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Application Portfolio Management

Application Portfolio Management: Aligning Applications Portfolios with Business Needs and Strategy

In previous blogs, APM: How Much Are Your Applications Really Costing You? and APM: Why Organizations Don't Understand the TCO of Their Applications, I focused on how organizations can start to determine the technical and business value of their application portfolios. In this post, I would like to focus on how well the application portfolio aligns with the business needs and strategies of the organization.

Aligning Applications Portfolios with Business Needs and StrategyApplication governance processes used to establish and actualize the application strategy must collect fact base data from stakeholders to analyze the current state and use it to maintain, prioritize, and classify applications based on business needs. One way to ensure that the application portfolio is meeting the business needs of the organization is to have frequent communication with the business customers of the application (Swanton, 2012). The needs of the business customer are constantly changing and if they are using applications within the portfolio, the application manager needs to understand those changing needs or requirements. One idea is to survey the application business users twice a year. The survey could include the following questions:

  • Are you having any technical issues with application X? How does the application X make you and the organization more productive?
  • Has your organization changed their business strategy and business processes in the last six months? Is the organization’s business strategy documented? Does application X still align with that strategy and business process?
  • Of all the applications you use in a day, week, month, how important is application X in getting your work accomplished. Would you prioritize application X enhancements ahead of other application enhancements? Why?
  • Do you use two or more applications to perform the same function? If you do, are you migrating off the old application to the new application or are there truly two or more applications that do the same thing?

Effective communication with your business customer is one important aspect of application governance. Answers to these questions and understanding the health and fitness of all the applications within the portfolio, helps the application manager prioritize all the work (projects to enhance the applications) that is connected to the application portfolio. In addition, reducing duplicate legacy applications should allow costs to be reduced or allow organizations to invest in future innovation projects. Finally, the business leaders, customers, and users should be equal partners in this analysis and the communication from IT should be frequent and responsive.

In my next blog, I'd like to discuss the concept of Pace-Layered Application Strategy and ways to continuously update your application strategy as well as how understanding the future application requirements helps the application manager determine future resource skill requirements.

I'd like to hear from you. How are you currently aligning business needs and application strategy? What is your approach to understanding the health of your organization application portfolios? Share your experiences by leaving a comment below.

Swanton, B. (2012). 2012 strategic road map for application strategy. Gartner, doi: G00234745

Related posts: APM: How Much Are Your Applications Really Costing You? and APM: Why Organizations Don't Understand the TCO of Their Applications

Application Portfolio Management: Why Organizations Don't Understand the TCO of Their Applications

Application Portfolio Management (APM) is a process used to attempt to capture application performance and spending over time. Recently, Gartner published a report stating that "Fewer than 10% of Global 2000 organizations understand the full costs of their applications." ¹ Why are so many organizations failing to do this right? I believe these organizations are using a "bottom-up approach" instead of the "top down approach" as mentioned in my previous blog titled, Application Portfolio Management: How Much Are Your Applications Really Costing You?

What's the difference?

Top to Bottom ApproachThe commonly used bottoms-up approach starts with trying to understand and integrate with the asset relationship data in the configuration management database (CMDB). It also requires the gathering of asset data attributes from an asset management system and the creation of financials to track the assets that relate to the applications. Then, any projects that relate to those assets or applications are verified. What's wrong with this approach? It is extremely time consuming to implement. The data may not be accurate in these systems, which then starts an initiative to clean up the data. The goal becomes complete transparency and precision of all assets and applications, as well as building out the service catalog rather than application portfolio management.

My previous blog briefly discussed using an automated, top-down analysis technique that breaks down large application portfolios into smaller departmental subsets that are easier to manage. To be more specific, this top-down approach begins with simply listing all of the applications that IT manages. This can be accomplished by asking each business unit what applications they use most and what drives the most value in the organization. Once the list is created, identify the attributes that should be tracked for each application, such as number of users, business and technical value scores, and the technology platforms the application runs on.

Next, determine costs by:

  1. Talking with Finance to determine the current process for tracking application costs. If it's not tracked at the application level, work with Finance to establish better application cost and forecast tracking methods moving forward. It's okay to start with estimating the cost allocation percentage per application and refining over time.
  2. Looking at the project portfolio already implemented. Many projects are tied to application releases or implementing new applications. The labor and other costs related to those applications can be rolled into an application portfolio management software solution.

You now have the beginnings of an application TCO and portfolio that enables you to make decisions to eliminate redundant applications or de-scope planned projects tied to non-strategic applications. This will lower your "run-the-business" costs and expenses while fostering a better relationship with the CFO and your business sponsors.

I want to hear from you. What are your strategies for understanding the TCO of applications? Share your experiences and best practices -- leave a comment below.

¹ Gartner, Inc. (Darryl Carlton), "APM Has a Critical Role to Play in Developing Your Application Strategy" March 15 2012.

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

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.