A Value Framework that Works for Transforming Your Application Portfolio
The case for building new, greenfield applications on 3rd platform is clear-cut. Cloud architectures and big data provide compelling opportunities to provide users with more robust functionality more quickly and cost-effectively. Not surprisingly, the majority of new enterprise applications are now being developed on cloud platforms.
On the other hand, the case for modernizing existing, legacy enterprise applications is not so cut and dry. Application modernization—whether it be refitting, replatforming or even rewriting—can be a quite costly, risky, and time consuming endeavor.
Given this fact, it’s not surprising that the level of scrutiny around the business case for application portfolio modernization efforts can be high. While cloud, 3rd platform and microservices architectures offer compelling benefits, it often is not clear how and where to best leverage these models across the current portfolio.
We’ve recently been using a new framework with our clients to help them understand the value levers associated with application transformation. As shown below, the sources of value from portfolio modernization change as applications move from Platform 2 to Platform 3. Significant cost and agility benefits can be created by application transformation; the key is to figure out where the opportunity truly lies in the portfolio and what the true business goals are.
If we start with a legacy application portfolio primarily comprising Platform 2 client/server or virtualized applications, the most immediate opportunities are typically driven by cost reduction across both COTS and bespoke applications.
Application Rationalization and Retirement
The first major source of value is retiring and decommissioning applications that are no longer needed, either due to redundancy or to the fact that they’re simply no longer used. Retirement can drive cost reduction through elimination of software licenses, hardware and support costs, and can frequently quickly reach savings in the millions.
The second major source of value is driven by replatforming Platform 2 applications to industry standard, open source OS stacks (LAMP, for example). What’s the primary source of value from replatforming? Avoidance of costly legacy app server and middleware license costs. This can apply both to COTS and bespoke applications.
These two levers offer significant cost reduction potential across the typical application portfolio, but don’t necessarily drive much in terms of agility.
The third source of value is providing developers self-serve, on-demand access to standard infrastructure resources and development environments. This helps improve agility, as developers no longer have to wait weeks or months for a new server to be provisioned. It also impacts cost, as the automation required to enable self-serve models drive improvements in infrastructure utilization and operational efficiency. Note this ITaaS enablement step is a prerequisite in order to obtain additional agility and cost benefits.
Next we get to a fork in the road from a business value perspective.
For organizations seeking to wring the greatest cost out of existing portfolios, the last common step is to migrate or “lift and shift” applications to public, private, or hybrid cloud infrastructure models. This is particularly quick and effective for apps that have already been replatformed for industry-standard OS platforms and stacks. While the majority of value is typically driven by migration of COTS, value can also be accrued to bespoke applications.
For bespoke applications, business value primarily driven by unlocking IP, increasing agility and responsiveness. This is particularly true for revenue-generating or market-facing applications.
DevOps / CD
To drive agility benefits, the next value lever is to implement DevOps and continuous delivery (CD) models. Breaking down the organizational, cultural, and process barriers between developers and IT operations can drive dramatic time-to-market improvement. While these benefits are typically described in terms of new app development, the same applies to brownfield applications being refactored or replatformed for cloud and/or microservices architectures.
Once the people, process, and tools have been put in place to enable DevOps, the final step in capturing the agility benefits of portfolio modernization is driven by PaaS. By eliminating the need to configure and deploy infrastructure resources, PaaS enables organizations to take the last step in streamlining modernization of brownfield applications.
There’s no free lunch with application transformation and modernization. In many cases, significant investments can be required to drive the value described above. The key is to know how, where, and why portfolio modernization investments can optimize business outcomes.
Stay tuned for future posts which will dive into the financial and business impact we’re seeing our clients generate from application portfolio modernization efforts.