Application Portfolio Management (APM) is about maximizing the value of the applications running your business. The goal is to achieve beneficial changes that improve the balance of value to supported cost and risk.
Without an APM practice, the unmanaged portfolio of applications grow stale. This may be in the form of higher operating costs to “keep the lights on” for the application, weak service level and support, or obsolete technology – to name a few. The key here then is to methodically and pragmatically assess all or a subset of the applications top-down in the business in order to devise strategies and define projects and request funds.
We begin the process by assessing key factors of each application in order to categorize each application. Ideally the scope is the entire application inventory but it may be segmented based on current strategic business initiatives with a process, risk, cost, or value perspective. There are various methods to categorize the applications. A popular format is based on the 2X2, 4 quadrant matrix. An example is the “TIME” (Tolerate, Invest, Migrate, Eliminate) method as defined by Gartner.
T – Tolerate applications that provide good enough business value but may have an old architecture or not be well integrated. Without APM, this is probably the largest category.
I – Invest in strategic or newer applications in order to increase value and use.
M – Migrate technologies that have high business value but have issues the with people, data, or technologies that support it. The technology may be unsupported or people may be on the verge of retiring with a declining pool of replacement skills.
E – Eliminate applications that no longer provide sufficient business value.
Once each application has been categorized then define a strategy and high level set of actions, and create a business case and project charter. Also, add these newly defined strategies to the overall future-state enterprise architecture plans and roadmaps.
Over time, the application portfolio balance should shift to a greater percentage of “invest” applications with a lower percentage of tolerate and eliminate applications. This will result in a greater proportion of IT spending to business value and growth based projects – and that’s the goal.