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February 2012

Application Portfolio Management: How Much Are Your Applications Really Costing You?

Many organizations spend a significant amount of time managing their product and project portfolios. After all, it's what drives innovation and strategic changes to the business. Usually 30 to 40 percent of the IT budget is dedicated to it. But how are we managing the remaining 60 percent? One area that is consuming a large portion of the IT budget is the applications that support the business. IT organizations should invest more of their time managing their application portfolios from a business value, technical value, and risk and cost perspective. Can you put a dollar figure on how much each of your applications cost each year? Do you know if you have multiple applications that provide the same functions and benefits to the organization but add significant IT infrastructure cost? What kind of Application Portfolio Management (APM) process do you have in place to ensure that figure is accurate?

Application Portfolio ManagementWe use hundreds of applications to run our businesses. When two businesses merge, you get even more, many of which are redundant. Applications also have a useful shelf life, as do the platforms they run on. Companies pour money into managing all of these applications when many could be consolidated, retired, or upgraded. It's a complicated process to manage, yet many still use manual spreadsheets to attempt to track it all. What you get are critical business decisions based on best guesses.

So how do you begin such a monumental task of determining the total cost of ownership of your applications? Gartner not only recommends an automated APM process, but a top-down analysis technique to triage subsets of the applications into one of four classifications: tolerate, invest, migrate or eliminate.¹ By using an automated tool that takes a large application portfolio and breaks it down into smaller departmental subsets, such as all of the applications in finance only, you can filter your applications and set parameters to measure value. Each quarter, you can tackle another subset, making the entire application review much simpler.

So what are the biggest benefits of APM? It improves the analyzing of application portfolios with the top-down approach, eliminates redundant applications and infrastructure that supports those apps, and reduces expenses by eliminating non-strategic apps. Simply put, you finally gain control.

Creating a process that helps you perform application analyses provides an accurate picture of your entire product, project, and resource, and application portfolios.

I'm excited about the enhancements in the latest software release of Planview Enterprise, we have enhanced the APM capabilities and reporting to help our customers achieve complete insight into their application portfolios.

I want to hear from you. What are your methods for analyzing applications? Share your experiences and best practices -- leave a comment below.

¹ Gartner, Inc. (Jim Duggan), "Application Portfolio Triage: TIME for APM," July 2010.

Facebook for the Enterprise -- Is Real Collaboration Finally Here?

In our personal lives (or at least for many of us) social networking has not only taken root, but has proliferated. Facebook is the de facto social outlet of choice. Recently I have become a big Spotify fan, and my wife is on Pinterest (I am not ready to add another quite yet). There is a reason we embrace these platforms. We are always looking to learn something new that may enrich our lives, and our friends are our best source of these nuggets. Yes, it takes "work" to be active in this social landscape, especially when you add LinkedIn and Twitter for business, but without question the benefits can be very compelling when the power of a social network kicks in.

As many of you are aware, this phenomenon is now charging into the enterprise -- Enterprise Social Networking. This is the next wave of collaboration within the walls -- physical and virtual -- of the organizations where we spend such a significant number of our waking hours. With the introduction of Planview Enterprise 10.4 we are introducing our first foray into this new domain via an integration and partnership with Yammer.

Is this the proverbial collaboration tool that we have been waiting for? The enterprise software space has made many stabs at the collaboration killer app -- email, content management, discussion groups, and SharePoint are all examples. Clearly SharePoint is everywhere, but do the use cases of all of these categories really equate to collaboration? I would venture to say no -- anything that feels like a "repository" does not equal collaboration in my opinion. Sure there is value to sharing stuff, but collaboration requires an interactive dialog, and that is the new ground that platforms like Yammer are bringing to life.Yammer

We have deployed Yammer internally at Planview and the notion of discovering nuggets within our company has already happened multiple times. As I said earlier, this nugget-effect is what makes the platform compelling and makes me come back. I routinely learn about new customers going live in record time, about successful sales calls (and some learning experiences), and gain real-time market intelligence from across the globe. I did not see all of this activity in real time before Yammer. At the same time, I can share my own feedback on calls with analysts, commentary on company news, and note industry events with the company in a low touch way that does not feel as invasive as the dreaded "company all" email.

