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Episode 35 - Application Consolidation using Value Streams

Today we explore application consolidation further using value streams. There is a new whitepaper published by The Open Group on the subject and we talk about that in this episode. I also talk about the Business Value Assessment Technique which is also suggested by The Open Group. Relevant links are shared below.

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Hey, what's up everybody? You're listening to the Enterprise Architecture Radio. If you're thinking about organizational complexity and agility, if you're concerned about operational efficiencies and thinking of taking it to the next level, if managing innovation is one of your priorities, you've come to the right place.

On this podcast, we talk about all. And more. It's a jungle out there, and we'll attempt to navigate this jungle of frameworks, methods, and most importantly, enterprise architecture in practice.

In my previous podcast, I had talked about application consolidation. I had taken a use case where an organization is transforming its data center and looking at moving all its application to the public cloud. And for that, I had talked about application consolidation and the total cost of ownership of those applications.

I also talked about the fact that you cannot really save any money if you just lift and shift the applications as is from your on-premise data centers to the public cloud. Today, I would like to talk about application consolidation, but from the point of view of a value streams driven approach to application consolidation.

In fact, I don't think there is any other approach that you can take, uh, when it comes to application consolidation. Now, how do we really do application consolidation, especially from a value streams driven approach? What that means is how do we identify the applications that are really driving value and keep them and decommission the applications that are not really driving any value?

Majority of the times the the application portfolio grows organically. The business functions will decide that they need a certain capability and they will go looking out for applications that will provide that kind of capability. And there are many application vendors out there who will, uh, who have excellent sales teams, who talk to the business owners directly, or talk to the business function owners directly and sell their applications to them.

And this essentially mushrooms the number of applications within the organization. When we do an application consolidation, we try to understand whether all the applications that we have in our portfolio are necessary or not, and if there are any overlapping capabilities, uh, within the application, there are duplicate applications that provide similar capabilities, et cetera, and then try to figure out which application is really the best application for the required function.

The Open Group publishes white papers and series guides that help an enterprise architect in doing all these kind of things. In fact, the toga framework is split into five different sections, but there is also a toga library that it heavily relies on. And one of the white papers that the Open Group has recently published is called the Value Streams Driven Approach to Application.


So let's talk about that for a little bit today. The value streams driven approach to application consolidation has five steps within it. The first step is initiate review. In this step, we agree on the vision and scope of our. Application consolidation activity. The second step is catalog all the application.


We try to identify our application landscape. What are the applications that exist within our landscape? The third step is classify all these applications. We classify all the applications that we have based on the business value that they drive. The footstep is assess applications. We try to understand.


If there are any duplications in the functionality provided by these applications, and C, if we really need these applications within our organization or not. And then finally, we consolidate the applications landscape. What that means is we. Identify what we are going to be doing with the existing applications.


The high value applications need to be retained, and the applications that do not drive sufficient to business value need to be decommissioned. There are going to be some common functionalities provided by multiple applications. We also need to come up with a strategy around what we are going to do about that are, which applications we are going to keep, which we are applications we are going to enhance, et cetera, et cetera.


Now let's go into a little bit more detail In the first step, which is initiate review, we start the review of the application landscape. This is literally the initiation of the application consolidation activity. We try to understand who our stakeholders are going to be and generally define the vision and.

Of the activity. The second step is the cataloging of the applications, the act of determining the contents of the application landscape. What applications exist in the application landscape today? The participating stakeholders are business owners, architects, and. Well, general IT application managers.


The entrance criteria of this activity is the scope and vision completed, which means the initiation has already been done, and the consolidation of the work part of the Shaul portfolio, the exit criteria is that the. Catalog of applications updated and verified, which means we now know what are the applications that exist in our portfolio.


And the outcome of this activity is that the application landscape is established. All the stakeholders agree and have approved the catalog of applications. The third step is classify applications. This is the classification of the application landscape by criticality to the business. How much value does an application drive within the overall business?


The participating stakeholders are business owners, business users, architects, and IT application managers. The entrance criteria to this step is that the applications in the scope identified in catalog, which is the previous step of cataloging of the applications and the exit criteria is. The applications have been classified and ranked by business criticality.

The outcome is that the critical applications have been identified within the overall application

landscape. This raises a very interesting question. How do you know which applications drive how much value? The Open Group Architecture Framework also suggests a technique called the Business Value Assessment Technique.


It is a four by four quadrant in which on the X axis you can have the business value, and on the Y axis you can have risks. Now there can be a number of criteria which can. Signify business value. For example, the business value index could be any criteria such as compliance to principles, financial contributions, strategic alignment and competitive position.


