Optimizing application development and maintenance (ADM) can reduce costs by more than 50 percent for organizations, according to new research by Gartner Inc. Managers can deploy sourcing strategies, metrics and processes to help their enterprises cut costs in half by eliminating legacy applications, complex architectures and outdated approaches to staffing, the firm says.

"ADM accounts for 34 percent of IT budgets," Claudio Da Rold, vice president and distinguished analyst at Gartner, said in a statement. "Most organizations tend to assume that the cost of ADM can only grow over time due to rising labor costs and the increasing complexity and number of applications.”

But ADM unit costs can be significantly optimized over time, Da Rold said, provided that organizations follow best practices across the application and sourcing life cycle, including strategy, selection, negotiation and management.

Few organizations today use a comprehensive, methodical approach to their sourcing strategies for application services, and only 11 percent of organizations master sourcing, according to the research. Most organizations source application work tactically, asking a few known service providers to size the work and compete for it on price and daily rates, and most companies still use staff augmentation for ADM work inefficiently.

The firm has identified several key recommendations to help organizations cut costs by optimizing ADM: Perform an application portfolio and lifecycle activity analysis to consolidate ADM suppliers; use the right metrics to size application portfolio and development efforts, and determine the right ADM team size; and drive continuous optimization of ADM activities through focused benchmarked metrics and contractual key performance indicators and service level agreements.

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