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EDITOR’S NOTE BUSINESS VALUE BEYOND EXPENSE REDUCTION

UNIVERSITY CIO TAKES ON THE CONSOLIDATION CHALLENGE

OVERCOME THE FEAR FACTOR

How to Consolidate Application PortfoliosThe business benefits of application consolidation make it a top priority for CIOs, but that doesn’t mean it’s easy to pull off.

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HOW TO CONSOLIDATE APPLICATION PORTFOLIOS2

EDITOR’SNOTE

The Applications, the Consolidation and the Wardrobe

Time for an embarrassing confession: My closet is in need of a major clean-out. I have so many articles of clothing stashed in there that either aren’t versatile enough for frequent wear, no longer fit or are desperately out of style. Until I get around to the Herculean task, it’s a good thing I can simply shut my closet door and hide the overflow.

A sprawling portfolio of applications, how-ever, isn’t as easy to mask. Enterprises that have been around for a while have accumulated a mind-bending number of apps for various business functions. The wide range of apps poses a difficult quandary for CIOs: Which applications are still useful? Which can adapt to future business needs? Which should be decommissioned? How do you make those cal-culations and find the proper balance? In this SearchCIO handbook, we explore all of those questions and more.

In our first piece, CIO expert Harvey Koeppel

talks about the 7.5-ton elephant in the room—a rapidly multiplying portfolio of applica-tions—his company was forced to confront in an inventory. The exercise set the foundation for a business and technology transforma-tion that helped boost both staff and customer satisfaction.

In our second piece, Eric Hawley, CIO at Utah State University, shares his experience consolidating applications in order to reduce complexity, which he termed “the harbinger of decline.” One of his highest-priority projects involved CRM, to ensure the university was serving every one of its customers, including

Enterprises that have been around for a while have accumulated a mind-bending number of apps for various business functions.

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tuition-paying students, donors and other supporters.

In our third piece, CTO Niel Nickolaisen dis-cusses how to overcome the fear factor when it comes to application consolidation. One strat-egy he’s found that works: selecting and imple-menting frameworks that insert a data broker

between application elements.Now if only I could ask a data broker to sort

through my wardrobe.Write to me at [email protected]. n

Rachel LebeauxSenior Managing Editor

mailto:[email protected]

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APP CONSOLIDATION:

AN OVERVIEW

Business Value Beyond Expense Reduction

The objectives of application consolida-tion are a no-brainer. Simplification, stan-dardization, integration, reduced risk, cost savings—this could be the credo of any IT executive (well, almost any). Three million Google search results for “application consoli-dation” support my theory, and we all know that if it says so on the Internet, it must be true. In an environment where there is relent-less pressure from boards and C-suites to reduce expenses, eliminating redundancy and shedding no-longer-loved applications are obvious places to focus attention and resources.

As noted, the objectives of application con-solidation are a no-brainer, but I have another theory—one that gives due credit to all of the above and, at the same time, postulates that everything described above is only a small part of the potential benefit. My theory is a simple one: We are looking at the tail when we should be looking at the rest of the elephant. To put

this into proper perspective, an average ele-phant’s tail weighs about 22 pounds while the rest of the elephant weighs in at about 7.5 tons (give or take 22 pounds).

THE 7.5-TON ELEPHANT IN THE ROOM

In my former life as a CIO at the BigWorld-Bank, we, like many large, global enterprises, had a sobering experience during the process of Y2K remediation: We were forced to inven-tory our applications. There was good news and there was bad news. The good news is we learned for the first time in a long time how many applications we were really running and maintaining. The bad news? There were thou-sands and thousands of them. (Think tribbles, animals in the Star Trek universe that are typi-cally gentle and slow-moving, but reproduce enormously fast and consume larger and larger amounts of food.)

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I suspect that if we had printed out the source code for all of our applications, the resultant stack of paper likely would have weighed more than 7.5 tons. The table of con-tents alone would likely have weighed at least 22 pounds. Both independently of and in sup-port of the Y2K exercise, this beast needed to be tamed.

Oddly, the goal became about transform-ing the 7.5-ton elephant into the 800-pound gorilla. And so, in defiance of the laws of Dar-win, we did just that. We saved millions of dollars. We dramatically decreased our nightly processing times and increased system avail-ability and response times. Service levels reached unprecedented high levels. Risk managers and auditors were pleased. And that’s when it became clear that application consolidation was not the end—it was the beginning.

