Earlier in the year, in the pages of 'In Focus', we spoke about Gartner’s elevation of ‘IT Modernization’ to the status of ‘major theme’ for 2008. In the article, ‘Storm Warning: Time to Take the Top Down’ we wrote:

Gartner believes there’s a storm coming.  And not just any storm.  In a recent web seminar, the industry analyst stated that numerous factors impacting business and enterprise IT today are creating what is increasingly referred to as a ‘perfect storm’ scenario, making 2008 a pivotal time for business – and in particular those businesses reliant on a complex and deeply-entwined IT infrastructure.

Several particularly harrowing months later, we are approaching the end of 2008.  And, true to its word, Gartner has produced numerous research notes guiding companies through the world of IT modernization, urging them to raise their game.  

And they are not alone. 

Numerous analyst firms, such as Forrester and IDC, have been vocal on the subject too, highlighting the importance of identifying and reusing the organization’s valuable IT assets.  In a recent paper[1] from Forrester, principal analyst Phil Murphy observed: “Excessive IT costs have application development and program management professionals searching for ways to reduce wasteful spending within their application portfolios.”  And in a separate paper[2] published at the same time, Murphy spoke about some of the challenges facing companies today in dealing not only with the complexity of their IT infrastructure, but also with the complexity of strategies and tactics available to them by way of a solution.  The analyst commented:  “Applications professionals need to modernize their approach to modernization”.

As if independently echoing these sentiments, Gartner’s Jim Duggan, in his November 2008 paper on ‘fast track’ Application Portfolio Management (APM)[3], presented useful guidance for companies on how to “subset the portfolio management problem to speed the time to useful insight”.  His guidance includes, for example, advice on when results from such an initiative might be realized.  Duggan indicates that, in the first year alone, application costs can be reduced, and that one should expect the “retirement of low-value or duplicative systems.”

Two key points emerge here (and, indeed, in other research being produced particularly near the back of 2008) – the idea of simplification of the process of modernization, and that of quick return on investment.

Speaking with one analyst recently, we discussed the question of just how much progress had actually been made by IT organizations during the year, and what effect the turbulent economy is having on the initiation and on-going momentum of their modernization activities.

I was advised that the pace has definitely increased.  There is urgency.  The storm is most definitely upon us, and people are striving to remove cost from IT operations.  But (and perhaps unlike previous recessions) they are trying to do so in sustainable ways; ways that will leave them in a better shape to support the business; not worse, and not ‘knee-jerk’ or debilitating, leaving them exposed as demand for projects once again picks up.

But if there is an urgency, it is focussed on solutions which will provide a quick return on investment – with companies typically looking for a return in that first year.  Duggan’s note clearly provides some indicators on this, as does Murphy.

But, often, desperate times call for desperate measures.

I was recently told about one company’s rather draconian approach to application modernization.  Specifically, this company was trying to clamp down on its growing sprawl of application complexity while at the same time trying to ensure it continued to support the company’s need to invest in new and innovative technology.  The analyst I was speaking to described how, for every application brought into this company’s portfolio, the CIO sought to remove one of its existing systems – thereby stemming the tide of portfolio creep.  How rigidly this policy was adhered to, or indeed how they chose the applications to be eliminated, we did not go into – frankly, I think I was too amazed to probe further into this ‘strategy’.  However, the mere fact that companies are considering such measures as appropriate, and even necessary, only goes to show how desperately the situation is viewed.

Interestingly, rather than to pose any kind of intelligent cross-examination, my immediate response was instead to present an analogy.  As the parent of two young children, and perhaps especially at this time of year, the following scenario came to mind...

I stand at a toy shop window with one of my daughters.  Her eyes light up on seeing some wonderful ‘shiny new thing’ on display.  Naturally, she asks for it, and, naturally, I relent.  But, as we walk into the shop and approach the shelf on which this ‘shiny new thing’ is stored, I turn to her and ask, “So, which toy are you going to get rid of in return for having this one?”  You can imagine her reaction.

It’s a tough approach, but you can certainly see the benefits, for parents looking to reduce the constant build of clutter in the home, and also for IT managers essentially trying to achieve the same thing in the workplace.  The downsides, of course, are that without any kind of objective assessment in place, the retirement process is flawed.  Also, many companies are able to realise dramatic savings in their application maintenance expenditure by eliminating low-value applications, irrespective of what new systems are being acquired.

The key here is for application organizations to put in place a strategy of sufficient maturity to ensure management and modernization of the portfolio... in line with business needs.  Even in times of such cost constraint and economic uncertainty for the business (and perhaps doubly so), IT must deliver business benefit.  The industry analysts are producing research notes to advise their clients on how best to achieve this.  Modernization is not an option; it is an imperative.  Gartner said this at the beginning of the year, and they are continuing to say it today. 

So, as 2009 beckons, with its undoubted onslaught of regulations and governance, the real bite of this year’s economic upheaval will hit IT.  Companies must remain focussed on their modernization objectives.  But they must simplify their processes for doing so.  The application portfolio contains ‘wheat’ and ‘chaff’, good and bad.  Identifying the ‘chaff’ is the fundamental starting point for modernization.  It provides huge opportunities for cost reduction and resource liberation.  Doing so in an objective, fact-based way protects the business from risk, and protects IT from the business, from simply responding to those departments who shout the loudest. 

Start small.  Start focussed.  But make sure you start.  Modernization of your IT portfolio, and the processes you employ to manage it, continues to be the critical imperative for IT.  2008 has been a hard year.  Let’s make sure we are all in good shape as we return in the new year.

Happy holidays – and I look forward to hearing from you in 2009.