IT Success!: Towards a New Model for Information Technology

7.8. Reducing application lifetime costs

Since running and enhancing production applications consume up to 80% of the IT budget, reducing application life-time costs becomes a key financial objective, not just from a pure cost-savings perspective, but also because the resulting savings can be used to fund new projects.

The first and most obvious way to reduce lifetime application costs is to consolidate duplicate or overlapping applications which were originally launched in glorious isolation from each other for organizational or political reasons. This is unfortunately quite common – many of us work or have worked in companies with multiple implementations of an ERP or CRM system from the same vendor.

Another option for cost reduction is to outsource mature applications to an outsourcer which has a more cost-effective infrastructure and skills base. A word of warning though. Outsourcing is a highly complex undertaking that is beyond the scope of this book – suffice to say that if you outsource the wrong applications for the wrong reasons and go about it in the wrong way, you will rue the day you ever read somewhere that outsourcing can save you money...

Finally, there is one other way to reduce application costs which is not very well known but is very effective, and that is simply – knowing when to retire it!

With proper asset management based on an ongoing cost–benefit analysis (like the examples in the previous section), an application manager would know when the stage was ...