Application portfolio management (APM) helps organizations to inventory applications and assess their technical and business value so that organizations can determine which ones to keep, modernize or eliminate. It is a proven methodology used by IT departments to successfully reorganize their IT systems.
Over the last few decades, many IT departments have witnessed an increasing number of applications. In most cases, this increase has been due to past mergers & acquisitions, globalization, or simply due to organic growth.
Thus, IT departments are facing an increasing complexity as well as multiple redundancies. They lack visibility into their applications, and the integration of new resources into their legacy systems can be very challenging.
Application Portfolio Management helps companies perform an application inventory under multiple perspectives such as lifecycle, costs, deployments, or the business capabilities they support. IT portfolio managers can also link applications to technologies and business capabilities so that they can understand the impact of an IT asset on the business and start performing what-if analysis to rationalize applications.
To speed up the application inventory, it can be crowdsourced to application owners that will update information about their own applications. Overall, this inventory will provide greater visibility and a better knowledge of the IT systems, enabling IT leaders to easily embrace new business projects.
Application portfolio management tools include many dashboards to understand the state of the portfolio. Dashboards on application lifecycles are one example providing information about when applications will be retired or replaced by another version. Other dashboards such as data flows between applications, give some clarity into the possibility of removing an application exchanging data with other ones. But the strength of an application portfolio management practice really resides on the business perspective. IT leaders have a clear understanding of how applications support business capabilities, and therefore they know which applications are critical to the business. Application Portfolio Management tools also include questionnaires that enable business users to provide their views on the applications they use.
Not only these dashboards highlight potential inconsistencies, but also they help better plan the IT transformation. Using these dashboards, IT managers can rationalize applications, reduce IT costs and increase IT flexibility because they have a better understanding of the business value of their applications.
IT departments often manage a very large number of software technology components that potentially represent a threat to organizations. By limiting the variety of technology products in use, IT departments can realize important economy of scale, but also dev teams are better trained to use these technologies.
To determine technology obsolescence, Application Portfolio Management tools can be connected to external libraries that contain information about lifecycles including end-of-life dates. Based on this information, dashboards are available that show how applications are affected by technologies’ end of life.
Once this assessment is complete, technology portfolio managers can decide whether technologies comply or not with the company’s standards.
By defining technology standards, technology portfolio managers help companies reduce the number of technologies – and their costs, while ensuring projects don’t use rogue technologies.
If application portfolio management solutions help provide the whole picture of IT systems, they also help IT managers to plan the transformation of their IT systems.
Based on application lifecycles and cost assumptions, IT managers are literally able to simulate future IT projects and analyze the outcome of their assumptions. To do so, they create a mix of initiatives based on different assumptions, such as extending or phasing out an application, and compile these initiatives into different scenarios. Then, they can see the impact on their IT systems and compare the different scenarios.
By planning and executing the IT transformation, IT departments can allocate more resources to new business initiatives and focus on innovation.
If an organization decides to outsource one part of its IT, it needs to make a detailed inventory of its assets and potentially eliminate irrelevant applications. Therefore, an assessment is required before deciding which applications to keep or outsource.
Streamline IT audit or IT certification is another benefit. External consulting companies or governmental organizations might indeed recommend or require that companies properly monitor their IT assets. Here, an application portfolio management practice will help organizations better support the IT roadmap, or reduce capital allocation to cover IT risk, as another example.