This feels like real collaboration to me, and it is hard to imagine that it won't become more pervasive in the enterprise. Remember, most people under the age of 25 think that email is old school, and many have spent much more time in Facebook than email during the course of their lives. This reality is going to have a major impact on how this technology permeates the enterprise in the years to come. From our own experience it still has to mature from a company-wide, praise-based medium to one where teams collaborate on real work. The next phase is the discovery of nuggets at the everyday work level, and not just the corporate communications level. We think the integration between Yammer and Planview Enterprise has the potential to bring this maturity to life for our users.

Overall, I have no doubt that enterprise social networking will become a mainstream enterprise capability. There are too many people using these tools in their everyday life to not expect the cross over. Will Yammer, Chatter, and Jive end up owning these platforms, or will we all end up rewriting our apps with a social UX? It is still too early to tell. Either way, it feels like real collaboration is here and we are excited to take this first step with Yammer and Planview Enterprise 10.4.

I want to hear from you. What do you think about Enterprise Social Networking and what have you done within your organization to improve collaboration and communication among employees? Leave a comment below and share your experiences and insight.

SRP and PSA -- There IS a Difference -- Part 1

As a follow up to a recent Webcast I participated in titled, The Missing Perspective: A Resource View for Service Driven Organizations, I wanted to begin a dialog around the key take-a-ways addressed in the Webcast as it provides a new perspective and insight into who is using Services Resource Planning (SRP) and why. I have an interest and passion for this topic based on my experience and seeing our customer success. Presented in a three part blog series, I will cover the differences between SRP and Professional Services Automation (PSA), the pain service businesses are facing in today's global economic climate and finally the requirements, key drivers, and recommendations for optimizing your service driven business. To begin the conversation this post will address the differences between SRP versus PSA.

SRP versus PSA

Contrary to traditional thinking, SRP and PSA solutions serve different markets and bring contrasting functionality and value to the table. PSA provides a high level view of what needs to be done in the business and works for everyday mechanics but it lacks functional depth and visibility into critical areas like resource management, demand management, engagement management, utilization optimization, revenue forecasts, and project portfolio management. SRP provides both high-level and in-depth knowledge around these critical components so service-driven companies can seamlessly manage execution to delivery while maximizing margins.

Understanding the Bigger Picture

A service-driven business is intently focused on how to continuously improve their "Quote to Cash" process in their services business lifecycle. On the quote side, the CRM system is used to manage opportunity, sales forecasts, demand snapshots, etc. On the other end, there's the cash side with the ERP system effectively used for invoicing and processing financial reports. The gap that sits in the middle of the quote and cash bookends is often referred to as the "Planning and Execution Gap." Service-driven businesses are always trying to balance current projects and forecasts, and require in-depth resource management functionality that can handle global, complex enterprise requirements. While resource management remains a company's biggest pain point with project execution coming in a close second, companies are typically unaware that there is a solution available that provides this visibility and balance they are striving to achieve.

PSA solutions are wide but very narrow. For global service-driven enterprises, a PSA solution will not work because of its lack of depth in resources and project management. SRP fills the gap and provides organizations with visibility not found in PSA solutions and is the 'middleware' that addresses the complexity of how an organization delivers value, manages costs, directs critical resources, and generates profitability. From a strategic standpoint, companies can really look ahead to what their organizations need are based on demand. SRP is the market that will service these large enterprises concerned about the following:PSA vs. SRP

Key Drivers for SRP:

  • Resource Management
  • Demand Management
  • Engagement (project management)
  • Utilization Forecasts
  • Project portfolio management

Organizations that would benefit from an SRP solution are global with thousands of resources (human and non-human) that are project-driven with a need of greater visibility into revenue forecasting and margin analysis on their engagements.

