A conversation topic that is coming up more frequently with our client CIOs is around how to transform global application portfolios that number in the thousands. This is particularly true with our global clients in the Financial Services sector, where in some cases the application portfolios can exceed five or even ten thousand. In these conversations we typically hear several common themes:
- ‘We need a strategy’ – we need to understand and prioritize the opportunities to transform our portfolio. It’s about more than just cloud native modernization and migration, we also need to understand where and how we can take cost out of the portfolio through rationalization and retirement.
- ‘We need it fast’ – we need to show the business some quick wins and business impact whether through modernization, migration or retirement. At the same time, we need to quickly show them a roadmap for how we’re going to help them with the rest of their portfolio.
- ‘We don’t know where to start’ – the portfolio is so large and the issues so complex that we don’t know where to begin. The variety of platforms, stakeholders, incentives and priorities we need to align creates a nearly impossible challenge.
The application portfolios aren’t new, and the concept of Application Lifecycle Management (ALM) has been around for quite some time. So why now? What’s created the burning platform around transforming and modernizing the application portfolio?
- Digital disruption – start-ups leveraging continuous innovation models are starting to draw blood. Financial services provides a great example, where fintech startups numbering in the hundreds are attacking virtually every incumbent market from consumer banking to insurance and starting to have real market impact. Blockchain technologies go a step further, with their potential to fundamentally restructure major financial services markets and institutions. Everyone knew it was a question of when not if, but even the largest enterprises are finally starting to feel the impact from digital disruption and continuous innovation.
- Risk perceptions – highly publicized commitments to the public cloud from GE and Capital One are giving cover to enterprises that may have been more reluctant. With leading blue chip Fortune 500 CIOS telling their IT peers that ‘the water’s fine’, more conservative shops are willing to start to wade in. This is particularly true for those fearing that disruptors may be leaving them in the dust. The biggest career risk for CIOs around cloud adoption was once being too early – now the risk is being too late.
- Platforms and infrastructure – application transformation is tightly linked and dependent upon both operating model and infrastructure transformation. In addition to public cloud, infrastructure teams are more confident around their strategy and vision for private / hybrid clouds. With a clearer roadmap around future cloud platforms, focus is shifting back to the application portfolio to understand where and how opportunities will be captured.
- Stagnating growth and profitability – many industries (particularly energy and financial services) also face renewed profitability pressure as global economic growth continues to stagnate. While not as draconian as what was seen during the Great Recession, many CIOs are now again facing aggressive cost reduction targets.
Having recently worked with several global enterprises on the topic, here are some key lessons we’ve learned so far on large portfolio transformation:
- Understand Sources of Value – this first step is to understand where and how portfolio transformation can drive business impact. IT executives seeking to increase agility and reduce portfolio costs can pull several different levers, depending on what they want to achieve and how quickly. For those seeking to reduce cost application rationalization, replatforming or retirement are often the ways to go. Those seeking to reduce cycle times need to learn how to enable ITaaS models and modernization using microservices and DevOps. Knowing the timing of potential impacts is just as important as understanding the levers themselves as results can vary widely. For example retiring unused applications, archiving their data and decommissioning related infrastructure can drive cost reduction far more quickly that modernizing legacy applications.
- Develop Opportunity Hypotheses –the next step is to do some thinking about how the sources of value apply to your portfolio. Get a whiteboard and make some educated guesses about where modernization, migration or retirement make have the most impact. They key here is to make some 80/20 guesses and where to start rather than waiting to boil the ocean by waiting to analyze the full portfolio to decimal level precision. Understanding the business processes and KPIs associated with a given application is often a good starting point. Market-facing applications that enable online sales, marketing or support need to evolve quickly and are often great candidates for Cloud Native modernization. Applications from a company acquired ten years ago that are only being kept alive to maintain access to data are good candidates for retirement and archival. Understanding the business context for different segments of the portfolio is invaluable in getting started.
- Take an Agile Approach – once you have some hypotheses around where value might be, start by developing a ‘pilot’ portfolio transformation approach for a single line of business, geography or function that may have 100 or so applications. Application profiling and analysis should be focused around hypothesized sources of value, and around identifying and prioritizing opportunities for short-term impact, whether through cloud migration, modernization or retirement. Quickly assessing a targeted set of apps to determine transformation strategy, TCO impact and roadmap will accomplish three things:
- Enable quick wins
- Demonstrate business impact
- Build credibility with business stakeholders.
After starting with an initial pilot, additional ‘sprints’ focused on additional BUs can be defined across the broader enterprise. Collectively these sprints will help shape an overall modernization, migration and retirement backlog that drives near-term impact, while also providing a broader roadmap for portfolio transformation.
- Selectively Use Tools to ‘Deep Dive’– often times you’ll need to dive deeper to understand transformation opportunities in given Application Profiling sprint for a specific BU. In these cases, tools can be used to help provide additional depth and detail required for both planning and execution. Two common examples are:
- Dependency mapping – to decompose a legacy monolithic application or develop a cloud migration strategy a clear understanding of app dependencies is required. This includes understanding the relationships of applications and enabling IT services (for example identity management). To gain a better understanding of application, service and infrastructure dependencies the use of blueprinting or dependency mapping tools is often helpful.
- Code analysis – often times automated binary or source code analysis can be helpful in determining optimal modernization or transformation strategy. For example tools now exist that can analyze binary code for target applications to assess alignment with the 12 factor or Cloud Native models. This can be particularly helpful in identifying PaaS modernization or migration options.
- Develop an Automated Approach – as you work through your first target LOB portfolio work hard to define a repeatable, scalable standard approach that can easily be extended across the portfolio. For large portfolios this will require tools and analytics platforms that enable automation, both for broad portfolio assessment as well as deep dive analysis. It also will required automated collection of metadata about applications and the portfolio from CMDBs, systems management tools and other sources – for portfolios numbering in the thousands manual interviews with applications SMEs won’t scale in time. Just as continuous delivery tool chains provide the automation and standardization that accelerate the impact of DevOps, Application Profiling and analytical tools (such as EMC’s Adaptivity platform) can help accelerate portfolio transformation.
One particularly effective model we’ve seen is for IT to develop an Application Profiling ‘service’ to BUs that helps them rapidly identify a roadmap, business case and backlog for modernization, migration and retirement for their portfolios. These can even be designed using a Dojo model, where coaches help BU stakeholders develop the internal skills and capabilities to both recognize transformation opportunities and develop roadmaps for execution.
EMC Global Services brings a unique set of skills, experience and tools to help even the largest enterprise transform and modernize their application portfolios. Contact us to learn more about how we can help.