Consulting 101: Rationalization and Portfolio Strategy

September 5th, 2017 Posted by Jon Sturm

Rationalization
Consulting firms typically charge top dollar to tell you what you already know. Have you heard some of this advice before? Legacy platforms must give way to modern systems. Emerging and unstable business systems increase risk and opportunity cost exposure. Business critical systems need to continually adapt to meet business needs. And with an evolving workforce and technological advances and disruptors, investments need to align to sustainability and growth objectives. Understanding where to spend your IT dollars is important to maximize your results.

Our competitors typically perform a very brief assessment tackling only the tip of the iceberg and then arrange systems into four potential categories. Any IT leadership with any tenure around the applications and system in their environment should be able to put systems into buckets without wasting a lot of time, energy, and money “assessing”. Like Alex Trebek would say, “And the categories are:” Maintain, Invest, Retire, or Replace.

The value doesn’t come in organizing or creating a plan or an IT Roadmap, the value is created when you follow through on that plan. And yet, consulting firms charge $250 per hour to tell you what you already know, stating what you should do, and then they hope that because they confirmed your suspicions of replacing the 40-year-old-COBOL system that you’ll buy the execution as well. If not, they’ve already made their money. At least 80% of the content in IT Roadmap and Rationalization Recommendation “deliverables” is boilerplate material.

No plan survives first contact with the enemy. Rather than investing top dollar for an outside expert to provide recommendations and roadmaps that will need to change the moment they stop billing, try working with a partner who understands your business and helps you adapt your roadmap while implementing and following through on the recommendations with and for you. Let’s get busy doing the work we know must be done. Yes, an ounce of prevention is worth a pound of cure, but too many consultancy organizations flip that around and fall into analysis paralysis. That’s not to say that deeply integrated and legacy systems aren’t complex and shouldn’t be understood. They should, and intimately, which is why I’ve always found it odd to bring an outsider to consult about a topic as a subject matter expert. Sometimes that objective eye is necessary.

Need help knowing where to start? Here’s what they’ll tell you:

It’s humbling to bring an outside expert behind the curtain to objectively evaluate your IT portfolio and systems. Incumbent IT personnel who have a sense of ownership and pride in what they’ve built are also biased. No one wants to hear that what they’ve built over the past 20 years is a poorly architected pile of spaghetti or that the technology on which they built their career is “legacy”. That’s like hearing a song from your youth on the “oldies” station or no longer hearing your songs on the radio at all. When did that song become a “classic”? I’m pretty sure I don’t want to learn to listen to this new music. It is important to learn the modern frameworks and technologies.

Systems with any longevity within an organization naturally start to evolve outside of its original architecture and outside of its original purpose. Rapid growth, chasing new business, changing regulations, and mandatory due dates all contribute to systems that are more and more difficult to manage, improve, and integrate.

If you’ve already partnered with another vendor for application managed services, what are they doing to mitigate technical debt? What are they doing to help achieve faster time to market with systems that just work? Are you getting strategic recommendations from your IT vendor about what to do with your systems? Are you getting the information proactively, or do you feel like you need to bring in an outside company to reveal the truth? Shouldn’t this be part of the service they are already providing? So, why isn’t it?

Every system has a lifecycle, and each stage of that cycle represents a level of risk or reward. Maximizing the reward and minimizing the risk is essential.

Emerging systems are typically innovative and a competitive differentiator. Many times, these types aren’t available off the shelf. Consider an application development partner who employs scaled agile development to quickly deliver a viable product to take advantage of beating their competitor with time to market. These differentiators may be so specialized that in-house development is the only viable way to go. If that’s the case, how would you like to transfer work allocated to that team and free up their time? How would you take advantage of capital expense to invest in time-to-market differentiation? If software development isn’t your forte, how would you like to work with a company where software development is their expertise?

Emerging systems can also be new systems in early life support and warranty. Transitioning knowledge and responsibilities from development to operations doesn’t happen (at least successfully) by throwing the system over a wall. These early stages of a new system’s life are fraught with integration and adoption issues. If your operations team isn’t ready to absorb the spikes in demand, and your development team needs to get working on a new project, how would you manage the demand fluctuations?

Core systems are frequently proven IT service capabilities that can usually be met with off-the-shelf software, SaaS, or enterprise software solutions. These are not typically competitive differentiators, so the goal should be to optimize and minimize the cost to maintain and support. But not all stable systems fall into categories easily picked up and supported by infrastructure managed services. Their experience and expertise stops at the server and or the desktop office suite. Even stable systems have a backlog of routine maintenance and enhancements that come from adapting to new business opportunities. How would you like to offload and minimize the cost to support your core systems?

Stable systems can also be legacy systems on aging platforms with an aging workforce. While it’s usually not ideal to retain aging platforms and systems. Those systems have been paid off for decades and have paid for themselves ten-fold. But we are rapidly approaching a time where expertise in that platform and technology are going to become scarce. Economics 101 describes how scarcity of resources can drive the prices up. Additionally, who can get parts for that model A system built on vacuum tubes and punch cards? Even if you “knew a guy,” they’ve long since retired and moved to Florida. Most organizations are doing their best to keep the lights on. Investing in modernizing their business process and systems is unattainable internally. How would you like to be able to invest in transforming your core systems to modern platforms?

See, now wasn’t that easy? Oh… and it was FREE.

Systems don’t always stay in the same category for their entire lifespan. Systems that were innovative yesterday can become ubiquitous and core platforms for tomorrow. Set an annual review cycle for yourself to assess and realign your organization’s application portfolio. Don’t navigate the constantly shifting sands of technology alone. Find an application management service who does more than the minimum to meet an SLA.

Let’s talk about how SmartIT can be the application managed service provider you need, without being a consulting nightmare. Connect with me on LinkedIn today!

About the Author: Jon Sturm is the Client Services Director for ADM with SmartIT. He has over 20 years in IT, management, leadership, and consulting, specializing in application managed services, outsourcing, IT service management, and organizational change. He has a passion for continually improving and maturing IT services. Prior to joining SmartIT, he spent 17 years with a global consulting services firm; helping clients meet and exceed application service objectives and solve complex organizational challenges.