If you are interested in watching the Webcast,
The Missing Perspective: A Resource View for Service Driven Organizations featuring from me and Margo Visitation, Vice President and Principal Analyst at Forrester Research, you can register and watch the on-demand recording any time.

I'd like to hear from you. Share your experiences and best practices related to managing the "Planning and Execution Gap" and post a comment below.

Top 5 Tips for Capturing the Voice of Your Customer

Product Development managers know how critical it is to develop products people want. How do you figure that out without simply guessing? How do you ensure your choice of which product or service to produce wasn't just your opinion? You need customer-driven data. Here are my Top 5 Tips on how to get it right:

1. Ideation

Never underestimate the power of the masses to give you the best ideas. By opening up the question to the world, or even just your customer base, you will be amazed at how many great ideas you can generate. You can simply ask your internal customers, like sales and support, or find key constituents who are passionate about the topic. The key is to choose an audience, maybe 10-15 customers, that is varied enough to capture the true market yet narrow enough as not to overwhelm. At Planview, we use the Agile process that enables our target audience to participate throughout the entire lifecycle and see progress every two weeks. The product (or service, project, etc.) can be refined with each iteration, giving us flexibility with inevitable changes.

Refinement. Once you have the ideas, you need a mechanism to narrow down the choices. We incent our target audience to vote on them. Again, the Agile process enables our audience to remain involved in the process beyond ideation. Because we are using the same audience from the ideation phase, we can ensure we are capturing the voice of the market, not just the voices of our executives.Product Development and Your Customer's Voice

2. Alignment

Now that you have a list of plausible ideas, you need a mechanism to align them with your strategy. With clear strategic goals and set criteria, you can score the ideas based on key metrics, such as revenue, market share, new markets, etc. You must decide what's important and then measure the ideas to find the absolute best ones for your company. Make the criteria visible to the company so everyone can understand how each idea was scored.

3. Capacity

With your best ideas in hand, it's time to estimate your capacity to develop them. "What if" scenarios allow you to imagine specific situations and how they would affect resources, revenue, time lines, and other criteria. With this data, you can make sound decisions to prioritize ideas based on real information. Many companies still do this process manually in spreadsheets, adding tab after tab with capacity and financials. But if something changes, which it always does, it's ridiculously time-consuming to make those changes to static spreadsheets -- even with pivot tables. An automated process saves countless hours of time and risks for errors.

4. Measurement

After you develop and release the product (or service), you need to measure the results. What was the actual versus estimated revenue? How long did the project take? What did it cost to get it on the market? Actuals help you improve the next planning cycle. Comparing actual results is much easier and accurate when it is done with a product development tool rather than spreadsheets and manual reports.

5. Repeat

Although your process should remain constant, your plan will constantly change because there are so many dynamic factors in play. The ability to see where you started and track your progress throughout the product development cycle enables you to make adjustments towards best practices.

Creating a process for capturing the voice of the customer is essential to developing the products people want. In fact, we followed this process for our latest software release and incorporated 320 customer-driven enhancements.

I want to hear from you. What are your methods for capturing the voice of your customers? Share your experiences and best practices -- leave a comment below.

Planning Millions of Dollars of Capital Investments using a Spreadsheet, Is it Sustainable?

Written by Maureen Carlson, Partner at Appleseed Partners

Maureen Carlson

Is it sustainable (or dare I say smart) to be planning millions of dollars of capital investments using spreadsheets and manual processes? According to a new study of 125 financial executives responsible for capital planning, the answer is no. In fact, 49% of respondents said their top pain point associated with capital planning is the manual process of using spreadsheets along with its complexity. Nearly half stated their top risks include the inability to track affordability and ROI and maximize opportunities, resources, and budgets. I think about those numbers and it strikes me as unsustainable to continue the status quo.

In the next couple of blog posts, I will drill down on what we discovered in the study and why several related phenomenon should be of concern for those involved in capital investment planning. To begin the conversation this post will address a significant finding that today's companies are in a near constant state of planning.

A Constant State of Planning

We all know masters of spreadsheets; people who are able to perform complex functions with macros that make it a very powerful tool.

