Application Rationalisation Techniques (Part 4 of 4)
7. Tracking your success with R.O.I in Application Rationalisation.
The process of application rationalisation is only worthwhile doing if you produce a return on investment. Validating your ROI is important to prove your success, but it does have a number of problems.
Most SAM practitioners will point out the difficulties of measuring SAM ROI because effective SAM delivers efficiency benefits in some ways that are not easy to quantify. However, it is possible to measure ROI if you have this as a key deliverable to assess your SAM program.
The primary cost efficiencies can be split into the following three groups:
- Reducing IT costs. Examples of these savings can be the reduction of the number of licenses paid for in a contract renewal or “re-harvesting” of unused licenses and reallocating them to users who need them, thereby avoiding the need to purchase additional licenses. These types of savings can be measured and quantified but may take a considerable amount of manual tracking.
- Cost efficiencies from improved services. An example of this can be improved service from a helpdesk because they have better information about the assets used by users. Another case could be the identification and retraining of users who have a new system to work with, but they have had difficulties coming to terms with it. In these cases it is harder to make an assessment of the value that a SAM program delivers in accurate financial numbers.
- Risk reduction. There are risks if IT assets are unknown. These can be penalties for being outside of license agreements or even security breaches where IT assets and software access fall into the wrong hands. Risk assessments should be part of any SAM project but it would not be appropriate to count these as savings unless a specific cost saving can be identified and quantified.
In addition to the cost benefits you will also need to identify the investment costs. These are much easier to calculate than the cost savings. Key components are:
- Staff costs. These include staff direct working on the project with all the additional costs and benefits such as pensions, tax, sick days and admin costs. Also you will need to add in a proportion of the cost for other workers who contribute towards the project.
- Cost of outside services, outsourcing and contract staff.
- SAM tools or other technology used to make assessments required by the SAM project.
Application rationalisation is not a revolution, it is an evolution. It won’t be an overnight task but instead one that become a process of continuous improvement. You start by knowing where you are now, identify your vital few opportunities and then validate them to create your action plan for the priority of rationalisation. Key things to remember are:
- Make sure you have accurate data for deployments, license entitlements and most importantly what you actually need based on real usage.
- Prioritise your applications with cost variances which show the value of your unused applications.
- Validate with users the impact of eliminating or replacing the applications.
- Measure your success and track ROI to show the value that you are delivering back to your organisation.
- Start now, don’t put this task off as you are wasting money every day.
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