With our application portfolio under reason-able control (including appropriate governance to keep it that way), we now had additional bandwidth and budget to invest in strategy and innovation. Collaborating with our business partners, we envisioned the fol-lowing strategic business and technology mandates:

■n Build market share (revenue) by retaining/growing existing relationships and acquiring new customer relationships.

■n Leverage M&A opportunities when they con-tribute to the ongoing prosperity, sustainabil-ity and scalability of the overall business.

■n Increase shareholder value (earnings) by con-tinuing to focus on the quality and efficiency of product/service delivery to our internal and external customers.

■n Transform our internal and external cus-tomer experience (brand) by simplifying and standardizing all interactions and engage-ment across all touch points and channels.

The goal became about trans-forming the 7.5-ton elephant into the 800-pound gorilla.

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Many, many meetings and what seemed like an endless onslaught of PowerPoint presenta-tions later, the BigWorldBank business and tech-nology leaders designed, planned and embarked upon the next phase of the journey. The Big-WorldBank would never be the same again.

APP CONSOLIDATION IS A MEANS, NOT AN END

The time, energy and budget invested in appli-cation consolidation set the foundation for a multiyear business and technology transforma-tion that was characterized by the following:

■n An integrated business-oriented workstation was created to enable staff to serve customers much more efficiently and effectively:PP An easy-to-learn and easy-to-use desktop replaced interfaces for 89 (237 pre-consoli-dation) applications required by staff to do their jobs.PP Biometric fingerprint identification tech-nology replaced the need for staff to remember and maintain 89 different pass-words that cycled at different frequen-cies and required different standards for

acceptable password composition.PP The 31 staff people whose sole job was resetting forgotten or expired passwords were retrained and reassigned to support more value-added help desk functions.PP Average staff training time was reduced from four to six months, to one to two weeks.

■n An integrated customer data management program was designed and institutionalized to provide staff with a real-time 360-degree view of all customer relationships and activ-ity. To wit:PP 150 million customers across 54 countriesPP All customers related to the current customerPP All accounts related to the current customerPP Patented recommendation engine to prompt staff with details of best next offer based upon customer needs

■n Illustrative business outcomes included the following:PP Staff satisfaction increased 20%

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APP CONSOLIDATION:

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PP Staff turnover decreased 23% PP Customer satisfaction increased 9%PP Customer retention increased 10%PP Cross-sell (new products to existing cus-tomers) increased 16%PP Up-sell (more existing products to existing or new customers) increased 7%PP Cost per transaction decreased 31%PP Time to complete average acquisition decreased 33%

Discretion and a well-written nondisclosure agreement prevent me from posting actual dollar impacts of the program to revenue or earnings; needless to say, both increased sig-nificantly by the second year of operation.

While application consolidation cannot take all of the credit for the outcomes of this incredible journey, it surely was the spark that lit the match that lit the fuse.

—Harvey Koeppel

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University CIO Takes On the Consolidation Challenge

For Eric Hawley, CIO at Utah State Uni-versity (USU), the No. 1 reason to consolidate applications is to reduce complexity. “Com-plexity is the harbinger of decline—of a secu-rity breach, of the inability to get involved in big data or data mining, because you have stuff all over the place. You don’t know where it is, you don’t know who’s controlling it and you’ve got too many systems solving too many spe-cific needs,” he said.

With the enterprise’s need to quickly access and mobilize data, application consolidation is a top priority for IT leaders, Hawley said, or should be. “My view is CIO stands for chief integration officer, and in this day and age, the job is to integrate multiple systems so they feel closer to one.”

Not many CIOs would disagree with the view that application consolidation is a laud-able goal and an important part of their jobs. Maintaining complex, redundant applications

eats up resources and, as Hawley points out, gets in the way of strategic IT initiatives—or worse, invites disaster. But, as many CIOs also can attest, application consolidation is easier said than done. Indeed, most initial application rational efforts fail—“often fatally,” according to a recent report from Forrester Research.

“Most firms attempt to rationalize their application portfolios two or more times before they see any real success. Some firms never attempt a second effort after the initial failure,” states author Phil Murphy, principal analyst for application development and delivery at the Cambridge, Mass.-based IT consultancy.

