IBM has reduced its number of internal applications by 70%, but that’s not enough for CIO Jeanette Horan.
When the company started its consolidation effort, it had about 16,000 applications. It has since cut that number to 4,500, “but it’s still too many,” Horan said.
Horan has given her IT team the task of cutting the number of remaining applications in half by the end of 2015. That would result in an overall reduction of about 85% from the original 16,000.
“I don’t know whether we will make it or not, but it’s a good goal,” Horan said in an interview.
IBM’s goal is to have common global applications across all business units.
“If you’ve got different applications in different countries, you don’t have a global process,” said Horan, who was appointed to her post one year ago.
Application consolidation is becoming a hot topic again, “especially as organisations are moving some applications to the cloud,” said John Longwell, a vice president at research firm Computer Economics.
A survey conducted by Computer Economics in 2010 found that a little more than one-third of all organisations had application consolidation projects underway.
An earlier study on the economics of consolidation, conducted in 2007, compared the median percentage of IT operational budgets spent on software licenses and maintenance by companies that had consolidated applications and by companies that had not consolidated. For those that had not consolidated, 10% of their IT budgets went to application support; for the ones that had consolidated, that figure was 5.4%, according to Computer Economics.
IBM’s IT department has a process for convincing business units of the need to jettison applications.
First, the application consolidation team will point to duplications. Horan said that could mean, for instance, identifying multiple applications serving the same purpose.
Second, the business unit will be told the cost of upgrading and supporting all of its applications.
Third, the application reduction will be framed in the overall context of the strategic goal “to get to a global process” for all its applications.
IBM estimated that it saved about $1.5 billion as a result of application and data centre consolidation projects over several years. The company now runs six global data centres. At one time it had more than 150.
Longwell said application consolidation efforts can reduce the need for support staff, cut the amount of money a company spends on software license and maintenance fees, and yield reductions in spending in other areas, including infrastructure. Consolidation can also improve operational efficiency, he said.
“Assessing the value of each application on an ongoing basis is a best practice we recommend,” Longwell said.
It isn’t easy convincing business units to reduce the number of applications they use. IT will hear arguments from users about the unique features of apps that are at risk of being eliminated. Those cries will be followed by requests for new features in the global common app, Horan said.
The IT department may get requests for “100 new requirements” for the global application, which they will negotiate down “to the 20 requirements that you are actually going to implement,” Horan said.
Phil Murphy, an analyst at Forrester Research, said application count is a difficult metric “to make any sense out of” because it could mean a Java app that’s only a few hundred lines of code, or it could be an app composed of a few million lines of Cobol. There is no consistent measurement in the industry, he said.
Murphy added that the cost savings from consolidation are real. The need for consolidation is more urgent because IT departments are rapidly adding new mobile apps, new business analytics tools and new CRM systems. “That is what has raised this whole topic to a fever pitch,” he said.
The idea of pulling people off a new project to take away existing apps “is counterintuitive,” said Murphy, but increased spending on support, maintenance and licenses also hurts investment in new projects.
IBM employees who want other applications still have an outlet for creating new apps.
The IT department provides employees with virtual server space and middleware to develop their own applications to serve specific needs. IBM has 100,000 registered users in the program. In some cases, these app projects may lead to something that the IT department will support in a production environment or may even turn up as a feature in a software product, said Horan.
