In this blog, we discuss the concept, benefits and business case of SAP Portfolio Rationalization. Portfolio rationalization plays important role when there are mergers or acquisitions. It is also implemented to enhance organization’s ability to sharpen the business process.

Rationalization:
The dictionary definition says ‘Rationalization is a process of making a company or industry more efficient by dispensing with superfluous personnel or equipment re-organizes so as to make it more logical and consistent’. Application rationalization means selecting your applications based on business need and prioritizing related actions and effectively managing the value of both existing and proposed applications.

During the process of SAP portfolio rationalization, very detailed analysis is needed to identify the key attributes of each application being used. This can be achieved by interacting with service function leads and application owners. It is very necessary to identify and document the specific issues for all applications under consideration. Another important task is to understand the priorities, considerations, scope and limitations according to business expectations.

Following are the pre-preparation steps of SAP portfolio rationalization:

  • Checking the suitability and usefulness of all the running applications with reference to their parameters and decide which need to discard, replace, retain as it is or enhance.
  • Performing detailed cost/benefit analysis to help in budgeting and investment decision making.
  • Security and integrity of data are the most important factors to be considered during SAP portfolio rationalization. So portfolio analysis for data security and integrity is to be done before starting the process of rationalization.

Based on the analysis of the information obtained we should prepare detailed application portfolio rationalization roadmap.

Following are some activities needed to be done:

  • Validation and updation of reports of the existing application inventory
  • Demonstration on the aspects of the application portfolio – vendor-wise, application criticality by functional groups, FTE utilization by application criticality.
  • All business processes and the corresponding supporting applications of enterprise reference model should be documented.
  • Security and integrity of data in most important factors to be considered during SAP portfolio rationalize. Special precautions needed to be taken to prevent any data loss.
  • Preparation of interface diagram which will explain the all interfacing applications along with their interfaces.
  • Propose an appropriate application inventory model and recommendations for Application Portfolio Rationalization for each functional group. This helps in eliminating redundant applications.

Benefits of SAP Portfolio Rationalization:

  • SAP Portfolio Rationalization helps industries to reduce their maintenance and development lifecycle costs and to improve customer’s technology investment decisions.
  • Properly conducted application rationalization process results in substantial cost savings while improving support for the lines of business.
  • The analysis done during SAP portfolio rationalization helps to identify which applications are important thus reducing investment costs in non-relevant applications.
  • Portfolio rationalization will give the idea as which frameworks suit our business and which patches need to be deployed.

Please send us your questions, comments or assistance, and our team would be glad to assist you.

By Mahesh Janugade (on behalf of SAP Consulting Team)


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