is that you’ve got to get started. It’s not going to happen without your effort and involvement and dedication.

[28:48] You can start looking for data, you can start your analysis, and you can actually look for opportunities. And my experience is that we quite often wait for permission to get started. You know, we wait for a project to be created. We wait for someone up the tree to say we need a rationalization project. And actually, I would advocate that you make a start yourselves. You get some of those insights and you start to gain the interest of business stakeholders because you’re showing that there are prizes on the table ready to be harvested, if you like. And you can always ask for forgiveness later if you should have been doing something else.

[29:20] There are some great tools out there clearly, which my colleague Malou has shared with you. Open iT absolutely has that capability to drive and derive real value from your data.

[29:31] Lastly, start a conversation. We’re very open for those conversations to start with us and come and talk to us. We’re going to share a link. There’s an opportunity for you to connect with any commitment whatsoever to have a conversation with an analyst and help. Let us help you understand where your problems are. Let’s try and describe what problem we’ll be trying to solve here and trying to understand your particular challenges. There’s an exceptionally competent team here at Open iT who can really help you improve your portfolios and helpfully think about it, derive and drive that shareholder value.

[30:10] I think that’s the end of the formal presentation. We’re happy to go to some questions if anyone just wants to jump in or write something in the chat. But thank you all so much for your patience and we’ve run slightly over, but hopefully you find something there of interest. Thanks.

[30:27] Mae: Thank you so much, Malou and Guy, for your inputs. I believe that we can go to our Q&A. I have a question here that’s for Guy. So, Guy, do you have any advice for getting started with an applications rationalization project as it seems rather daunting?

[30:49] Guy: Yeah I don’t know where that question came in a bit earlier but I think yeah my response would be you’ve got to get started and it’s that question of you know do you wait for someone to ask you to do that piece of work or do you actually just get on with it. There’s you know your organizations are already collecting data through their different license managers and I think we’ve got a bit of a solution where we can help sort of start to analyze some of that data for your organization. And I think once you start to gain some of that insight, you build confidence and actually there’s a story here and there’s some prizes on the table. So I think don’t be afraid to make a start. Don’t seek forgiveness afterwards. I think that’s probably my key takeaway there.

[31:33] Mae: All right. Thank you very much. And I think this question still goes to you. From your own experience, what has been the best way to get apps rationalization underway?

[31:44] Guy: Well, actually, I’m going to answer that by saying how not to do it. And it’s probably back to the anecdote to spending 18 months, 18 months having quality conversations and workshops and all that sort of stuff. That process would have been so much simpler if we’d actually had the opportunity and we should have seen it. We should have delved into that data a long, long time ago. It’s just we didn’t have the tooling or the processes and the confidence, I guess. I think in order to make that start, start with some quick wins around data and those observations and use that insight to help drive that process. It’s so much easier. It’s like writing a draft document. Once you’ve got something down on that piece of paper, it’s so much easier to contribute and to share those ideas with others. Hopefully that answers the question. I’m not sure.

[32:35] Mae: Thank you very much, Guy. So I believe those are the questions that we have today. And I would like to ask our viewers if you have other questions and if you have late questions, you may also send it to our website now. That concludes our webinar for today. Thank you very much, Guy and Malou, as well as all the attendees today. A quick reminder that this webinar is recorded, so we will be sending you a copy of the recording through your registered email address. We will see you again next time. Once again, this has been Mae, your host for today. Thank you and stay safe.