top of page

What Is Application Rationalization? (Gilad David Maayan)

What Is Application Rationalization?

Application rationalization is a strategic process employed by organizations to analyze and optimize their existing application portfolio. The primary goal of this process is to streamline operations, eliminate redundancy, reduce costs, and improve overall efficiency by identifying and retaining only the applications that provide tangible value to the organization.

This process typically consists of several steps:

Application inventory: Cataloging all applications in use, along with their associated data, dependencies, and interrelationships.

Assessment: Evaluating the applications based on criteria such as functionality, cost, risk, and user satisfaction, to determine their value and alignment with business objectives.

Decision-making: Identifying applications that should be retained, consolidated, replaced, retired, or modernized based on the assessment results.

Execution: Implementing the decisions by executing appropriate actions, such as decommissioning, upgrading, or migrating applications.

Monitoring and continuous improvement: Regularly reviewing the application portfolio to ensure ongoing alignment with business goals, and making adjustments as needed.

What Are the Key Drivers for Application Rationalization?

Organizations implement application rationalization for various reasons, as it enables them to streamline operations, optimize IT resources, and align their application portfolio with business objectives. Some of the main use cases for undertaking application rationalization include:

Migrating to the cloud: As organizations transition to cloud-based infrastructure, they need to evaluate their existing applications to determine which ones can be migrated, modernized, or retired. Application rationalization helps in identifying suitable applications for the cloud, ensuring seamless cloud migration, and optimizing resources by eliminating redundant or outdated applications.

Managing a hybrid cloud: Many organizations adopt a hybrid cloud approach, which combines on-premises and cloud-based infrastructure. Application rationalization supports this approach by identifying the best environment for each application, based on factors such as cost, performance, security, and scalability, ensuring efficient utilization of resources across both environments.

Mergers and acquisitions: When organizations merge with or acquire another company, they often face the challenge of integrating and consolidating multiple, potentially overlapping application portfolios. Application rationalization helps streamline this process by identifying redundancies, reducing complexity, and aligning the combined application portfolio with the new organization's goals.

Consolidating business applications: Over time, organizations may accumulate a large number of applications, some of which may be redundant, outdated, or underutilized. Application rationalization helps consolidate and optimize these applications, leading to reduced IT costs, improved operational efficiency, and simplified application management.

Engaging customers: In today's digital landscape, organizations are constantly seeking new channels to engage with customers, such as mobile or website platforms. Application rationalization plays a crucial role in identifying which applications can be leveraged or modernized to create these new channels, ensuring that the organization's digital presence remains up-to-date and competitive.

Application Rationalization Challenges

Application rationalization, while offering numerous benefits, also comes with several challenges that organizations need to overcome for successful implementation:

Engagement with business stakeholders: One key challenge is ensuring active engagement and collaboration between IT and business stakeholders. It is crucial to understand business priorities, objectives, and requirements to make informed decisions about application rationalization. Lack of communication can lead to misaligned goals and hinder the overall success of the process.

Shadow IT and redundant applications: The presence of shadow IT, where employees use unauthorized applications, can complicate the rationalization process. Identifying and addressing these applications is essential to prevent duplication, security risks, and inefficiencies. Additionally, organizations may find it difficult to identify redundant applications, as they may have overlapping functionalities or dependencies.

Budgeting and prioritization: Rationalization efforts often face budget constraints, which can impact the prioritization of applications for migration, modernization, or retirement. Allocating resources effectively while balancing the need for innovation, maintenance, and security can be challenging.

Reluctance due to unsuccessful prior attempts: Organizations that have previously attempted application rationalization without success may be reluctant to undertake the process again. This reluctance can stem from a lack of clear objectives, insufficient stakeholder engagement, or inadequate resources allocated to the rationalization efforts.

Steps for Successful Application Rationalization

Assessing the application landscape and enabling successful rationalization involves a systematic approach. The following steps can help organizations gain a comprehensive understanding of their application portfolio and make informed rationalization decisions:

  1. Listing the applications: The first step is to create an inventory of all applications currently in use within the organization. This includes not only officially sanctioned applications but also those that may be part of shadow IT. The inventory should document essential information such as application names, versions, vendors, and functional descriptions.

  2. Identifying application owners: Each application should have a designated owner, typically a business stakeholder, responsible for its functionality, performance, and management. Identifying these owners is crucial, as they will provide insights into application usage, business value, and alignment with organizational goals.

  3. Determining application lifecycles: Assess the lifecycle stage of each application, considering factors such as age, support status, and compatibility with current and future technology. This information will help organizations identify which applications need to be modernized, replaced, or retired.

  4. Assessing application usage: Evaluate the usage patterns of each application, including user satisfaction, frequency of use, and the number of users. This information can help identify underutilized or redundant applications, as well as those that are critical to business operations.

  5. Determining each application's cost and business value: Analyze the direct and indirect costs associated with each application, such as licensing fees, maintenance costs, and infrastructure expenses. Additionally, assess the business value provided by each application in terms of revenue generation, cost savings, or operational efficiency. Combining cost and value data will help organizations prioritize applications for rationalization efforts.

  6. Establishing and documenting an application architecture framework: Develop a comprehensive application architecture framework that outlines the relationships between applications, their dependencies, and the underlying infrastructure. This framework should also include information about the application's role in supporting business processes and meeting organizational objectives. Documenting the application architecture will provide a foundation for making rationalization decisions and facilitate communication between IT and business stakeholders.

  7. Implementing application mapping: Map the relationships between applications, data, and business processes to identify areas of redundancy, inefficiency, or misalignment with business objectives. Application mapping can help organizations understand the impact of rationalization decisions on other applications, data flows, and business processes, ensuring that any changes do not negatively affect overall operations.

  8. Establishing a continuous rationalization process: Application rationalization should not be a one-time event but rather an ongoing process that ensures the application portfolio remains aligned with organizational goals and adapts to changing business requirements. Establish a continuous rationalization process by regularly reviewing the application landscape, monitoring usage patterns, and reassessing the value and costs associated with each application.


In conclusion, application rationalization is a strategic and essential process that helps organizations optimize their application portfolio by identifying and retaining the most valuable applications while eliminating redundancies and inefficiencies. Through this process, businesses can reduce costs, increase agility, enhance security, and better support digital transformation initiatives.

By engaging stakeholders, understanding the application landscape, and establishing a continuous rationalization process, organizations can effectively align their IT resources with their business objectives, ultimately improving overall operational efficiency and competitiveness in today's rapidly evolving digital landscape.

Author Bio: Gilad David Maayan

Gilad David Maayan is a technology writer who has worked with over 150 technology companies including SAP, Imperva, Samsung NEXT, NetApp and Check Point, producing technical and thought leadership content that elucidates technical solutions for developers and IT leadership. Today he heads Agile SEO, the leading marketing agency in the technology industry.



bottom of page