Application  rationalization is the process of streamlining the portfolio to improve  efficiency, reduce complexity and redundancy, and lower the cost of  ownership. Twenty had partially complete inventories and two did not  have any inventory. Specifically,
4 agencies fully met all four practices;
9 agencies fully met three practices and 8 of these partially met the
6 agencies fully met two practices and 5 of these partially met the
2 agencies fully met one practice and partially met the three others,
3 agencies did not fully meet any practice. OMB’s requirement for agencies to complete an IT asset inventory by the  end of May 2016 greatly contributed to most of the agencies including  business systems and enterprise IT systems for all of their organizational  components and specifying key attributes for them. Those agencies that  did not fully address these practices provided various reasons for not  doing so. Not accounting for them may result in  missed opportunities to identify savings and efficiencies. It is also  inconsistent with OMB guidance for implementing FITARA  which requires  that CIOs have increased visibility into all IT resources. In addition, the lack of a comprehensive inventory presents a security  risk. Each of the six selected agencies relied on their investment management  processes and, in some cases, supplemental processes to rationalize  their applications to varying degrees. However, five of the six agencies  acknowledged that their processes did not always allow for collecting or  reviewing the information needed to effectively rationalize all their  applications. The sixth agency, NSF, stated its processes allow it to  effectively rationalize its applications, but we found supporting  documentation to be incomplete. Only one agency, NASA,  had plans to  address shortcomings. Conclusions

While it is encouraging that 13 of the 24 CFO Act agencies fully met at  least three of the four practices for establishing a complete software  application inventory, most could improve their software applications  inventories—albeit to varying degrees—by taking steps to fully meet the  practices we identified as being either partially met or not met. Recommendations for Executive Action

To improve federal agencies’ efforts to rationalize their portfolio of  applications, we are recommending that:  the heads of the Departments of Agriculture, Commerce, Education,  Energy, Health and Human Services, Housing and Urban  Development, the Interior, Labor, State, Transportation, the Treasury,  and Veterans Affairs; and heads of the Environmental Protection  Agency; National Aeronautics and Space Administration; National  Science Foundation; Nuclear Regulatory Commission; Office of  Personnel Management; Small Business Administration; Social  Security Administration; and U.S. Agency for International  Development direct their CIOs and other responsible officials to  improve their inventories by taking steps to fully address the practices  we identified as being partially met or not met; and  the Secretaries of Defense, Homeland Security, the Interior, and  Labor; and the Director of the National Science Foundation to direct  the CIOs and other responsible officials to modify existing investment  management processes to address applications more completely. Specifically,  the Secretary of Defense should direct the responsible official to  modify the department’s existing processes to collect and review  cost, technical, and business information for the enterprise and  business IT systems within the Enterprise Information  Environment Mission Area applications which are currently not  reviewed as part of the department’s process for business  systems;  the Secretary of Homeland Security should direct the  department’s CIO to identify one high-cost function it could collect  detailed cost, technical, and business information for and modify  existing processes to collect and review this information;  the Secretary of the Interior should direct the department’s CIO to   document and implement a plan for establishing policy that would   define a standard analytical technique for rationalizing the  investment portfolio;  the Secretary of Labor should direct the department’s CIO to  consider a segmented approach to further rationalize and identify  a function for which it would modify existing processes to collect  and review application-specific cost, technical, and business value  information; and  the Director of the National Science Foundation should direct the  CIO to consistently document evaluations for all applications and  report cost information for them in the roadmap or other  documentation. In written comments, the Department of Defense disagreed with both  of our recommendations to the department. Appendix I: Objectives, Scope, and Methodology

