In one of my earlier posts I talked about the 70/30 ratio and how IT leaders want to free up the 70% of vital IT budget which is currently being spent on maintenance of applications and infrastructure so that it can be used on innovation. In order to enable that I proposed three phases that the organization must go through: assess, modernize and manage. In this post I will zoom in on the assess component and talk about one of the key enablers of this phase — Application Portfolio Management (APM).
Application Portfolio Management can mean many things to many people. To some people APM represents a project management approach – i.e. how do I effectively manage the projects or initiatives which are focused on delivering and/or changing my applications? Others may take a financial spin to this, looking at APM as a way to leverage financial management techniques to justify and measure the efficiency and value that each application provides to the organization in terms of cost and risk. Other disciplines may look at APM as a way to assess the complexity of the applications from a code or integration perspective. The bottom line is that APM can be all these things, and actually it is most effective when parts or all of these components are used and assessed in conjunction with one another.
I don’t normally blog about products (even though I work for HP). However, earlier this week HP made an interesting announcement– launching a combination of products and services in the Application Portfolio Management space. The reason I liked the announcement is because it highlighted/reinforced a few things we have been discussing here:
- 1. Many organizations today feel like they are bloated in terms of the number and type of applications they currently have to support.
- 2. If organizations don’t have a clear strategy around APM and the right tools to execute this strategy their ability to respond to change will be significantly reduced.
- 3. Rationalization of the application portfolio is key to agility and the secret to freeing up the current investment in maintenance (70/30 split). This may mean a renewed focus on retiring “unused” applications to free up valuable and costly infrastructure.
- 4. In order to make decisions about which applications are business critical we need tools and best practices to help guide us in our decisions so that we are not making “decisions in the dark.” Some of my colleagues within HP suggest using frameworks like APQC and the newly launched HP APM Tool because it has many decision making criteria included.
- 5. Decisions on which applications to keep should not be one-dimensional and should involve a variety of criteria such as business criticality (is this part of the core value delivery chain), functional complexity of the application (is this based on legacy code/infrastructure), risk of not supporting the application and but, certainly not last, financial cost of the application’s maintenance. (There are many more but I did not want to list them all here).
However, one thing that really came across to me from speaking to businesses who have successfully implemented an Application Portfolio Management approach is the importance of two simple but crucial items:
- 1. The value of automation as a key enabler of APM – from collecting the right data from within the application to making the business decisions, to the communication of decisions back to the business.
- 2. The importance of making APM a continual process – APM implemented as a one-off event will only bring so much value to the organization and will likely mean that they will get to a stage of “portfolio bloat” again in the next 3-5 years. Instead if APM is a continual process you can start to make progress towards making your organization lean and start leveraging the assets you own in an effective and cost effective manner.
It would be great to hear from the forum members on this topic, do you agree that automation and a continual approach to APM are success factors of an organizations application transformation?