Application Rationalization Framework: Optimize Your SaaS Stack

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min read time
February 2, 2024
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Have you ever felt overwhelmed managing SaaS apps in one place, struggling to keep up with everything at once?

You're not alone. IT teams have to deal with many SaaS apps daily, including duplications and redundancies, making optimizing overall SaaS stack management challenging.

According to reports, 53% of SaaS licenses remain unused in organizations. However, you can effectively optimize the SaaS stack using the SaaS application rationalization framework.

The application rationalization framework is an iterative approach designed to enhance your organization's operational efficiency. It is like cleaning up and organizing a cluttered closet of SaaS applications.

The process includes readiness assessment and analyzing which applications are a technical fit, align with business goals, and are worth keeping.

The steps are simple:

  • Make a list of all applications. Analyze the usage and see how it contributes to your business.
  • Check if each application helps with the organization's goals. If not, consider if it's still needed.
  • Look at the costs of maintaining each application, including licenses and maintenance. Decide which ones are worth the cost.
  • Consolidate similar applications or remove those that aren't useful anymore. It simplifies things and cuts down on costs.

You must do this to keep your organization's digital space tidy, save money, work more efficiently, and be more flexible.

Keep reading this article to learn and build your application rationalization framework to enhance your organization's operational efficiency. This article provides practical tips and insights to simplify your software choices.

Application rationalization: Why should you not overlook this?

Application rationalization involves organizing and removing redundant, low business-value software applications used throughout your organization. You can eliminate SaaS sprawl and optimize your SaaS portfolio using this framework.

It enhances your enterprise architecture, reduces the costs associated with owning and managing applications, and makes way for better innovation.

The goal is to boost efficiency by eliminating unnecessary tools and saving money. It's not just about cutting costs; it's one of the smart methodologies to make your portfolio look optimized and your teams work better.

Here’s why you should not overlook this:

Cost Efficiency: By rationalizing applications, you can identify and eliminate redundant or underutilized software. It leads to cost savings as you avoid unnecessary licensing fees, maintenance, and support costs.

Resource Optimization: It helps you improve IT resource allocation and vendor management. You can assign SaaS app licenses more effectively.

You can improve how you handle SaaS licenses by giving them to users who actually need them and using them correctly. This helps boost efficiency instead of having extra licenses for applications that aren't really needed or used.

Enhanced Productivity: Reducing the number of redundant applications streamlines workflows. Employees can concentrate on using and mastering a core set of tools rather than dealing with many applications with varying complexities.

Better Security: Managing a smaller stack of sanctioned applications makes implementing and monitoring security measures easier. Security vulnerabilities are easier to identify and address when dealing with a streamlined and standardized application stack.

Scalability and Agility: An optimized application portfolio makes it easier for organizations to scale and adapt to changing business needs. It facilitates the integration of new technologies and the deployment of updates and changes more efficiently.

What are the challenges of application rationalization?

Successful application rationalization is crucial for IT because of challenges like uncontrolled spending, rogue applications from shadow IT, and unoptimized purchasing. Mergers and acquisitions often bring in new apps, adding to the confusion.

The complexity of apps makes it hard to see duplicates, causing visibility issues. Deciding which apps to keep or retire is tough due to complicated cost calculations.

This table will help you understand the challenges and their impact on the organization.


8-Step Application Rationalization Framework

With this 8-step application rationalization roadmap, you can target redundancies, cut costs, and boost the operational efficiency of your organization.

1. Get complete visibility into your SaaS portfolio

Image of a man with magnifying glass

As the first step in the framework, you have to get complete SaaS app visibility in your SaaS stack. This visibility is important because many businesses use different apps, which can get messy.

Using usage data lets you make informed decisions on which apps to retain, modify, and optimize costs. It functions as a digital map, ensuring seamless integration and enhancing efficiency to contribute to your business's success.

2. Assess your SaaS inventory for redundant and unused apps

You can use a SaaS management platform to evaluate your SaaS inventory, explicitly looking for apps that might be redundant or unused. By assessing your SaaS stack, you can identify apps that might be doing similar things or aren't used much.

This application portfolio management process helps streamline your inventory applications, ensuring you only invest in tools that bring real value to your business.

It's a practical way to optimize your SaaS resources, cut unnecessary costs, and ensure that every digital tool you have contributes to your success, leading to an increased bottom line.

3. Establish evaluation criteria

Image showing a checklist for evaluation

While creating the application rationalization framework, you must specify guidelines to help you decide which SaaS apps are keepers.

Four key criteria are to consider:

  • Business Value: This is about determining how much each app contributes to your business goals. Does it help you make more money, save time, or improve customer satisfaction? Apps that bring more value are like MVPs in your digital lineup.
  • Functionality: Take a close look at what each app does. Does it perform its job well? Does it meet your business needs without being overly complicated? Functionality is all about making sure your tools work smoothly and efficiently.
  • Risk: Consider the potential risks associated with each app. It involves looking at factors like data security and compliance. You want to ensure that using a particular app doesn't expose your business to unnecessary risks or vulnerabilities.
  • Technical Quality: This criterion focuses on the technical side of things. Is the app reliable? Does it integrate well with your existing systems? Technical quality ensures that your digital tools work within your overall technology landscape.

4. Conduct total cost of ownership analysis for each application

Image showing factors influencing total cost of ownership

Conducting a Total Cost of Ownership (TCO) analysis for each application is very important. It's not just about the upfront price; it's about considering all the costs of owning and using throughout the application lifecycle.