Our objectives were to determine (1) whether agencies have established  complete application inventories and (2) to what extent selected agencies  have developed and implemented processes for rationalizing their  portfolio of applications. For the first objective, we reviewed the 24 major agencies covered by the  Chief Financial Officers (CFO) Act of 1990. To be considered complete, we  determined an inventory should:  include business systems and enterprise IT systems, as defined by  OMB;  include these systems from all organizational components; specify basic attributes, namely, application name, description, owner,  and function supported; and be regularly updated with quality controls  in place to ensure the reliability  of the information collected. We selected the agencies based on three factors: whether they had an application rationalization process; in our initial  set of structured questions to agencies, we asked whether they had a  plan or process for rationalizing applications and selected those that  reported having one;  the size of the agency based on fiscal year 2015 IT spending; we  selected two large agencies (i.e., with spending equal to or greater  than $3 billion), two medium agencies (i.e., with spending between $1  billion and $3 billion), and two small agencies (i.e., with spending of  less than $1 billion) for a full range of IT spending; and  if they were known for effectively rationalizing their applications based  on OMB observations and our research on IT acquisition reform  recognizing agencies for their application rationalization efforts.
Why GAO Did This Study

The federal government is expected to spend more than $90 billion on IT in fiscal year 2017. This includes a variety of software applications supporting agencies' enterprise needs. Since 2013, OMB has advocated the use of application rationalization. This is a process by which an agency streamlines its portfolio of software applications with the goal of improving efficiency, reducing complexity and redundancy, and lowering the cost of ownership.
GAO's objectives were to determine (1) whether agencies have established complete application inventories and (2) to what extent selected agencies have developed and implemented processes for rationalizing their portfolio of applications. To do this, GAO assessed the inventories of the 24 CFO Act agencies against four key practices and selected six agencies—the Departments of Defense, Homeland Security, the Interior, Labor, and NASA and NSF—due to their IT spending, among other factors, to determine whether they had processes addressing applications.

What GAO Found

Most of the 24 Chief Financial Officers (CFO) Act of 1990 agencies in the review fully met at least three of the four practices GAO identified to determine if agencies had complete software application inventories. To be considered complete, an inventory should (1) include business and enterprise information technology (IT) systems as defined by the Office of Management and Budget (OMB); (2) include these systems from all organizational components; (3) specify application name, description, owner, and function supported; and (4) be regularly updated. Of the 24 agencies, 4 (the Departments of Defense, Homeland Security, and Justice, and the General Services Administration) fully met all four practices, 9 fully met three practices, 6 fully met two practices, 2 fully met one practice, and 3 did not fully meet any practice (see figure).
A January 2016 OMB requirement to complete an IT asset inventory by the end of May 2016 contributed to most of the agencies fully meeting the first three practices. Agencies that did not fully address these practices stated, among other things, their focus on major and high risk investments as a reason for not having complete inventories. However, not accounting for all applications may result in missed opportunities to identify savings and efficiencies. It is also inconsistent with OMB guidance regarding implementation of IT acquisition reform law, referred to as the Federal Information Technology Acquisition Reform Act, which requires that Chief Information Officers at covered agencies have increased visibility into all IT resources. Not accounting for all applications also presents a security risk since agencies can only secure assets if they are aware of them.
Each of the six selected agencies relied on their investment management processes and, in some cases, supplemental processes to rationalize their applications to varying degrees. However, five of the six agencies acknowledged that their processes did not always allow for collecting or reviewing the information needed to effectively rationalize all their applications. The sixth agency, the National Science Foundation (NSF), stated its processes allow it to effectively rationalize its applications, but agency documentation supporting this assertion was incomplete. Only one agency—the National Aeronautics and Space Administration (NASA)—had plans to address shortcomings. Taking action to address identified weaknesses with agencies' existing processes for rationalizing applications would assist with identifying additional opportunities to reduce duplication and achieve savings.

What GAO Recommends

GAO is recommending that 20 agencies improve their inventories and five of the selected agencies take actions to improve their processes to rationalize their applications more completely. The Department of Defense disagreed with both recommendations made to it. After reviewing additional evidence, GAO removed the recommendation associated with improving the inventory but maintained the other. The other agencies agreed to or had no comments on the draft report.