Virtually all the failures exhibit a common theme, Murphy finds: “Team members inven-tory the applications and collect some data without a lot of forethought about how it will be used.” Applications are inventoried, often over a period of several months; but without a clear strategy, the information collected tends

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to be whatever is easiest to get—platform, lan-guage, database, vendor, user satisfaction—and the payoff moment never comes.

“In our experience, these efforts rarely yield the kind of ‘aha!’ moments their leaders hope for,” the Forrester report states.

CRM CONSOLIDATION TO FULFILL

A CORE MISSION

Hawley emphatically agrees. Integrating appli-cations at Utah State University is a huge chal-lenge, he said, and not just because of the size and complexity of this public university: three regional campuses, eight colleges and a dis-tance learning center, with nearly 30,000 stu-dents, more than 800 faculty and some 1,600 staff.

“Too often, we dive into data consolidation efforts or data interfacing efforts without hav-ing a clear indicator in our own minds of the questions we need to ask,” he said.

He likened these undertakings to embark-ing on a big family road trip to Cancun with no discussion about what the family hopes to get out of it. If just getting there were the goal,

then driving 20 hours a day with limited bath-room breaks and the kids fuming in the back seat might make sense. If the goal, however, is to have fun as a family, “that road trip will be a very different experience,” he said.

The same lack of clarity plagues many appli-cation consolidation efforts. “Too often, the IT people have no clue what the business’ objec-tive is; they know they’re going to Cancun but haven’t thought about why.”

Moreover, just as often, the business hasn’t thought through the objectives either—or, more problematic for IT, wants no part of the project. One of the high-priority application consolidation projects Hawley’s team is work-ing on involves CRM, the software tool for managing customer relations.

“Right now, there are five or six different CRMs at different colleges with wildly differ-ent approaches. [Each] feels they are in some way their own special snowflake—they have to do it their way,” he said. Using disparate sys-tems, however, has been shown to undermine an important university objective, Hawley said, namely “recruiting and retaining those people who are the bottom line of the university.” They

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include the tuition-paying students, donors and other supporters of USU.

A half-dozen different CRM tools means that the same donors are solicited numerous times, student messaging is inconsistent and the university comes across as muddled (not to

mention annoying) in the eyes of the very peo-ple its needs to court. “We are USU; we’re not just individual colleges competing against one and other, but one unit,” Hawley said.

The solution in this case will be moving to a common CRM application (ideally software as a

D FOUR TIPS TO SUCCEED AT APPLICATION CONSOLIDATION

According to Forrester Research, most companies fail at their first few attempts at application consolidation.

Here are four tips from analyst Phil Murphy, application development delivery specialist at Forrester:

■n Define the goal. Portfolio management and app rationalization share the same goal: transparency into resource

allocation and consumption. Transparency into consumption patterns brings insight into how consumption and

resources may need to change.

■n Define the problem. Spell out why you need more transparency into resource allocation and consumption. Is it

to reduce operation costs and waste, eliminate redundant apps, or increase resources for innovation?

■n Define the audience. Who are you trying to convince that applications need to be winnowed? Are you talking to

developers? Technology management professionals? Tailor your insight about the data you collect on applica-

tion bloat to your audience. If business leaders or executive management are your audience, Murphy advises

avoiding technical jargon and metrics to try to win them over.

■n Define (and collect) the data that will resonate with your audience. Figure out which data (or combinations of

data) will create a compelling story for whomever it is you are presenting to. Then go out and get it, working

with other departments, such as finance and internal audit, if need be.

SOURCE: “THE SECRET TO RATIONALIZING APPLICATIONS: START WITH THE END IN MIND,” A FORRESTER RESEARCH REPORT PUBLISHED DEC. 26, 2014.

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service) that “will not force people to behave in the same way” to their target audience, but will provide a common communication platform, Hawley said. The risk, of course, is that the university ends up with a seventh CRM tool, and “nobody is getting rid of the one they had,” Hawley concedes, pointing to the webcomic XKCD’s jaundiced take on standards. “That is the challenge we face on the application side.”

THE PLATFORM ROUTE AND APIs

Hawley said another approach his team is using to reduce IT complexity is to build standard-ized platforms that IT supports and that it can train people to use. “We’re working on build-ing standard APIs with interfaces into HR,

financial aid data, student finance … and offer-ing up that platform to individual departments to do creative things with,” he said.

Before, when a user required access to data or a custom application, IT would build a direct interface between the database and the user’s application. “Before you know it, you’ve got to maintain an interface between 600 different applications that may have been implemented in different ways,” Hawley said.

