5 ways to measure the success of application transformation

Driving continual business value

Today's IT organizations increasingly need to focus their technology dollars where it can drive the most business value. Mobility and cloud computing, for example, represent huge trends which place new and challenging demands on existing applications and their integration. However, most still have their IT investment socked away on legacy, keep-the-lights-on rock-and-a-hard-place.jpgapplications. Unless this investment is evaluated and largely refocused, IT organizations will find themselves between the proverbial rock and a hard place when it comes to generating new business value and productivity.

 

 I believe that today’s IT organizations are at a cross roads. They need free legacy investment dollars to become relevant to an increasingly “Instant-On” World. Making matters worse, all the easy, self inflictable cost cuts have already taken place. The next round requires business restructuring or joint business/IT cost reduction. This means IT needs the business to participate in setting funding priorities. For this reason, the question is no longer whether to transform aging applications and infrastructure, but when to start the process. It is essential that the business and IT gain control over legacy applications, inflexible processes, and infrastructure that impede responsiveness and innovation. Getting started involves establishing a clear understanding of the applications portfolio and answering 3 simple questions:

 

 

  • What should we keep?
  • What should we change?
  • What should we retire?

 Getting rid of “IT debt”

In the language of portfolio theory, this is about determining where to invest, grow, maintain, and harvest. In organizations that I have talked to there is not only huge cost tied up in legacy applications, but there are even historical versions of applications being retained and maintained as historical data repository. At a significant insurer, a new version of Siebel was put in eighteen months ago. It is running just fine. However, the business came to their IT asking that they maintain the prior two versions of Siebel because “there might be some data that they might need in the future.” A major North American bank put it this way: “We never take any down.” A consulting house tried to shock its audience recently by saying that 50% of applications at the typical multinational could be shut down without the business knowing the difference. It is easy to see why IT costs have become bloated and focused on things that have limited continuing business value.

 

Getting out of the box involves knowing the cost of applications as well as their continuing value proposition. To kick start this process, IT organizations need to derive their cost per application or service and then being able to relate this to application utilization and value. Why is this important? With cost and utilization, IT can ask business counterparts, “Why are we continuing to fund this legacy application?”

 

Proving the business value from application transformation

Many need to go further yet. They need to conduct a top-to-bottom analysis of IT investments. To some degree, this is kind of like those that seek the assistance and services of a therapist.

 

 therapy.jpg

Often people who’ve been in therapy are in fact the most sane of anyone because after the journey they actually can have their “act together.” In the case of IT, an organization is supported by a consultant that helps them determine what is important and how they can measure and show the value that they generate. I’ve written about how IT can measure the value of converged infrastructure (http://h30499.www3.hp.com/t5/Discover-Performance-Blog/5-Ways-to-Measure-the-Success-of-a-Converged-...) and show success of a hybrid delivery strategy (http://h30499.www3.hp.com/t5/Discover-Performance-Blog/5-ways-to-measure-the-success-of-a-hybrid-del...). Likewise, there are concrete measures here too to prove out the value of the application transformation journey taken. The typical improvements measures include the following:

 

1) MTTR and downtime percentage of SLAs because when legacy applications are jettisoned you need less institutional knowledge. You’re also not running as much fragile aging infrastructure that has a tendency to break.

 

2) Percent of software licenses that are in use.  Divide this number into the cost of application because where this number tends to be high, the application has minimal use and should be considered for harvesting.

 

3) The percentage change in service cost because when this slows or even goes up, the age of applications and their infrastructure really should be questioned.

 

4) The percentage variance in actual and planned costs because as the age of applications goes up, this will slow or grow in a negative way.

 

5) Innovation delivery because a very small number here implies an imbalance in IT investment.

Labels: IT strategy
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About the Author
Mr. Suer is a senior manager for IT Performance Management. Prior to this role, Mr. Suer headed IT Performance Management Analytics Product ...
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