Many organizations tend to overlook the spending associated with tool sprawl. Sean McDermott, President & CEO, founder of RedMonocle and Windward Consulting Group, discusses how businesses end up investing in multiple tools that provide the same functionality. He shares how application rationalization can eliminate this unnecessary overlap and save jobs.
The worldwide IT spending neared $4 trillion in 2019 alone. However, as businesses face budget cuts and priority shifts due to the COVID-19 pandemic, they’re still struggling to cut costs when it comes to IT tools.
As businesses evaluate where they have the flexibility to cut costs — without letting go of their critical staff — many overlook the opportunity to reevaluate current IT tools. The reality is that many businesses have tools that overlap by providing much of the same functionality. Still, due to organizational structure or failure to communicate across teams, excessive IT tool adoption goes unchecked. Industry experts call this trend “tool sprawl,†and the best way to control it is through application rationalization. Application rationalization works by assessing the entire IT tools portfolio against the needs and identifying overlap and unnecessary tools in use by the organization.
So how does application rationalization eliminate this unnecessary software overlap while saving jobs? Let’s take a look.
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Application Rationalization: The Basics
Application rationalization can be completed in one of two ways. Businesses can handle it in-house through a manual process which can take months. Or, they can outsource to a partner who can perform a rapid proof of concept (POC) through an automated process, cutting up to 15% on tool costs — within minutes.
Conducting the manual tools portfolio audit is a tedious process that relies on outdated spreadsheets. It is often labor-intensive and reallocates precious business resources solely to the process. Manual audits are also “snapshots in time,†often outdated in 6-12 months, requiring a costly repeat year after year.
Using modern application rationalization platforms, this process is streamlined and evaluates an organization’s entire tech stack in three steps:
- Automatically inventory the current portfolio based on tool capabilities and requirements
- Use AI to identify overlapping tools
- Establish an automated, continual cadence to complete the audit process.
Businesses spending more than $10 million on IT tools save more than $1.5 million through an application rationalization process. This money can then be reallocated toward salaries to retain employees.
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How Application Rationalization Impacts Internal Teams
Application rationalization goes much further than cost savings. While application rationalization helps prevent job loss by cutting unnecessary spending on IT tools, it also allows executives to focus on other
areas of the business, like employee salaries or additional overhead costs where the workforce can be sustained.
The second way application rationalization provides job security is not as upfront.Â
Over the years, as digital transformation has swept the globe, a significant selling point for many technologies was the removal of basic tasks. Taking tedious, simple tasks out of the hands of employees allows them to focus on more strategic functions that add value to the business as a whole.
Outsourcing application rationalization aligns with this trend. If employees spend time and resources on more strategic business functions, they create value for the organization that cannot be lost. In combination with the money saved by minimizing the IT tools portfolio and eliminating overlap, great value is brought back to the internal team by allowing them to focus on more strategic tasks that push the business forward and help with future growth and sustainability.
As the current United States unemployment rate reaches 14.7%, reflecting a loss of 20 million jobs in April alone, businesses should re-evaluate their current tech stack as an early cost-saving measure before they initiate employee layoffs. Application rationalization is a valuable asset, and while it can be handled manually, outsourcing this process saves both time and resources. Through application rationalization, businesses can effectively achieve greater spend control and tool standardization while protecting their employees in challenging times.
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