9.3. Building an Inventory for Rationalization

A complete and accurate application inventory serves as the foundation for successful rationalization. This inventory provides a centralized view of all applications within the organization, capturing key data points needed to identify opportunities for streamlining, optimizing, or retiring applications. In this section, we explore the process of building an effective inventory tailored to early-stage rationalization efforts.

9.3.1 Why an Inventory is Critical for Rationalization

A well-maintained application inventory:

• Provides Visibility: Ensures the organization has a clear understanding of the applications in use across departments and business units.
• Supports Data-Driven Decisions: Enables objective evaluations of applications based on cost, usage, and business value.
• Identifies Redundancies and Gaps: Helps uncover overlapping functionality and areas where tools are missing.
• Facilitates Governance: Serves as the foundation for APM governance structures and ongoing portfolio management.

9.3.2 Key Data Points to Capture

To effectively support rationalization, the inventory should include the following data points:

• Application Basics
  • Name, version, and vendor.
  • Type (e.g., custom-built, off-the-shelf, SaaS).
  • Primary function and business purpose.
• Usage Metrics
  • Number of active users.
  • Frequency and volume of usage (e.g., daily, weekly).
  • Departments or teams relying on the application.
• Cost Information
  • Total Cost of Ownership (TCO), including licensing, maintenance, and support.
  • Associated infrastructure costs (e.g., servers, storage, networking).
  • Vendor contracts and renewal schedules.
• Technical Details
  • Hosting environment (e.g., on-premises, cloud).
  • Integration dependencies with other systems.
  • Known technical debt or performance issues.
• Business Value
  • Alignment with organizational goals and key business processes.
  • Criticality to operations (e.g., mission-critical vs. non-essential).
  • Contribution to customer experience or competitive advantage.
• Lifecycle Information
  • Application age and roadmap (e.g., actively maintained, end-of-life).
  • Future plans (e.g., upgrades, re-platforming, retirement).

9.3.3 Steps to Build an Application Inventory

1. Define Inventory Objectives
   • Focus on capturing data relevant to early-stage rationalization (e.g., identifying duplicates, assessing usage, understanding costs).
   • Keep the scope manageable to avoid overwhelming teams with data collection.
2. Engage Stakeholders
   • Collaborate with application owners, business units, and IT teams to ensure accurate and comprehensive data collection.
   • Provide clear guidance on the data points to be collected and why they matter.
3. Leverage Existing Resources
   • Use available documentation, such as CMDBs (Configuration Management Databases), financial records, and software asset management tools, to gather initial data.
   • Supplement with surveys or interviews to fill in gaps.
4. Use Tools for Automation
   • Start with simple tools like spreadsheets for small inventories.
   • Consider entry-level discovery tools to automate data collection for larger portfolios (e.g., open-source solutions or lightweight inventory tools).
5. Prioritize Critical Applications
   • Focus on high-cost, high-impact applications first to deliver quick wins and ensure early rationalization efforts yield measurable results.
6. Validate Data
   • Cross-check data with stakeholders and existing records to ensure accuracy.
   • Address any inconsistencies or missing information promptly.
7. Document Dependencies
   • Identify integrations and dependencies between applications, as these will influence rationalization decisions.
   • Ensure that retiring or consolidating one application doesn’t negatively impact others.

9.3.4 Organizing the Inventory

Structure the inventory in a format that is easy to analyze and update. A simple example is a spreadsheet or database with columns for each data point (e.g., Application Name, Usage, Cost, Business Value). For larger organizations, consider using an entry-level APM tool to manage the inventory.

9.3.4.1 Common Challenges in Building an Inventory

• Incomplete or Outdated Data
  • Challenge: Legacy systems and decentralized application management can lead to gaps or inconsistencies.
  • Solution: Use surveys, interviews, and automated discovery tools to fill in missing information.
• Stakeholder Resistance
  • Challenge: Teams may be reluctant to share information due to concerns about losing their preferred tools.
  • Solution: Clearly communicate the purpose and benefits of the inventory and involve stakeholders early.
• Overwhelming Complexity
  • Challenge: Large portfolios with hundreds of applications can make data collection seem daunting.
  • Solution: Break the process into manageable phases, starting with high-priority applications.

9.3.4.2 Best Practices for Inventory Success

• Start Simple: Focus on key data points critical for rationalization and expand as needed.
• Keep It Dynamic: Ensure the inventory is a living document, regularly updated to reflect changes in the portfolio.
• Align with Governance: Tie the inventory to governance processes to ensure ongoing accountability and relevance.
• Communicate Progress: Share updates with stakeholders to maintain transparency and build confidence in the rationalization process.

By building a robust application inventory, organizations gain the visibility and data needed to make informed, strategic rationalization decisions. This foundational step not only supports early-stage efforts but also establishes a framework for continuous portfolio management and improvement.