Application Rationalization Best Practices To Follow in 2024

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On average, an organization uses more than 300 SaaS applications. Managing your vast portfolio can be complex. And if you overlook SaaS management, it will increase the number of redundant, free, and duplicate apps in your system.

These redundancies will clutter your SaaS stack, resulting in increased spending, missed renewals, and challenging cost optimization.

So, how do you eliminate the redundancies in your SaaS stack? That is where application portfolio rationalization comes in.

Successful application rationalization efforts eliminate redundancies and streamline your SaaS stack, making application portfolio management easier. It will also help you optimize your spend and increase ROI.

To optimize your stack effectively, you must follow these application rationalization best practices discussed in this article.

What Is Application Portfolio Rationalization?

Application rationalization is the process of evaluating and streamlining your company's SaaS portfolio. It involves assessing each app's value and cost and optimizing them to align with your business value and needs. The goal is to eliminate redundant, free apps from your SaaS portfolio and organize everything.

Application portfolio rationalization will enable you to make informed decisions on which applications to:

• Keep: Retain and continue using, potentially with some updates.
• Replace: Swap out for a better-suited alternative.
• Retire: Eliminate the application.
• Consolidate: Merge functionalities from multiple applications into one.

Why Should You Rationalize Your Application Portfolio?

1. Cost Optimization and Efficiency

By rationalizing your IT landscape, you will likely optimize your SaaS costs and enhance operational efficiency.

By reducing the number of redundant apps, you will save on those app’s licensing fees, maintenance costs, and support services. This will help free up the budget for other business needs and reduce overall IT costs.

It will also help you make the best possible decisions about which apps to keep or replace. This will help reduce IT complexity and optimize resources.

2. Keep Your Portfolio Secure

You might be aware of the popular phrase, ‘One bad apple spoils the bunch.' This is true when it comes to SaaS applications.

One non-compliant free app from a third-party vendor, purchased without IT approval (shadow IT), can put your entire portfolio at risk.

You can keep your SaaS stack secure by getting rid of free apps purchased through shadow IT. This is why you must rationalize your stack every quarter.

3. Strategic Alignment of Business Resources

Effective portfolio assessment and rationalizing your portfolio are crucial for strategically aligning business resources and preventing application sprawl. This means that the process ensures that your IT investments align with your business objectives.

By eliminating redundancies, your stack will only consist of valuable applications that better align with your financial and operational goals. No more spend escalations or missed renewals, leading to budget overruns.

4 Application Rationalization Best Practices To Follow

1. Get Complete App Visibility and a Centralized App Management Approach

If your team uses spreadsheets to keep track of the number of applications you purchase, then it is time to eliminate those outdated methods.

To rationalize your stack, you must have a complete view of your application portfolio and IT assets. Start by getting a bird’s-eye view of your SaaS stack. This will make it easier to identify redundancies and free apps.

You need an automated tool that can integrate with your internal systems and see the sanctioned and unsanctioned applications being used by your teams.

However, to identify redundant apps, you need usage data. So, the automated application must also be able to integrate directly with your existing applications to analyze the application data.

With the combined insights from your internal systems and direct integrations, you’ll be able to easily identify redundancies and rationalize them.

2. Use a SaaS Management Platform To Identify App Redundancies

Now that you know what to do, here’s how you do it:

Application portfolio rationalization is impossible without a SaaS management platform. You can use a solution like CloudEagle to get complete visibility of your SaaS applications.

CloudEagle can integrate with your internal systems and organize all the applications under one roof. And the best thing is you don’t have to look for redundant or free apps.

By integrating with your SSO, finance, and HRIS systems, CloudEagle will automatically identify apps within your system. Through direct integrations, it’ll analyze the usage and pinpoint redundant and free apps existing in your portfolio.

It’ll notify you about the redundancies and organize them in one dashboard. There you go. Not only did you get complete visibility, but you now have a list of redundant and free applications.

3. Optimize Your Portfolio Based on App Usage

Understanding how different applications are used allows you to prioritize and allocate resources more effectively. This helps ensure that the most significant investments and resources are concentrated on the essential apps for your business.

This practice also involves consolidating, eliminating redundant and unused apps, and retiring outdated and costly-to-maintain apps to streamline your portfolio and drive innovation.

By focusing on the most critical apps for your business and eliminating redundancies, you’ll rationalize your portfolio. It’ll also ensure your IT infrastructure is optimized and aligned with your business goals.

Also, by regularly reviewing and optimizing your app portfolio based on usage, you can keep your stack rationalized and free from redundancies, duplicate apps, or free apps. This will reflect positively on your expense and increase your ROI.

4. Collaborate Together With Finance and Procurement Teams

Collaborating with finance and procurement teams involves working closely with these departments. This is to align your organization's financial and procurement goals with the objectives of your app portfolio.

Typically, IT teams lead this process. However, partnering with finance and procurement offers insights into the initial reasons for acquiring certain apps.

By working with finance, you can pinpoint the ROI of redundant applications. Simultaneously, collaboration with procurement ensures that future app purchases align with actual business needs.

This alignment is crucial for a comprehensive rationalization of the SaaS stack.

When these teams work together, they can effectively assess the necessity of each app. From there, you can avoid unnecessary purchases and optimize the software portfolio for enhanced efficiency and cost-effectiveness.

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Conclusion

Application portfolio rationalization is a crucial initiative if you are looking to streamline your IT portfolios, reduce operational costs, improve resiliency, and enhance agility.

Some of the application rationalization best practices include adopting practices such as getting complete app stack visibility and centralizing app management.

You must use a SaaS management platform like CloudEagle to optimize applications based on app usage and keep your stack rationalized.

Considering application rationalization initiatives as a vital strategic initiative for improved IT management is crucial. This will help you achieve significant cost savings, improved efficiency, enhanced security, and strategic alignment of business resources.

Ready to rationalize your apps? Look no further than CloudEagle for a comprehensive solution. Book a demo here.

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Frequently asked questions

1. What is application portfolio rationalization?

Application portfolio rationalization is like cleaning up your apps. It means sorting and organizing them to keep only what's essential. You decide what to keep, upgrade, or eliminate to make things simpler and more efficient.

2. What is the goal of application rationalization?

The goal of the application rationalization process for your organization is to streamline and simplify. It helps you reduce unnecessary apps, reduce costs, and improve efficiency.

By sorting and optimizing your applications, you make your organization’s digital sector more effective and easier to manage.

3. What are the challenges of application rationalization?

Difficulties in application portfolio rationalization include deciding what to keep or discard, managing resistance to change, and ensuring smooth transitions.

Balancing short-term disruptions with long-term benefits is tough, but you can overcome these hurdles with these app rationalization best practices.

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