Organ-W-11/CC-W3

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Chapter 17

APM is the ongoing management process of categorization, assessment, and rationalization of the IT application portfolio.

APM allows organizations to identify which applications to maintain, invest in, replace, or retire (i.e., avoid maintaining applications quagmire).

Built-over-time application systems that support the key operations of the organization.

They are often obsolete and unsupported by any vendor; host to countless “workarounds”; remain poorly undocumented; are often duplicated.

More than 80% of IT spending is used in these applications.

Line-of-business managers are reluctant to change these applications to avoid the agony of change.

They restrict the enterprise vision of IT.

This perspective evaluates the existing applications (i.e., the applications portfolio) against a set of potential applications that can be used across business units (i.e., the project portfolio).

Investment Portfolio Management Application Portfolio Management

Professional management but the client owns the

portfolio

Professional management but the business owns the

portfolio.

Personal financial portfolio balanced across

investments in: equities, fixed income, cash.

Application portfolio balanced across investments in:

new applications, currency (maintenance,

enhancements, upgrades), retiring/decommissioning.

Client directs investment where needed (e.g., 50%

equities, 40% fixed, 10% cash).

Business directs investments where needed (e.g.,

40% new applications, 30% currency, 30%

decommissioning).

Client provides direction on diversity across

investments (e.g., investment in one fund would

exclude/augment investment in other funds).

Business provides direction on diversity of investment

(e.g., investment in one business capability might

exclude/augment investment in another).

Client receives quarterly updates on its portfolio

health and an annual report.

Business receives quarterly updates on application

portfolio health and an annual report.

New investments are evaluated on their impact on

the overall portfolio as well as on their own merits.

New applications are evaluated on their impact on

the overall portfolio as well as on their own merits.

2-30

Application portfolio – identifying the value of existing applications against corporate profitability, stability, usability, and technical obsolescence.

Project portfolio – identifying the value of future spending on applications, attempting to balance IT cost-reduction efforts and investments to develop new IT capabilities.

Visibility into where money is being spent, which provides the baseline to measure value creation.

Prioritization of applications across multiple dimensions – value to the business, urgency, and financial return.

A mechanism to ensure that applications map directly to business objectives.

To deliver value with APM, three interrelated capabilities are needed:

Capability 1: Strategy and governance.

Capability 2: Inventory management.

Capability 3: Reporting and rationalization.

“If strategy is the destination, then governance is the map”

Application portfolio governance answers this:

What decisions need to be made?

Who should make these decisions?

How are these decisions made?

Positioning APM within an enterprise IT governance framework

Common barriers during initial phases of APM:

Lack of accountability in the governance process (i.e., what governance practices should be applied). Application assessments are not taken seriously. Business managers lack awareness and accountability.

Identification of applications to be included in the portfolio to be managed (e.g., limiting the portfolio to business-critical applications).

The inventory is determined by the strategy and governance outlined in capability #1.

The identification can start by gathering the following information about applications:

General application information (i.e., functionality).

Application categorization (e.g., business capability provided, life cycle status)

Technical condition (e.g., development language, operating system, architecture).

Business value (e.g., business criticality, user base, effectiveness).

Support cost (i.e., maintenance and upgrades).

A set of standard parameter-driven reports should complement the application inventory.

Reports help to monitor the status of all existing applications so that management can ascertain the health of the portfolio applications.

Reports should compare applications on the basis of business value, technical condition, and cost.

The reports should provide information to meet the needs of various stakeholders.

IT organization

• Mapping and assessing business functionality against applications

Risk, audit, and security teams

• Assessing regulatory compliance and risk management

Business teams

• Assessing the costs and business value of the applications used

Balance demand and supply – regulate enhancements and releases for APM reporting.

Look for quick wins – identify immediate and visible wins that impact the bottom line.

Capture data at key life stages – capture data in the approval, testing, production, modification and retirement of applications.

Tie APM to TCO initiatives together.

The information captured by the APM initiative should support the total cost of ownership (TCO).

Provide an application “end-state” view.

Current and future information about applications are key for business planning.

Communicate APM benefits.

Communicating the goal of the APM initiative, the results, and the next stages are essential for the effectiveness of the APM.

APM promises significant benefits to adopting organizations.

The benefits require the development of three mutually reinforcing capabilities: ü Development of a strategy but reinforced with

governance procedures.

ü Creation of an application inventory.

ü Reporting capability built to align the application portfolio with the strategy.