Full disclosure: I love spreadsheets and even my kids know that a quick analysis on a spreadsheet will help them bargain with me. However, let us dig a little deeper into why our favorite tool may no longer be sustainable to meet the challenges and requirements of capital financial planning in today's business world.

One of the objectives of the study was to determine how rapid business change affects financial planning and we found that the frequency of capital planning is changing a great deal.

In the past, most companies were in a rhythm of annual capital planning with minor adjustments on a quarterly basis. Today, companies are in a near constant state of planning due to economic pressures and rapid change. As indicated in the chart below, 25% of respondents are in an ongoing state of planning and 51% are engaged in it on a quarterly basis. Even those companies that still had traditional annual budget cycles were more apt to revise their plans more frequently.How often does your organization conduct capital planning?

We originally suspected the findings would indicate planning is an ongoing process but we were surprised to see the just how much the planning process has shifted. Consequently, companies need to develop the discipline of portfolio management on an ongoing basis. This starts with planners having access to data at the ready. In this dynamic environment, companies need to minimize time spent collecting and preparing data and more time analyzing on demand metrics and information. The critical questions become, "How much time is spent collecting data in spreadsheets?", "How much time is it taking finance resources?" and "How efficient is it?"

From all indications in the study, this access to on-demand, accurate data is limited and the ability to what if scenarios and modeling is not available to planners. The top pain point being the manual nature of planning and its complexity is especially acute in this environment. It links directly with the top risks of not being able to measure investments and concern that the right investments are taking place from the start.

The bottom line is this; companies that are in a constant state of planning need better information technology tools to manage their capital planning process.

We still have a lot of interesting information to cover from this research. Next time we will hear from Madison Laird and get his thoughts and insight about 'Level of Structure' in capital planning its impact, and more.

Do you want to read the full report? Get The State of Capital Planning and discover ways to improve your capital planning process.

The Missing Portfolio

Over the past few months, I have written several posts regarding the changing landscape of portfolio management and Gartner's recent PPM Market Universe. As you may recall, part of this research includes a new Magic Quadrant for Integrated IT Portfolio Management Applications. This Magic Quadrant expands the IT portfolio and formally includes projects, applications, services, and enterprise architecture -- I contend there is one missing portfolio not listed -- the product portfolio.

Over the past few years product portfolio management has matured as a discipline. This maturation has predominantly happened within the context of classic product companies -- companies that design and build "real" products like discrete manufacturers consumer packaged goods (CPG), medical equipment, and many others. Because of this discipline, product portfolio management has been tied to the product lifecycle management (PLM) world as a software category. This has brought great value to these product companies, and more are adopting portfolio management every day. My point is to the IT community -- an opportunity is being missed.

Practitioners of IT portfolio management have aspired for years to achieve ideal "alignment with the business" as an output of the portfolio management process. Projects, applications, and services can be aligned to the strategic objectives of the enterprise as a way to ensure IT spending is best used. This is fine, but people who know me know that "alignment" is not one of my favorite words. Being aligned is an inherently reactive, passive state -- reactivity and passivity are classic traits business people use to complain about IT organizations. Alignment has value for sure, but how can IT organizations get to the next level with their portfolios?

I contend the product portfolio may be part of the answer. The largest IT organizations typically exist in industries such as financial services, health care, and insurance. Aren't these "services" companies? They don't design products, so how could the product portfolio be applicable? Hold on one minute. Talk with the businesspeople in these industries, and they will quickly tell you about the plethora of loan products, credit card products, fixed income products, and more that they market and sell. Sounds like a hidden product portfolio.

What if IT organizations understood how every aspect of their investments connected directly to the products that drove the revenue of the firm? That would go beyond passive alignment and put IT spend right in the business. We have seen leading IT organizations think this way, but they are still the minority.

Consider product portfolio management as a tool in your IT portfolio management approach. It has the potential to bring an important new dimension to understanding your IT spend. Let us know your thoughts about this subject. Is product portfolio is the missing portfolio?