By: Chuck Keffer and Jes McPhee
APM (application portfolio management) identifies which applications an organization needs, which it doesn’t, and helps the organization plan for the safe removal of the redundant applications. It also helps organizations manage the costs of the remaining portfolio through hardware refreshes, license renegotiation, moves to new platforms or to the cloud, and outsourcing. Done consistently, it assures the application portfolio continues to provide the proper functionality as technology and business needs change.
When many companies first think of APM, they think of dramatic short-term cost reductions. This
is good and proper, and a well-executed APM program will deliver these results. A best-in-class APM initiative, however, reflects an enterprise context that provides much more value over time.
This enterprise context includes an understanding of the dynamic relationships among the application portfolio and five other enterprise portfolios: Business goals and strategies, the business architecture (including people, processes, capabilities, and organizations), investments, information and the underlying information technology infrastructure.
This broader enterprise portfolio management (EPM) context ensures better decision making in a number of ways. Only by understanding, for example, which geographies the business is expanding in (from the goals and strategies portfolio) can managers know which applications they will need today and in the future. Only with an understanding, for another example, of the investment portfolio can business managers know which applications are already on track for modernization and thus avoid wasted repeated effort.
The key to implementing APM in this necessary broader EPM context is to focus the data gathering around the needs of the business. Rather than wasting time and effort gathering every last bit of information or data to the last degree of detail, successful organizations focus on the specific information they need to meet their most critical challenges. Implementing APM with the broader EPM perspective is the only way to make the best-informed APM decisions, and to deliver incremental value from APM while paving the way for the longer-term benefits of EPM.
The initial driver for many APM efforts is reducing costs by eliminating those applications that are not delivering value, are especially costly to maintain, involve a high degree of risk or perform the same function as other applications. The more significant and long-term benefit of APM is refining the application portfolio on an ongoing basis to reduce risk, increase agility to meet changing business needs, and spend less on maintaining daily operations and more on ”transformational business” initiatives.
At Troux we have found that the organizations who achieve this “best in class” APM are those that recognize that it is lifestyle change, not a one-time “crash diet,” and that APM is part of a broader EPM program taking into account all six enterprise portfolios. While APM requires an up-front investment of time and effort, when executed correctly with an understanding of the full enterprise portfolio, it delivers long-term benefits not only through lower costs, but increased business effectiveness and reduced risk.