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APR - application portfolio rationalisation

Introduction 

Application Portfolio Rationalization (APR) is a critical component of Enterprise Architecture (EA). It cannot be effectively executed without considering the broader EA framework. Whether or not an organization has a formally established EA function, APR must align with the enterprise vision and strategy. The APR journey begins by examining EA, particularly Business Architecture, and subsequently deriving IT and Technology Architecture.

Before initiating an APR exercise, it is essential to analyze business processes, the organization's operating model, and architecture maturity. A gap analysis should be conducted to identify misalignments between IT strategy and business strategy. This document focuses on the practical execution of APR once the decision to proceed has been made.

Objectives of APR 

APR involves the analysis and reorganization of applications within a portfolio to achieve the following:

  • Reduction in application count – Eliminating redundancy

  • Complexity reduction – Simplifying the IT landscape

  • Risk reduction – Mitigating operational and technological risks

  • IT-business alignment – Ensuring IT supports standard business processes

  • Cost reduction – Lowering maintenance and operational expenses

How APR Reduces Costs

  • Lower maintenance costs by removing redundant applications

  • Reduced infrastructure expenses due to consolidation

  • Improved IT management efficiency through decreased complexity

Steps in APR

  1. Assessment

  2. Analysis

  3. Planning

Assessment: Gathering Information

The first step in APR is gathering comprehensive data about all applications:

  • Application inventory: Owners, versions, technologies, platforms

  • Mapping applications to business processes

Analysis: Evaluating the Portfolio

Various aspects must be considered to assess an organization's application portfolio:

Business Analysis

  • The business value of an application is determined by its alignment with the company's strategic vision.

  • Applications critical to business operations and continuity hold high business value.

Technology Analysis

  • Technical quality assessment determines whether an application should be replaced, modernized, or maintained.

  • Two key aspects of technical value:

    • Software Quality (functional performance, code standards, production feedback)

    • Hardware Quality (scalability, compatibility, upgradability, maintenance challenges)

Software Quality Evaluation Methods:

  1. Testing – Functional and performance testing (e.g., response time, scalability)

  2. Static Code Analysis – Identifying potential issues affecting maintainability, security, and robustness

  3. Production Feedback – Collecting user experiences on system reliability and performance

Hardware Quality Considerations:

  • Scalability constraints

  • Upgrade limitations

  • Integration challenges with newer hardware

  • Support and maintenance difficulties

Risk Assessment

  • Applications with poor technical quality but high business value pose significant risks.

  • Risks should be identified, quantified, and mitigated through contingency planning.

  • Consider risk exposure, probability, and business impact.

Cost Analysis

The total cost of ownership (TCO) of an application includes:

  • Support costs

  • Maintenance expenses

  • Upgrade investments

  • Licensing fees

Planning: Rationalization Strategies

Based on the assessment and analysis, a rationalization plan is formulated:

  1. Low-value, old applications → Retire

  2. High-value, old applications → Modernize

  3. Redundant applications → Eliminate

Additionally, infrastructure and platform standardization should be part of the consolidation strategy.

Conclusion APR is a structured process aimed at optimizing an organization's application portfolio by eliminating redundancies, reducing costs, and aligning IT with business objectives. A systematic approach involving assessment, analysis, and planning ensures that applications contribute positively to the organization's strategic goals while maintaining efficiency and cost-effectiveness.

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