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Surprising and not-so-surprising results from an IT Applications and Services Survey – Part 2

By Ram Ponnapalli

A few weeks ago, I posted Part 1 in a series about the results of an IT applications and service survey sponsored by HP and conducted with the help of Dimensional Research. Per my first post, the objective of the survey was to gain a better understanding of the applications market with a focus on the state of the applications portfolios.

 

Here is the Part 2 - continuation of the results with a few thoughts of my own:

 

Survey Methodology

 

  • Global survey conducted in December 2010 - January 2011
  • 645 individuals participated in the survey
  • 100% of the participants are from the IT department
  • A wide range of vertical markets were represented
  • Participants did not know HP was sponsoring the survey
  • 60% of respondents were from companies with more than 1000 employees
  • 66% of companies support more than 250 applications

 Ram June 21 picture 1.jpg

Ram June 21 picture 2.jpg

 

 

 

 

4. Asked how recently their company’s applications portfolio was thoroughly reviewed, only 44% of Americas, 45% of EMEA and 53% of APJ respondents confirmed that it was done within the past 12 months.

 

This is not surprising based on my experiences with clients. An Applications Rationalization exercise should not be considered a one-time exercise.  In fact, it is viewed as a first step in the Applications Transformation journey, which consists of the Applications Modernization and Applications Management phases. Once the portfolio is rationalized and modernized, it is essential that it is actively managed.

 

A comprehensive Applications Portfolio Management practice should be established and supported by the appropriate software and tools. Applications portfolio should be reviewed frequently to guard against application sprawl. Otherwise you will be back to square one.

 

5.    Asked whether their companies track Total Cost of Ownership (TCO) of individual applications, only 36% of Americas, 28% of EMEA and 44% of APJ respondents replied in the affirmative.

 

This result is hardly surprising. Many companies do not have a good handle on their applications TCO at the portfolio level, let alone at the individual application level. Even if a TCO number is computed, the level of confidence in it does not seem to be high.  Companies encounter many barriers to computing TCO. Some of them include:

 

  • Lack of accounting structures to track costs appropriately
  • No mapping between applications and supporting IT assets ( e.g., servers)
  • Complex licensing contracts
  • Lack of techniques for allocating indirect staff costs to applications
  • Applications supported in multiple datacenters across multiple geographies

 

HP works to help its clients overcome these barriers and compute their application TCO by considering all the relevant cost components and using the appropriate allocation techniques for different cost categories.

 

6.  Asked whether their companies measure and track the business value of their critical applications, only 41% of Americas, 33% of EMEA and 47% of APJ respondents replied in the affirmative.

 

No surprises here. Measuring and tracking the business value of an application from cradle to the grave is one of the more daunting tasks for many organizations. The following are some of the prerequisites to measure the business value:

 

  • Business IT alignment
  • Mapping of applications to business processes
  • Quantification of business benefits
  • Business and IT matrix teams with the right skill sets

 

A thorough understanding of the business value will enable the development of a more complete business case for Applications Rationalization and modernization initiatives.

 

In the 3rd post in this series, I will discuss some more results of the survey. Meanwhile, I would be interested in your experiences and whether you agree with the survey findings.

 

And, if you want to learn more about ways HP can help you transform your applications, check out our info on Applications Rationalization or download our Applications Rationalization in an Instant-On World whitepaper.

 

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