What is Application Rationalization: Everything you Need to know

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What happens if you don’t pay close attention to your smart devices?

The software gets outdated, leading to potential security risks, poor performance, and unnecessary spending to return the device to its old state.

The same goes for your app portfolio too. The average number of apps enterprises use is no longer a closely guarded secret. Everyone knows that the number is close to 200+ applications. 

An application stack of that size should be meticulously monitored, scrutinized, and rationalized to identify and eliminate discrepancies within the stack and avoid downtime and needless expenses.

Application rationalization will increase the overall hygiene of your tech stack, and this article will assist CIOs, as well as IT, finance, and procurement teams, in understanding the need for SaaS software rationalization and how it can benefit your organization. 

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TL;DR

• Application rationalization is the process of scrutinizing a company's app portfolio to identify and eliminate redundancies within the system.
• The CIO and IT teams use an application rationalization strategy to align their app portfolio with business goals, find resource gaps in the portfolio, and identify new opportunities for improvement.
• Challenges of app rationalization include a lack of application visibility, reluctance to adopt new apps, complex integrations, etc.
• Rationalizing apps can lead to cost savings, reveal overlapping functionalities, eliminate redundancies, and achieve high-quality results.

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What is application rationalization?

Application rationalization is a strategic approach to evaluating and streamlining an organization’s software portfolio. It involves examining existing applications to uncover redundancies, inefficiencies, and underused tools, then determining which ones should be kept, upgraded, eliminated, or merged to improve performance and reduce costs.

The primary objective of rationalization is to enhance the efficiency of the applications, reduce maintenance costs, manage SaaS spend, improve security and compliance, and enhance the user experience.

The CIO and IT teams often use an application rationalization strategy to align their app portfolio with business goals. It is also used to find resource gaps in the portfolio and identify new opportunities for improvement.

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Challenges of app rationalization

Application rationalization, though valuable, comes with its share of challenges. Common obstacles include incomplete or outdated application inventories, resistance from stakeholders, and tangled interdependencies between systems. 

Organizations often struggle with objectively assessing app value, controlling costs, and ensuring security and compliance.

Lack of application visibility

Rationalizing your apps can be challenging without application visibility. If you cannot see how many apps exist in your system, you cannot analyze and rationalize them.

Businesses track applications using spreadsheets or other traditional methods; this isn’t the right practice. You should migrate from spreadsheets to a SaaS management platform to get SaaS visibility and proceed with the software rationalization process.

Reluctance to adopt new apps

Rationalizing apps isn’t possible without the involvement of other stakeholders in your team. At times, the stakeholders will hesitate to adopt new applications because they’ve grown fond of the existing ones and want to keep using them.

This reluctance will make it harder for the IT teams to eliminate applications from the systems, making rationalization difficult.

Complex integrations

Each application will have custom integrations, and some will be deeply rooted in your software infrastructure. Eliminating them might break the chain, leading to operational inconsistencies.

Careful considerations need to be made before rationalizing applications like these; they should be meticulously disconnected from the system without impacting business processes.

Lack of app usage data

App rationalization is increasing efficiency by eliminating or optimizing redundant, unused, and underutilized applications.

How can you identify these applications? The conventional practice is to visit each application and verify its usage data, which can be time-consuming and tedious.

IT teams will need a SaaS management platform that can integrate with your internal systems and provide accurate usage insights for all applications in a single dashboard. You can use this data to rationalize your portfolio by eliminating redundant, unused, and underutilized apps.

Poor stakeholder alignment

One of the biggest challenges of software rationalization is the lack of interest from other stakeholders.

The process requires complete collaboration across the organization; stakeholders may have different priorities and goals, making it challenging to align their interests with your goals.

It is important to converse with stakeholders, clearly define your goals, listen to their queries, and align them with the business requirements before initiating an application rationalization strategy.

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Why is app rationalization important?

Application rationalization is essential for businesses aiming to streamline IT operations, cut unnecessary costs, and boost organizational agility.

 By identifying and removing redundant, outdated, or underused applications, companies can improve efficiency, reduce complexity, and ensure their IT landscape aligns with strategic business objectives.

In other words, why rationalize applications that seem to be working just fine? Behind the scenes, outdated, duplicate, or unused software could be draining your resources and weakening your infrastructure.

Here are some compelling reasons to rationalize your applications,

• One of the applications in your stack might have compliance issues, jeopardizing your entire app portfolio or business.
• Applications with overlapping functionalities might exist in your portfolio. Apps like these can be identified during the app rationalization process.
• Your tech stack will have multiple applications with poor integration capabilities, hindering the cohesiveness of your software infrastructure. Apps like these need to be rationalized for seamless business operations.
• Your application spending is spiraling out of control. Rationalization will open up more cost-saving opportunities.
• If you don’t initiate an app rationalization process, you’ll never identify the applications that have been paid for but are not being utilized by your team.
• Not rationalizing your applications will lead to poor productivity and sub-par results within your organization.
• CIOs and IT teams will be unable to determine the resource gap within your organization.

