Application Rationalization:
Reducing IT Costs and Driving Digital Transformation through Application Optimization

In a world where companies increasingly rely on digital applications, the complexity of IT landscapes becomes a real challenge. Application Rationalization helps reduce this complexity and deploy resources more efficiently. But what exactly does this term mean, and how do companies benefit from it?

Up to 30% lower IT operating costs

85% greater IT transparency

Application landscape streamlined by 28%

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≈ 70% cloud-ready systems

What is Application Rationalization?

Application Rationalization is the process of analyzing and optimizing an enterprise's IT landscape. The goal is to critically assess the value and utility of each application through comprehensive data analysis to make decisions on whether to retain, consolidate, replace, or retire them. According to a study by Capgemini and Hewlett-Packard, 50% of applications in use are redundant or irrelevant to the business, revealing a substantial opportunity for optimization. 

Why is Application Rationalization important?

  • IT Cost Reduction: Eliminating outdated or redundant applications can result in significant cost savings.
  • Efficiency Gains: Fewer and better-integrated applications streamline workflows.
  • Improved Security: Consolidation reduces potential attack surfaces for cyber threats.
  • Enhanced User Experience: Employees benefit from a streamlined and more effective IT environment. 

Application Rationalization in Enterprise Architecture Management

Application Rationalization is a key element of Enterprise Architecture Management (EAM), aimed at keeping the IT landscape lean, efficient, and aligned with business goals. While EAM provides the strategic framework, Application Rationalization focuses on evaluating and optimizing the application portfolio. By assessing the value, cost, and relevance of each system, organizations can identify redundancies and outdated applications. 
This streamlines the portfolio, reduces complexity, and frees resources for strategic initiatives. A structured rationalization process helps decide which applications to keep, consolidate, replace, or retire – creating a clearer, more cost-effective landscape that supports business goals and future digital growth.

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Application Rationalization

Gartner's TIME Model in the Context of Application Rationalization

A proven framework for Application Rationalization is Gartner's TIME Model, which helps companies systematically categorize applications into four groups:

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1. Tolerate: Applications that are functional and meet business requirements but do not require immediate optimization. 

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3. Migrate: Applications that would operate better in a modern environment, such as the cloud. 

2. Invest: Applications that are strategically important and can deliver significant value through additional investments. 

4. Eliminate: Applications that are outdated, redundant, or business-irrelevant and should therefore be decommissioned. 

How the TIME Model Supports Companies

The TIME model provides a structured approach to making efficient decisions about IT landscape optimization. Applying this model enables targeted resource allocation, unlocks innovation potential, and reduces costs. 

Inventory


Start by creating a complete and transparent inventory of all existing applications across the organization. Go beyond just listing names – capture their key functions, ownership, integration points, and user base. A clear picture of your current landscape is the foundation for every decision that follows.

Analysis


Assess each application thoroughly in terms of cost, business value, security posture, technical health, and user satisfaction. Identify redundancies, underutilized systems, and tools that no longer align with strategic goals. This stage provides the insight needed to separate high-value assets from those draining resources. 

Decision


Use the TIME model to categorize each application based on its performance and relevance. Be decisive and objective. The goal is to ensure that every application either contributes measurable value or is phased out responsibly. 

Implementation


Put decisions into action through a structured execution plan. This may involve system consolidation, upgrades, or decommissioning. Communicate changes clearly to stakeholders and document results to maintain transparency and accountability. Success here depends on disciplined follow-through. 

Continuous Optimization


Application rationalization isn’t a one-time exercise – it’s a continuous process. Regularly review the portfolio to adapt to new business needs, emerging technologies, and evolving security requirements. Ongoing optimization ensures your application landscape remains lean, secure, and strategically aligned.

Best Practices and Tips

  • Engage Stakeholders: Involve IT and business departments early.
  • Data-Driven Approach: Make decisions based on thorough analysis.
  • Consider Cloud Technologies: Evaluate opportunities to migrate to the cloud for scalability and cost efficiency. 

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About the Expert

Markus Kück

Head of BPM Services

Markus leads the BPM Services department and is responsible for its strategic direction. Together with his team of seasoned specialists, he helps clients optimize their processes sustainably and prepare them for the future. For every need, dedicated experts are on hand to develop tailored solutions that address each client’s unique requirements. With his deep expertise and the collective knowledge of his team, Markus delivers comprehensive, top-tier support for all challenges in business process management.

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