App Consolidation: A Strategy That's Always In Style
Windows 7 rollouts and increased M&A are two good catalysts for app consolidation.
Application consolidation should never go out of style. Sure, the cost-cutting pressure of the recession has eased a bit, but there are new forces--a Windows 7 rollout, increased M&A activity, new application development--that call for the discipline to cut unnecessary apps. Complexity is every bit as big a problem as cost, and app consolidation helps fight both.
Think it's time to focus on growth and not sweat so much about trimming those software maintenance and support staff costs? Hewlett-Packard CIO Randy Mott doesn't have that one-or-the-other luxury. Mott led a massive, three-year transformation and consolidation of Hewlett-Packard's IT operations, culling HP's apps from more than 6,000 to about 1,500 in late 2008. With the subsequent growth-minded acquisitions of EDS, 3Com, and a few other companies, HP's app count crept up to almost 2,800. So Mott has reset the goal: 1,000 apps by the end of fiscal year 2011 is the new target.
In terms of business justification, the case for consolidating apps is one of the easiest to make but the hardest to implement. Every application has a loyal constituency of users adamant about not losing the perceived unique capabilities of (and their comfort level with) their app of choice. App consolidation often becomes a political nightmare that scares IT away from forcing tough choices.
It's why former General Motors CIO Ralph Szygenda made app consolidation visual. First, he got fellow business unit leaders to buy into the notion that cutting apps is needed to improve business processes, not just make IT cheaper. Together, they agreed on measurements, such as what percentage of apps are common versus unique to a business unit. Then he provided reports that showed who was meeting the app-cutting goals and who wasn't. "If they can't visualize how good or bad they are, it's 'IT guys, go away,'" says Szygenda, who cut about 3,500 systems out of GM's app portfolio in the late 1990s and early 2000s, before retiring last fall. "It's a little bit of embarrassment."
The drivers are pretty clear and revolve around cost and complexity. The more complex the software and systems involved, the greater the return for consolidation. The recurring annual maintenance costs paid to vendors for conventional software can be extensive. Beyond that, internal staff, contractors, and vendor services to keep the lights on and make changes can also be significant.
A catalyst such as the Windows 7 operating system upgrade can be just the spark companies need to take on the application consolidation challenge. So can a data center consolidation project or a hardware refresh--which is what Mott did, consolidating 80-some global data centers to six. Just be careful not to introduce too much change in the environment without proper testing and an appropriate process. Sometimes, the allure of new systems can be appealing and the rush to implement can cause significant business problems.
When developing the business case, first develop then validate your requirements, as some capabilities in existing systems may no longer be required. Be sure to include a wide range of stakeholders representing all aspects of the system. You might pick one of the systems you have, or you may find new options--commercial vendors offering software choices that didn't exist before, letting you decommission custom code, for example.
Or there may be new software-as-a-service and cloud delivery options, and the cost savings from these models may be a big driver to justify the consolidation. Even if you don't consolidate, it's helpful to perform this exercise formally at least annually to ensure you're aligned with the business objectives the application was designed to meet.
That inventory process also might yield some surprises as to the extent of the "shadow IT" in a company. When Mott's team members at HP started their IT transformation, they thought HP had about 3,500 apps. It was more like 6,000. That surprise alone might point to the need to consolidate apps.