By rationalizing your application portfolio, you can eliminate redundancies in your software infrastructure, improve the cohesion between your applications, and ultimately increase productivity and achieve high-quality results.

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How does my business benefit from app rationalization?

Cost savings

With recession headlines every day, businesses have already started to take necessary app cost optimization measures to save on SaaS spend.

As part of spend optimization, the app rationalization process will reveal duplicate, low-usage, and redundant apps in your portfolio. You can leverage app usage data and negotiate with the vendors for SaaS usage-based pricing plans to cut down expenses and pay only for what you use.

You need a SaaS spend management platform to identify these apps, optimize their spend based on usage, and cut costs.

Enhanced performance

Eliminating redundancies within your application portfolio will streamline your business operations and enhance the performance of the applications.

Eliminating applications with complex integrations will pave the way for a better connection between the applications, resulting in maximized performance and increased productivity.

Improved security

Rationalizing applications with security and compliance issues will improve the security of your application portfolio. It will also make it easier for the IT team to manage the applications and keep them secure. You can keep the stack clear of breaches or cyber threats.

Make better SaaS app management decisions

An application rationalization strategy will help the CIOs and IT teams identify the resource gap within their infrastructure. This data can help the team make necessary decisions about purchasing more applications to meet the business goals.

Rationalization can also be helpful for the procurement team, as it allows them to determine which applications should be purchased and which ones should be avoided to keep their stack optimized.

In a nutshell, app rationalization will

• Increase your SaaS savings.
• Cut down unnecessary expenses.
• Eliminate unused and duplicate apps.
• Optimize underutilized apps.
• Improve security and compliance.
• Improve application performance.
• Enhance team productivity and provide better results.
• Help the team make better decisions on applications.

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CloudEagle.ai simplifies your app rationalization process

CloudEagle.ai is a comprehensive SaaS management and cost optimization platform with the right features to assist your app rationalization process.

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To make your process successful, you’ll need an SMP like CloudEagle.ai.

Why?

A. Application visibility

Without visibility, CIOs, IT, and finance teams cannot see the applications they use. One of CloudEagle’s core strengths is delivering complete application visibility by integrating with SSO, finance systems, HRIS, and other platforms, ensuring 100% SaaS transparency across the stack.

It will discover all the applications within your portfolio and display them in one centralized dashboard for easy management.

B. App usage

CloudEagle will provide accurate app usage details, so you can see how your users are using the applications and make the right rationalization decisions to optimize them.

Your team can quickly identify unused apps and apps with underutilized licenses and eliminate them to save on software costs.

C. SaaS cost management

Finance system integrations will allow CloudEagle.ai to see how much your team spends on each application. You can compare the spending data with usage data to calculate the ROI.

ROI will show you which apps should be rationalized and which shouldn’t. You can use the cost optimization feature of CloudEagle.ai to identify redundant and duplicate applications and optimize them to save on SaaS spend.

Check out how our customer identified free apps that resulted from shadow IT.

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Wrapping up

App rationalization is an essential practice that should be a part of an organization’s action plan if you want to increase efficiency and lower the total cost of ownership (TCO).

However, various challenges like lack of visibility, lack of collaboration, and lack of app usage data make it difficult to rationalize your application portfolio.

This is where a SaaS management platform like CloudEagle.ai can make your app rationalization strategy successful by enabling CIOs and IT teams with much-needed features.

We listed the importance of software rationalization and how businesses can benefit from it. Now it's time to start the app rationalization process by adopting SaaS management software in your organization.

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Frequently Asked Questions 

1: What is application rationalization, and why is it important?
Application rationalization reviews and optimizes your app portfolio by removing redundancies, improving performance, reducing costs, and aligning software with business goals for better efficiency.

2. Why rationalize applications in a growing SaaS stack?
Rationalizing applications eliminates overlaps, improves productivity, and controls SaaS spending, ensuring your app stack remains efficient and supports evolving business needs.

3: What are the common challenges of app rationalization?
Challenges include limited app visibility, stakeholder resistance, complex integrations, and lack of usage data, which can hinder effective application rationalization.

4: How does app rationalization lead to cost savings?
A4: It identifies unused licenses and duplicate apps, helping reduce unnecessary expenses and optimize SaaS spend for better budget management.

5: When should a company start application rationalization?
Start app rationalization when your SaaS stack grows complex, costs rise, or app usage is unclear, to maintain efficiency and security.

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