CIOs Ignore Application Cost Savings, Warns Fujitsu

Many businesses are ignoring the cost savings that could be gained from retiring their old and redundant applications.

And IT managers are having to deal with an increased level of complexity when managing their applications portfolio, independent research from Fujitsu has revealed.

The Vanson Bourne research report interviewed 100 UK based CIOs and IT managers within large and enterprise-size organisations (1,000 plus employees), across both public and private sectors.

Application Estates

It showed that many IT departments are failing to get to grips with managing their application estates, and are running either inadequate or ad hoc audits of applications. To make matters worse, organisations are often not acting on their findings in an appropriate and timely way.

The same point was made earlier this year when Gartner warned that businesses urgently need to plan for an application overhaul to address the growing IT debts from maintenance backlogs.

The Fujitsu report however found that 42 percent of respondents said it would be difficult or very difficult to make a decision over decommissioning their applications. This is contrasted by only 4 percent admitting that it would be very easy (to decommission an app).

“We get into a lot of discussions with our clients about their application portfolio and how they could go about reducing the ongoing cost of their applications,” said John Hanley, MD for Application Services at Fujitsu UK and Ireland.

“A lot of organisations are struggling to understand the management of their application portfolios (what state they are in, how much they are costing etc),” he told eWEEK Europe UK. “This is proving to be a challenge for organisations, so we thought we would commission research in order to put a baseline in, and help introduce some concepts.”

Meanwhile it seems that the majority of the businesses do not really know what applications they are running, after only 47 percent of organisations said that they audit their applications estate. This figure drops to just 41 percent when applied to large businesses.

These lack of insights into their own internal resources are often exposed during mergers and acquisitions. More than half (57 percent) of all organisations surveyed had undergone some form of merger over the past two years, and 56 percent admitted that they had found it hard to get hold of information to evaluate the combined applications estate.

M&A Angst

More than three quarters of respondents (78 percent) said they knew about the state of most or all applications and systems used across the organisation, but following the merger, only 12 percent said they had an accurate understanding of which applications were used within each organisation.

“One of the report’s themes is that many organisations think they have a handle on their application portfolio, but this is often tested strongly during M&As, when the knowledge of their application portfolio is more limited than they realise,” Hanley told eWEEK Europe UK.

“They often don’t know which applications are being actively used, which applications are redundant, which can be removed, and which need to be modernised or replaced because they are too costly or there are better ways to do things,” he said.

And the research also highlighted another problem, after the majority of businesses admitted it is not easy to remove or decommission applications. Only 1 in 3 respondents said this was easy to do.

Ignored Cost Saving

And it seems that organisations are reticent to act on the results of an audit – just 15 percent said they would immediately remove applications which are identified as redundant. More worryingly, 20 to 25 percent rarely or never remove redundant application even after identifying that it is no longer in use.

And Hanley also told eWEEK Europe UK that many CIOs and IT managers are missing a cost saving trick here.

“Organisations of late have taken a good hard look at how they can reduce the cost of their IT, by either rationalisation, virtualisation etc,” said Hanley. “But the application portfolio is often untouched by this approach.”

Hanley described how methods and diagnostic tools can help management to take a more structured approachto the application portfolio.

Fujitsu for example, like other organisations, offers application value assessments that can identify redundant applications, what the apps are costing the business and where they are in the lifecycle.

“The application value assessment is the approach we use,” said Hanley. “We found some organisations do have a structured approach and a good understanding, but quite frankly some organisations, even large organisations, have surprising lack of knowledge about their application portfolio. I know of a number of public sector organisations for example, where they could not tell you how many applications they have, how many redundant applications they have. This is a vicious circle, as it means that old apps not being retired.”

Earlier this year HP revealed that it had slashed the number of applications it uses from 6,000 down to 2,000, a simplification which allowed the company to reduce 83 data centres down to just three.

A full copy of the Fujitsu report can be downloaded here.