This analysis includes the initial purchase or subscription costs and factors in ongoing expenses such as maintenance, updates, training, and support. Additionally, hidden costs, like potential disruptions to productivity or increased cybersecurity measures, should be considered.

5. Ask for feedback and collect user satisfaction metrics

By actively seeking feedback and collecting satisfaction metrics for applications in their current state, you can ensure your SaaS portfolio aligns with user expectations and needs.

It involves reaching out to the people who use the software—your workforce and end-users—and finding out what they think. This feedback loop helps gauge users' satisfaction with their daily applications.

  • Are the apps user-friendly?
  • Do they meet specific needs?

Understanding user satisfaction metrics provides valuable insights into your team's practical, day-to-day experiences. This information determines whether an application genuinely adds value to your business operations.

6. Determine appropriate actions based on satisfaction metrics

Determining appropriate actions based on satisfaction metrics to make strategic decisions about each application in your portfolio.

Here are four key actions based on user satisfaction metrics:

Keep: Applications receiving positive feedback and high user satisfaction can be kept in your SaaS stack. These are the tools that are contributing effectively to your business operations, and users find them valuable.

Retire: If an application consistently receives low satisfaction metrics and is not meeting user needs or business requirements, it might be time to retire it. It involves discontinuing its use and finding alternative solutions that align with your organization's goals.

Replace: For applications with mixed feedback or those that are becoming outdated, consider replacing them with newer or more suitable alternatives. This action ensures that your digital tools remain current, efficient, and aligned with evolving business needs.

Consolidate: Sometimes, you may have multiple applications performing similar functions. If user feedback indicates redundancy, consider consolidating these tools. This action streamlines your digital portfolio, reducing complexity and potentially lowering costs.

7. Implementation, Communication, and Change Management

Implementing the application rationalization framework involves careful planning, effective communication, and strategic change management.

Here's a breakdown of each aspect:

Implementation: This phase involves implementing the rationalization plan. It includes identifying stakeholders, allocating resources, and executing the decisions made during the assessment phase.

It may involve retiring, replacing, consolidating, or keeping certain applications based on the established criteria.

Communication: You must regularly inform stakeholders, including end-users and decision-makers, about reasons for changes, rationalization benefits, and expected outcomes. Regular updates and feedback mechanisms ensure everyone is on the same page, reducing resistance to change.

This streamlined and open communication process is vital for building understanding and support.

Change Management: Change can be challenging, and effective change management is essential for a successful app rationalization initiative.

It involves anticipating and addressing concerns, providing training for new tools or processes, and creating a supportive environment for users to adapt to the changes.

8. Ongoing Monitoring and Governance  

The application rationalization framework doesn't conclude with implementation; it extends into the critical phase of ongoing monitoring and governance to ensure sustained effectiveness.

Here's how this aspect is managed:

Ongoing Monitoring: Continuous monitoring is essential to track the performance and impact of rationalization decisions over time. It involves regularly assessing key metrics such as user satisfaction, application usage, and adherence to established criteria.

Governance: Establishing governance mechanisms is crucial for maintaining control and alignment with proper objectives. It involves defining roles and responsibilities, creating policies for introducing new applications or changes, and setting up a framework for ongoing reviews.

Adaptation: Your application rationalization efforts should be adaptable to accommodate changes in the organization's strategy, technology trends, and user requirements.

Regular review and framework updates allow it to remain relevant and effective in supporting the organization's goals.


In simpler terms, the application rationalization process is like organizing and optimizing your software portfolio for a better future state. It's not just about saving money but also ensuring everything works well together and there are no redundancies.

Imagine a busy marketplace with many stalls selling different things. If there's no one in charge to set rules, it can become chaotic. Similarly, not managing a company's various software tools (SaaS applications) can lead to a messy and unregulated situation, posing security risks.

Maximize the efficacy of your IT and finance teams by utilizing the CloudEagle tool. This tool guarantees comprehensive coverage, reaching a full 100%, for discovering SaaS applications.

Image of CloudEagle's dashboard

CloudEagle offers 300+ integrations and browser extensions, simplifying application discovery with a database of 150,000 applications, including SaaS and non-SaaS products. It makes navigation and SaaS app discovery easy.

You can directly integrate with your applications to understand your employees' app usage. It helps you identify active and inactive users and gather insights like login details and premium license counts. This 360-degree visibility lets you make informed decisions on duplications and redundancies and take prompt action.

Onboarding & offboarding

Efficiently managing user access is crucial during both the onboarding and offboarding processes. With CloudEagle, you can optimize these procedures through automated workflows.

For new employees, the platform allows you to grant access to necessary applications, streamlining onboarding swiftly. Similarly, CloudEagle promptly revokes access when users leave, ensuring efficient offboarding.

Cost optimization

CloudEagle is your go-to solution for optimizing SaaS cost. The tool connects with internal systems and other applications, offering comprehensive visibility into SaaS usage and spending. With detailed spending breakdowns by departments and accurate insights into user usage, CloudEagle helps identify areas of overutilization or underutilization.

Shadow IT

On this platform, you can also configure proactive alerts, automatically notifying you of any unsanctioned SaaS purchases and helping you take prompt actions to avoid budget overruns and identify duplicate applications.

Are you concerned about unauthorized spending and shadow IT? You should ease your worries by adopting CloudEagle.

To rationalize your business's SaaS apps, scheduling a demo with CloudEagle is highly recommended.

Written by
Prasanna Naik
Co-founder, CloudEagle
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