Make smarter decisions with application portfolio management
As software plays an increasingly critical role in the business performance of corporations, IT faces considerable pressure to support new business initiatives while cutting costs. Over the last 30 years, billions of dollars have been invested in software applications, but typically, these investments are poorly leveraged. Too often, a complex and poorly understood application portfolio consumes a large percentage of IT funds, leaving corporate business and IT leaders challenged to find the funds needed for business innovation.
The compelling case for application portfolio management
As companies struggle to fund new applications to support the competitive business needs, CIOs and other technology leaders are beginning to view IT budgets from a larger perspective. We frequently see three cascading problems related to IT budgets in mature companies:
It appears that our industry has gotten the 80/20 rule wrong. Over the last decade, IBM has observed many large and medium-sized companies that have invested in transparent and objective project portfolio management processes that typically provide good governance over the 20-30 percent of IT funds spent on new projects. Few companies, however, have a similar governance process for the money spent on basic operational and maintenance expenses. This is where application portfolio management can make a difference.
Application portfolio management (APM) is the practice of continuously assessing the applications that run your business in terms of their business value, enhancement potential, cost, and risk. APM enables teams to make decisions about what actions to take with each of the portfolio elements. It provides a transparent and objective process for managing investments in existing applications and can help teams make better and faster decisions by using info
In most organizations, information about the application inventory, the associated technology, financial performance, business value, technical debt, and service quality is distributed across discrete and isolated organizations, a myriad of spreadsheets and systems, or in people’s heads. This prevents meaningful comparison and analysis of this information to enable timely decision-making.
When companies begin an APM initiative, they produce an application inventory that contains the information and analytics that they will need to determine which applications can be discontinued or which enterprise modernization approach will be the most favorable for an application. APM feeds the project management process with project proposals for taking action to address the cost of management and maintenance. Actions can range from discontinuing or modernizing applications to replacing them with packaged applications.
Application portfolio management use scenarios
Let’s look at some typical scenarios in which application portfolio management can be adopted, including what drives companies to adopt them, the benefits derived, and the typical payback time.
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About the author
Per Kroll is Chief Solution Architect and Program Director for Portfolio Strategy and Management. As such, he is driving solution architecture for portfolio strategy and management, including application portfolio management, demand management, and delivery management. He is also development manager for IBM Rational software for process, enterprise architecture, and next-generation analytics. Per has written more than 30 articles, and he is the author of two books that sold more than 30,000 copies and were translated into six languages. He also co-authored The Rational Unified Process Made Easy – A Practitioner’s Guide with Philippe Kruchten and Agility and Discipline Made Easy – Practices from OpenUP and RUPwith Bruce MacIsaac. Per is a frequent speaker at conferences and a member of the IBM Academy of Technology.