What isapplication rationalization (AR)

Application rationalization is the process of evaluating and prioritizing business applications within a company to determine whether they should be maintained, replaced, retired or consolidated.

What is Application Rationalisation?

Application rationalisation is the process of evaluating and analysing an organization’s software applications to identify which ones are essential, which ones are redundant or duplicates, and which ones are no longer needed. The goal is to optimize the application portfolio in terms of efficiency, security, and cost. It helps businesses to streamline their IT infrastructure, reduce operational costs, and ultimately, improve business performance.

Why Is Application Rationalisation Important?

Application rationalisation is crucial for companies that want to stay competitive and agile. In today’s fast-paced business environment, where digital transformation and innovation are essential for survival, maintaining a complex and outdated application portfolio can hold a company back. Here are some of the reasons why application rationalisation is essential:


Having too many applications with overlapping functionalities can lead to confusion and inefficiencies. By rationalising applications, businesses can simplify their operations, streamline workflows, and reduce the number of redundant applications. This, in turn, can enhance employee productivity and speed up business processes.


Maintaining an oversized portfolio of applications is expensive. It can lead to unnecessary licensing costs, hardware maintenance costs, and support costs. Rationalising applications can help companies save money by eliminating redundant applications, consolidating functionalities, and negotiating better contracts with vendors.


An outdated or unsupported application can pose security risks to an organization. By rationalising applications, businesses can identify and retire applications that are no longer updated or supported, reducing their attack surface and mitigating security risks.

How Does Application Rationalisation Work?

Application rationalisation typically involves the following steps:

Inventory and assessment:

The first step in application rationalisation is to create an inventory of all the applications that an organization is currently using. Once the inventory is created, the next step is to assess each application’s value, cost, functionality, and performance. This helps businesses to identify which applications are critical, which ones are redundant or duplicates, and which ones are no longer needed.


Once the applications have been assessed, they can be categorised based on their business value and priority. This helps businesses to determine which applications are essential and which ones are expendable. The categories could include applications that are critical, important, secondary, and non-essential.


Based on the assessment and categorisation of applications, businesses can then make recommendations on which applications should be maintained, replaced, retired, or consolidated. The recommendations should be based on the analysis of each application’s value, cost, and performance.


The final step is to implement the recommendations. This could involve retiring redundant applications, consolidating applications with overlapping functionalities, upgrading or replacing outdated applications, or negotiating better contracts with vendors.


In Accordingly, application rationalisation is a crucial process for businesses that want to optimise their IT infrastructure and stay competitive in today’s digital economy. By simplifying their application portfolio, businesses can streamline their operations, reduce costs, and improve productivity. It’s a continuous process that requires ongoing monitoring, assessment, and implementation.

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