Defining Application Tiers

“The secret power of lawlessness is already at work!” — means the any future work based on tradition (e.g. the past) is already going on. Secret means something no one has discovered, but something that will be revealed in any transformation effort. Lawlessness is the hidden, subtle, underlying force from which “we’ve always done it this way…” springs.

Rationalizing the need makes it easier to commit, but rationalization does not convince executives or cancel legacy practices that brought you to the point at which you find yourself today.

Why define tiers?

So…you’ve discovered and documented your portfolio of applications. Congratulations! Do you know how many companies don’t have their portfolio documented? Most of them…

Are you surprised how big your documented inventory is? I’ll bet you didn’t think you had that many applications? The list invariably includes business applications, IT tools, interfacing applications, middleware, utilities, and desk-top productively apps. You name it, you’ve got it in your inventory. Again, CONGRATULATIONS!

So… now that you have your inventory, you are ready to manage one of your firms largest assets more effectively, therefore reducing costs, right? Then why can’t you? Ask yourself, what do business applications and IT tools have in common? The answer is ‘nothing’.

Don’t get me wrong, a complete inventory is THE essential first step. The second step is just as important — YOU MUST DEVELOP A TIERING MODEL in order to effective focus your attention on what needs your attention.


You could retire 100% of your IT tools and not save enough money to pay for the inventorying effort. On the other hand, understanding what the business truly needs in the way of functionality, reporting, and forecasting is worth its weight in gold.

The Secret of Developing a Tiering Model

There is no secret. Rather, you just do it…

Maybe one secret: Compromise can be defined as a blending of the qualities of two different things or a concession of principles. Cooperate with people (e.g. business people if you’re in IT, IT people if you are in operations) as much as you can, but avoid any alliance, partnership, or participate that could lead to continuation of the current state, and more importantly, a water-downed less-than effective future state strategy.

Your tiering model does NOT delete anything from the composite inventory. It DOES tier less important things out of your way. You want your transformation focus to be on business applications – those enterprise and regional apps that are generating revenue, profit, and keeping your customers onboard.

An example might be:

Tier 1: Enterprise, business unit or regional level applications critical to the firm’s business processes

Tier 2: Plant specific, non-industry specific business applications

Tier 3: [Utility Example] Specialized generation, transmission, or distribution applications or tool sets

These 3 tiers would be your focus for any rationalization, modernization, or transformation effort. Experience shows that the majority of cost savings can be realized by transformation of business applications. In most organizations, these three tiers account for about 40% of the total portfolio.

Tier 4: Everything else

Not so fast… Additional cost savings may be identified in other tiers, so a little effort in this area may be of additional value. Something like:

Tier 4: Desktop office productivity applications

Tier 5: IT and system applications for backup, security, help desk, testing

Tier 6: Development applications & tools

Tier 7: Data subscriptions, services and unknown applications

You may also want to consider additional criteria such as:

  • Previously identified rationalization candidates
  • High support-cost applications
  • Focus application-areas for business standardization or improvement
  • Linkage to in-flight projects
  • Identify “top business processes”, and look at the world of actual applications and desired standards for these processes

Remember, ask yourself, what is the value in this particular tier’s definition? For every tier defined. Point is, each tier must be defined BEFORE linking each application to its appropriate tier. The tier number simply becomes another attribute that helps you define and management your portfolio.

If you are a reader of my blogs, you’ll remember that ‘tiering’ is directly linked to ‘Defining an Application’ – check it out @

Again, with larger portfolios a tiering model is developed to provide focus on the upper tiers that will provide the largest payback in any transformation effort. A completed example may look something like this:


What’s Next After Tiering?

Simply put, begin the analysis of your current state inventory. But Frank wait, Frank, Frank, do I perform an analysis across the enterprise or functional area-by-functional area?

You are finally asking the right questions. Until next time…

See you in the future…

Frank Wood

Executive Transformation Advisor


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