So depending upon how the application helps you achieve this business value, you could give it a relative ranking. So for example, if there is an application that does not, uh, contribute to any of these, say for example, compliance to principles, financial contribution, strategic alignment and competitive position, then you give it a one.


Now, if you can find another application that contributes even lesser than what this application does, then you give that application one and this becomes. And so on and so forth. So ultimately you are going to get a relative index of all the applications and how much contribution they make to these criteria.


And these are just example criteria quoted by, um, uh, by the open group for business value. You could have any other criteria that makes more sense to you. And on the risk index, you have criteria such as size and complexity, technology, organizational capacity to run and manage the application impact of failure in case the application has a, um, an outage and so on and so forth.


Now, again, these are example criteria for the risk index, but you could have your own. Now again, you. Give it a ranking based on how risky this application is or what is the risk in not having this application, right? Once you have these numbers identified for each of these applications, you will give it another number, uh, based on the size of the application or the total cost of ownership of these application.

Okay. And then you will plot circles on the business value assessment matrix. Higher the value, higher the application circle. Uh, higher the risk, the more on the right, the applications circle, and then the circles size will be defined by the total cost of ownership of that application. So if it's a, uh, if, if the cost of ownership is higher, then the circle is going to be bigger, and if the cost of ownership is lower, the circle.


Going to be smaller. This will give you a four by four quadrant of how valuable an application is, how risky an application is, and how. Expensive. An application is this way you'll get to know which are the applications that you want to keep. So for example, high value applications, higher on the business value assessment matrix should be retained. The ones that are lower should be, we should. Uh, sort of sunset them as soon as possible, and especially if the total cost of ownership of the applications that are high risk and low value, um, we know that they are, these are the applications that we must decommission as soon as possible.


If they're not very expensive applications, not very high value and not very risky, the, the business owners can get to decide whether they want to keep them or not, and so on and so forth. So once we. A classification mechanism of the applications based on the business value and the risk and the total cost of ownership.


We are in a better position to take decisions about, uh, what to do with these applications. So that is the, the third step in the value chain driven application consolidation approach. The footstep is assess these applications, right? Once we have charted and classified these applications, we assess, we take decisions about what we are going to be doing.


Now, there are going to be duplications, uh, within these applications, and, and most of the times, this is what happens. Applications mushroom organically, like I said, based because there's a lot of shadow IT in. Most of the organizations, business owners take a lot of technical decisions without, uh, many times consulting with the enterprise architects and, and we find that there is.


Or duplicate capabilities provided by more than one applications. So we do an assessment of how we are going to resolve these duplicate functionalities, which applications we are going to retain, which applications we are going to sunset, how we are going to do the migration of the capabilities that are unique from an application into another or what have you, and come up with a strategy.

Of reducing the number of applications in our application landscape, which essentially has the effect of a reduced total cost of ownership of the overall application landscape. So in the fourth step, Assess applications. We do the assessment, like I told you before. And then the stakeholders who participate in this activity are the business owners, the architects, and the IT application managers.


The entrance criteria for this step is applications are ranked by business criticality and, and they're ready for assessment. And the exit criteria is the applications have already been assessed, duplicate functionality has already been identified and quantified. And the outcome of this step assess applications is duplicate functionality of the applications have, uh, and overlaps have been determined. In the last and final step of application consolidation, we consolidate the applications based on the plan that we have formed in our previous step, which is the assessment step. Uh, we remove duplicate functionalities and duplicate applications.

The stakeholders of this step are the business. The architects, the IT application managers, the portfolio managers, and of course the finance team who ultimately will, uh, calculate the amount of money that we've saved on the total cost of ownership of the applications. This steps entrance criteria is that the applications have been assessed and a course of action for each of the applications have been identified, which is the previous step, assess applications.


And the exit criteria is that the applications have been consolidated into a fewer number of applications, and the overlaps have been. Or at least reduced. And the outcome of this step is the application landscape reduced. Now that is the overall application consolidation based on value streams approach of the open group.


Obviously this is a podcast and there's only audio, so there's only, there's only so much that you can understand. I mean, I have tried to do my best to help you understand how application consolidation can be done, especially the business value assessment technique. It's very difficult to understand unless you actually see the four quadrants, uh, in front of you.


So what I'll do is I'll share the links to the business value assessment technique and to the white. In the show notes, you will require a, a registration and login to the open group, which is, by the way, free of cast. Uh, do feel free to go to the Open Group website, register yourself, and then go to the link that I've shared and you'll find the white paper there.


There are a number of other white papers which are there in the toga library, which some of which are free of cost. Others. Require you to pay something, but the free of cost white papers are also very good reference material for not only enterprise architects, but any IT manager or IT leader to view.


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