Application Rationalisation
Sai Prakash Mattipalli | Principal Consultant | Retail Reply, London, UK
Version 1.1 | July 2025
Introduction
Many organisations are battling with a complex, heterogeneous application landscape, marked by multiple integration and data points and a lack of clear ownership. Maintainability and supportability have become increasingly challenging, with added overheads, greater dependency between teams, and rising operating costs, ultimately leading to constrained budgets for innovation and business change.
What is Application Rationalisation?
Application Rationalisation is the effort to strategically identify business applications across an organisation to determine which should be kept, replaced, retired, or consolidated. This includes developing a detailed inventory, with attributes and functionality, determining business value and total cost of ownership (TCO), and then comparing or rationalising that inventory of applications to eliminate redundancies, lower costs, and maximise efficiency.
Why is it necessary now?
Application rationalisation reduces total cost footprint and technical debt. It drives improved IT portfolio management, empowers leaders to make better decisions, and enhances the delivery of key business-critical projects and initiatives. Rationalisation efforts rely on leadership support and continual engagement with stakeholders to deliver sustainable change.
A six-step process for Application Rationalisation
- Identify Needs and Conduct Readiness Assessment
The first phase will start by understanding the goals and drivers of this initiative, capturing business pain points, revisiting the business capability model, analysing the IT organisation and various stakeholders, assessing change management readiness, and finally agreeing on application data collection.
- Inventory Applications
Application inventory is the key input to carry out a detailed analysis. This phase will comprise preparing an application inventory questionnaire and sending it to business owners and application owners. This phase will also revisit the business capability model with applications mapped to business capabilities. Application inventory data collection is followed by defining the metrics to evaluate each application and validating the responses.
- Assess the Business Value and Technical Fit
The third phase will analyse application dependencies, duplication, business relevance, and whether each application is tactical or strategically aligned.
- Assess the Total Cost of Ownership (TCO)
Cost outliers are identified in this phase, including licences, IT components, SLAs, operational and overhead costs.
- Score Applications
Define and agree on scoring metrics for applications, review the scores, and reach consensus with the project team on final scores.
- Determine Application Replacement
Group applications based on scores and alignment with Gartner’s TIME model (Tolerate, Invest, Migrate, and Eliminate). Applications under the “Migrate” and “Eliminate” categories will be the focus areas for determining the future application estate. For applications in the “Eliminate” category, data retention requirements will be reviewed, with recommendations for data archival. Applications in the “Migrate” category are candidates for replacement. Strategic applications aligned with the technology roadmap will be identified and assessed for migration.
The Outcome
The outcome of this initiative is to categorise applications into logical buckets “Tolerate”, “Invest”, “Migrate”, and “Eliminate” based on business value and technical fit. Priority should be given to the “Eliminate” category to enable cost savings. Applications with lower technical fit but high business value should be optimised and “migrated” to alternatives with stronger strategic alignment. This initiative may also recommend next steps, such as defining a strategic roadmap and transitioning to a target architecture.
Conclusion
Application rationalisation is integral to portfolio management and IT modernisation. The six-step application rationalisation process provides a structured approach that IT organisations are encouraged to use for future portfolio management and cloud migration strategies. IT organisations that develop a reliable application inventory will empower their leaders to make more informed IT decisions, allow procurement offices to buy services more efficiently, and enable users to deliver mission services to customers.
Next Steps
Retail Reply have demonstrated successful delivery of “Application Rationalisation” initiatives to our customers. We adopt a structured and well-defined framework which enables us to identify and work with the relevant stakeholders for data collection, scoring applications, and categorising them into logical buckets as per Gartner’s TIME model, along with client recommendations for tangible gains and strategic alignment. We have experienced architects and qualified business analysts who can undertake and complete the project within a defined timeline and fixed budget. Please reach out to us if you believe “Application Rationalisation” could be a value differentiator for your organisation.