Platform standardization still allows for application or data diversity, but provides tem-plates and plug-ins people can use, for example, to build department websites, he said, offering up a metaphor: “People are building with Legos as opposed to each using their own injected molded plastic pieces.” —Linda Tucci

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Overcome the Fear Factor

We all have messes to clean up. Our inven-tory of applications includes tired, old products that were not architected, that we designed to handle myriad exceptions, that do things they were never designed to do, and that we have customized so much that they are no longer recognizable and are a nightmare to manage.

As the pace of technology change continues to accelerate, these applications are a direct barrier to our IT and enterprise agility. When-ever we think about a new process, product or market opportunity, we consider the appli-cation labyrinth the new process or product would have to navigate through, and we get depressed and give up. Even if that old applica-tion is only a few years old, we made it so com-plex that only the brave dare touch it.

Even worse, when we do define a technology path forward to modernize, simplify or replace that troublesome application, some of the users of the application mutiny. They love the

exceptions it handles. They are enamored with its complexity. They cannot imagine ever doing things differently.

Application modernization, simplification and replacement are broad and deep topics. Here are some approaches I use that seem to help.

ISOLATE AND INTRODUCE

‘DATA BROKERS’

Often, our legacy applications contain lots of direct data connections. Application elements exchange data directly with each other. Over time, we have built more direct connections onto existing direct connections. When we attempt to revise one portion of the applica-tion, we first have to find and dissect all those connections. This work can be so daunt-ing that we simply choose not to update the application.

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There is a way out of this: We can select and implement frameworks that insert a data bro-ker between application elements. These data brokers handle the way the application ele-ments publish out and subscribe to data. The broker knows not only which other application elements need the data but also whether the data is replicated in other application elements. Knowing this, the framework lets us manage the data flow into and out of an element.

As we do this work, the application element becomes its own little (or big) island with data flowing in and out, but as managed by the bro-ker. Once we have isolated the element, we can safely update or replace the element (and its data). This data broker approach also helps us identify and replace data replication issues and define the one true source of the data (rather than having elements with duplicated data that we have to synchronize).

SEGREGATE BASED ON PURPOSE

I like to segregate all activities—including the functionality of applications—into two broad categories based on the purpose of those

activities. The purpose of a few (very few) activities is to create competitive advantage. Only these activities deserve our innovation and creativity.

Almost everything else we do is important but does not deserve innovation. I call these the parity activities. They are vitally impor-tant—we cannot survive without them—but no one does business with us because we do these things in a unique, creative way. For example, for the vast majority of us, our accounting system is mission-critical, but it is highly unlikely that we win customers and grow market share because of our unique, inno-vative approach to accounting. (Besides, don’t we sort of frown on creative accounting?)

Yet, how many of us have customized or modified or embedded into our accounting systems interesting ways to do procurement or payables or receivables or inventory costing? If our users are hesitant to give up the lovable (but painful) features of the legacy applica-tions, I talk to them about the purpose of the application and convince them that the way we optimize business value is by doing the parity activities in a standardized, simplified,

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best practices way—and we do that through a vanilla implementation and adoption of stan-dard functionality.

I also apply this idea of purpose (to be bet-ter than anyone or be as good as everyone) to application consolidation. We once replaced seven customized versions of CRM with a single configured (not coded, not custom-ized) CRM system. There was not a customer on the face of the earth who chose us over our competitors because we had seven custom-ized CRM systems. We took the idea of process

parity all the way to specific functionality. We defined an organizational standard for case management workflow.

Every case looked and was handled the same way. Even better, with this level of standard-ization, it is simple to move applications and other services to the cloud, and upgrades are a breeze.

Given the pace of technology and market change, we need to move fast. To do that, let’s get serious about making obvious, conscious plans for modernization. —Niel Nickolaisen

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ABOUT THE

AUTHORS

HARVEY KOEPPEL is president of Pictographics Inc. and a former CIO. Write to him at [email protected].

LINDA TUCCI is executive editor of SearchCIO. Write to her at [email protected].

NIEL NICKOLAISEN is chief technology officer at O.C. Tanner Co. in Salt Lake City. Write to him at [email protected].

How to Consolidate Application Portfolios is a SearchCIO.com e-publication.

Rachel Lebeaux | Senior Managing Editor

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Linda Tucci | Executive EditorFOR SALES INQUIRIES

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