This shows that the new economy, one based on technology advancements, has completely taken over the old one that was mostly centered on energy and finance. Today, technology is the business, and the business is technology. The digital era has become a reality, and will continue to do so far into the future.
When you think about it, it is remarkable that energy and finance are no longer the number one industries after decades of dominance in the economy. Technology advances are a primary reason. For example, a big part of energy output is used to fuel cars, but when self-driving cars emerge, most will be electric. Elon Musk, CEO of Tesla, predicted that all new cars will be self-driving vehicles within ten years. Hence, the shift from energy to technology. With the internet revolution, information is available to everyone, everywhere in the world. The economy is therefore not only digital, but also global. Facebook and Google are present in almost every country, reaching billions of people.
In that context, IT has become the new hub, where it is the engine driving innovation across markets. However, without true innovation, companies can’t survive in this digital economy. For example, insurance agents and bankers are being replaced by artificial intelligence, and most sales orders and contract renewals happen online. That’s why it is critical that IT systems are agile enough to quickly support new business activities.
For executives, it means the company’s IT systems need to be modernized and rationalized so that it becomes much easier to integrate new developments or systems of customer engagement into the IT landscape. But many companies encounter hurdles to IT rationalization. A primary challenge is the lack of visibility into their systems. They have accumulated many different IT assets through organic growth, as well as mergers and acquisitions. They are overflowing with duplicate, redundant, obsolete and irrelevant applications, resulting in a highly complex IT landscape.
To streamline and simplify the IT portfolio, two key elements are required:
Here are the steps in IT portfolio management:
The inventory of your assets includes applications and the technologies that support them. The inventory can be made using several perspectives, such as application deployments, application lifecycles, costs and business value.
The enterprise architecture approach models the links between business activities, applications and technologies, so you can understand the value and performance of each application accurately, thus allowing you to streamline the IT portfolio.
You can also track technology obsolescence, and understand when software components will no longer be supported, to better plan technology change.
The data collection process can be crowdsourced. By doing so, you are sure to get trustworthy data as the basis for evaluation and planning.
This provides a better decision-making basis for IT rationalization, leading to a reduction in complexity and costs.
Again, you can assess IT assets using multiple perspectives … business value, application lifecycle and technical efficiency, and decide which assets to invest in, tolerate, migrate or retire. This detailed understanding of your costs helps you plan better and drive down costs.
Recommendations made during the previous phases need to be analyzed in terms of time, costs, risks, benefits, and impact.
There are key questions that should be answered before applications are retired or changed in any way:
All of these questions should be answered before final decisions are made, so that you can assess the full impact of IT rationalization projects.
By consolidating IT assets, you’ll be able to reduce your costs and, thus, use an increasing portion of your budget for new initiatives. You can also strengthen IT governance principles and thus, increase convergence with the business.
To learn more about how to rationalize your IT assets and align them with your business objectives, download our white paper.