Rupert Colbourne, Chief Technology Officer, Orbus Software.
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Technology sprawl is a common problem facing organizations today. The rapid pivot to embrace digital has resulted in enterprises now relying on a complex web of systems, platforms and applications. To provide perspective on the size of the problem, large enterprises run an average of 664 IT applications. Coupled with economic uncertainty and the pressure to find cost savings, businesses are clamoring to streamline and rationalize their IT infrastructure. However, it’s vital that cost-cutting is not the sole driver of decision-making; otherwise, companies run the risk that the short-term benefits incurred could limit growth and innovation in the longer term.
IT rationalization is the process of using data to make strategic decisions about an enterprise’s technology: software, hardware, systems and applications. The end goal is to deliver efficiency gains by reducing the number of systems to be supported and maintained. Rationalization enables an organization to maximize the value and return on its investments while improving the efficiency and effectiveness of its technology-enabled business processes. So, how should enterprises tackle IT rationalization?
1. Cultural Shift
Rather than treating rationalization as a one-off corporate initiative, it should be viewed as a continuous journey with no final destination. Constantly monitoring and tweaking your tech stack helps ensure that it doesn't become dated or slowed by too much IT clutter. Think about trying to improve your fitness. If you only go to the gym in January, it’s not going to make you stronger or deliver long-term benefits versus undertaking a regular program of activity over a sustained period. Organizations need to see rationalization through this lens to obtain the efficiency and innovation benefits.
Additionally, it's vital to get buy-in from the people who manage the applications/technologies. They need to provide information about the assets they own, as without that data being current, accurate and timely, the rationalization won't be effective. This approach allows a company to plan ahead and ensure that its technology stack is ready to support a new solution or market. This agility is vital for success today.
2. Three Drivers: Cost, Efficiency And Business
Rather than looking at rationalization solely through the prism of cost-cutting, CIOs must take into account the impact on efficiency and the organization’s business objectives. For example, a business with a customer service function that isn’t using generative AI chatbots will initially save money; however, over time, it could churn customers frustrated by poor service levels, negatively impacting its brand and reducing revenue.
3. Data-Driven Decisions
Relying on data insights is vital to help inform and direct decision-making. It can uncover additional ways and opportunities to consolidate, standardize or retire underutilized technologies.
4. Reduce Technical Debt
Keeping technical debt levels in check helps reduce costs and delivers efficiency gains. If you are managing and maintaining hundreds of systems and applications, this is a time-consuming and costly endeavor that does little to further agility and innovation. With many IT balance sheets focused on fixing existing technology issues, this has a material impact on operations and budget. Rationalizing and retiring outdated applications can keep this problem in check and allow the enterprise to focus on delivering value for customers. Companies need to keep a laser-like focus on technical debt levels to ensure they have clarity on the size of the issue.
5. Vendor Sprawl
As the volume and complexity of technology have expanded, so too has the number of vendors and partners enterprises rely on. As anyone in a management position understands, the larger your team, the more time this consumes. While no one recommends relying on just a handful of suppliers, reducing the number helps free up the team to focus on supporting business initiatives and delivering value. In addition, it removes the chance of tool duplication, which can result from a highly distributed vendor strategy. By optimizing procurement, IT teams can negotiate better rates and rationalize IT spending.
Holistic Approach
IT rationalization has the potential to deliver a myriad of benefits to an organization. However, it mustn’t be considered purely a cost-cutting directive. Instead, CIOs need to approach it holistically, taking into account how decisions will impact efficiency and innovation. By adopting this outlook, IT rationalization can deliver the trifecta of reducing costs, increasing agility and better-aligning technology with the company’s strategic priorities.
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