Tuesday, June 03, 2014

Categorization of applications in IT portfolio

During any portfolio rationalization exercise, we categorize applications based on various facets, as explained in one of my old posts here.

Interestingly, Gartner has defined three application categories, or "layers," to distinguish application types and help organizations develop more appropriate strategies for each of them.

Snippets from the Gartner news site (http://www.gartner.com/newsroom/id/1923014)

Systems of Record — Established packaged applications or legacy homegrown systems that support core transaction processing and manage the organization's critical master data. The rate of change is low, because the processes are well-established and common to most organizations, and often are subject to regulatory requirements.
Systems of Differentiation — Applications that enable unique company processes or industry-specific capabilities. They have a medium life cycle (one to three years), but need to be reconfigured frequently to accommodate changing business practices or customer requirements.
Systems of Innovation — New applications that are built on an ad hoc basis to address new business requirements or opportunities. These are typically short life cycle projects (zero to 12 months) using departmental or outside resources and consumer-grade technologies.

Ruminating on RTB, GTB and TTB

The IT industry loves TLA's (three letter acronyms) ! Recently a customer was explaining their IT budget distribution to us in terms of 'Run the business investments', 'Grow the business investments' and 'Transform the business investments'.

RTB investments are for 'keeping the lights on'. This budget is required to keep the operations running that support the core business functions. In RTB investments, the core focus is on efficiency and performance optimization. RTB-type applications are increasingly being outsourced to a IT vendor under a managed services contract.

GTB investments are used to support organic growth and increased customer demand. For e.g. adding capacity to an existing data center, bolstering your DR site, virtualization for quick provisioning, etc.

TTB investments are for creating new products or introducing new services; i.e. making changes to the current business model. For e.g. Apple entered the music industry with iTunes, IBM moved to services from hardware, etc.