Problem Statement
What is portfolio rationalization, and why is it a critical discipline for modern enterprises? What key dimensions and decision factors must organizations consider when viewing portfolio rationalization from a 10,000-foot perspective?Solution Abstract
What? Why?
What is Portfolio Rationalization?
It is the act of streamlining an organization's existing portfolio to improve efficiency, reduce complexity, and lower TCO. The portfolio spans
people-process-technology, and consists of hardware, software, data, and process.
Key points worth noting. It's about -
- streamlining the existing portfolio;
- improving efficiency;
- reducing complexity;
- lowering TCO of the portfolio;
- people, process, technology; and
- all assets - hardware, software, data, process.
Most often a portfolio rationalization process is composed of :-
- rationalization of applications;
- rationalization of IT;
- rationalization of processes;
- rationalization of data;
- rationalization of infrastructure.
Why is Portfolio Rationalization needed? What are the benefits?
The key goal is to :-
- reduce operations cost;
- reduce maintenance cost;
- reduce innovation cost; and
- increase savings.
An effective rationalization process can help -
- finding capital which can be re-invested;
- optimize IT budget in operations and maintenance areas; and
- enable organization remove its Tech-Debts and become future ready.
The Essential Method
The 10000 Feet View
The Stages
At an abstract level portfolio rationalization consists of multiple stages, i.e., :-
- assessment, i.e., assessing organization's as-is portfolio and building the asset repository;
- evaluation, i.e., ; evaluating the portfolio's current state, and defining the target state;
- planning the rationalization;
- executing the rationalization; and
- establishing governance and continuity.
The Building Blocks
The below mind-map depicts the essential building-blocks and aspects involved in a portfolio rationalization process.
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High Resolution Image)
The Process Model
Portfolio Rationalization is a perpetual journey, and not an one-off project.A successful rationalization needs a process model, which can achieve the
immediate rationalization goals, and
establish continuity. A well defined model consists of multiple elements, including :-
- the mechanism to detect the business need for a rationalization;
- the scope which is well defined and achievable;
- the phase to assess the portfolio and build the as-is asset inventory;
- the phase to evaluate portfolio's health;
- the target-state definition;
- the rationalization plan consisting of budget, people, timelines;
- the phase to transform the portfolio to target-state; and
- a well defined governance process which can track the transformation, and provide continuity.
The sketch depicts the high-level process model.
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High Resolution Image)
Glossary
| Title | Description |
|---|
| TCO | Total Cost of Ownership |
| Tech-Debt | The inefficiencies in People, Process, and Technology aspects. |
| 10000 Feet View | A high-level abstract view of major components of a system or process, but no specific implementation details. |
References
Paper Code: TWP_1009.10, Version: 1.0, Author: Biswajit Dash, License: CC-BY-ND, Published: Aug-2021