NET(net), Inc.

Driving Value through Portfolio Rationalization by jmafisher

Let’s face it; the current economic environment is creating trying times for many organizations.  With cutbacks in the supply chain and decreased consumer confidence, nearly everyone is looking for ways to help improve the bottom line and maximize value, especially in the IT organization.

Over the past 6 to 12 months, many of our Clients have come to NET(net) looking for ideas to improve the overall value proposition for their IT investments.  We have been able to help our clients achieve cost savings in a lot of areas, and one area which is often overlooked is Portfolio Rationalization.  Many Clients have all their portfolios increase in number and complexity over the past few years, and are now asking if there isn’t something that can be done to help reduce overall IT spend by simplifying their IT portfolio.

The process we have used effectively involves not only identifying and classifying the portfolio of applications and services, but also taking a critical look at which ones can be combined, simplified, replaced, scaled down, or even eliminated.  In a recent engagement, we spent time going through the contracts and financial information of a Client organization and conducted interviews with key staff in all areas of the IT organization: mainframe, client/server and web development, infrastructure, testing, finance, and business analysis.  This helped us understand the entire IT organization and how it aligned with the business objectives.  We documented the spend in each area as well as the staff dedicated to providing support for each of the portfolio components.  Armed with this information, we had a series of discussions with the CIO and senior IT team and helped them identify areas where there were opportunities for cost reduction.

One benefit of a portfolio rationalization approach is that it does not necessarily focus on staff reductions; rather, it helps identify where costs can be reduced by simplifying the technology portfolio components.  In many cases, our analysis has identified multiple products from different suppliers which perform the same function.  By rationalizing these products into a single offering from a single supplier, our team has helped our Clients successfully achieve cost savings and simplified support for the IT organization.

Another area of potential savings in portfolio rationalization involves understanding the costs and benefits associated with outsourcing.  Our clients are in different stages of their use of outsourced resources.  Some are just entering into outsourcing agreements, and we help them find appropriate partners to perform these tasks from development to maintenance to infrastructure support.  Other clients already have long term agreements with outsourcers; however, their business may have changed and they want to take a fresh look at what is outsourced and what remains or can be brought back into the IT function. This aspect of portfolio rationalization focuses on the most cost effective way to develop or support one of the portfolio components rather than combining multiple products into one.  The result can be just as effective in terms of overall value realization, and it is another way in which we help our Clients drive value.

One last area for portfolio rationalization comes about when an organization goes through a merger, divestiture or acquisition. Some of our Clients have gone through tremendous growth spurts during the past few years and while organizations are growing, they often do not have the time or resources to look at consolidating applications from the various organizations they have acquired.  Now that economic forces have changed, new opportunities have emerged for cost savings and operational efficiencies.  Our team of portfolio analysts will dig into the massive amount of data required to fully understand the various portfolio components that exist in the combined organization and identify opportunities for savings through rationalizing the portfolio.

When we get down to the NET(net) of it, we find portfolio rationalization is an excellent way for our Clients to drive value in their organization. Whether they are looking to simplify their current infrastructure or need to restructure after a series of acquisitions, the NET(net) team can help find opportunities for savings.


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