What is Application Portfolio Management (APM)?

Application Portfolio Management (APM) is an approach for managing enterprise IT software applications and software-based services. APM provides stakeholders with an inventory of the company’s software applications as well as the metrics to illustrate the utility associated with each application. Essentially, it lets management measure the financial benefits of an application in comparison to the cost of its maintenance and operations.

This endeavour is indeed very relevant, especially when you consider that organizations spend two-thirds of their IT budgets on ongoing operations and maintenance. Corporate mergers and acquisitions and failed attempts to adopt a new tool are but a few reasons why an enterprise might be supporting (and, therefore, paying for) multiple applications that perform the same, or a very similar function. This ultimately translates into an increased operating cost, due to keeping and periodically upgrading them separately, but also an unnecessarily high level of complexity.

As a result, APM is concerned with the transparency of the application inventory and resource consumption. Effective APM enables organizations to:

find and cut applications overlap either partially or wholly with another application
objectively measure an application’s status taking into consideration its stability, quality and maintainability
objectively measure the business value and impact of an application
facilitate the best assignment of resources

APM helps you understand and optimise your application portfolio, align the needs of business and IT, assess the reliability of applications within an environment and make better financial and strategic decisions; all of which combine to greatly reduce your costs and make your organisation more successful.

What is the goal of APM? How is APM measured?

APM practitioners’ main goal is to keep a lean, productive applications inventory. The way they achieve this is by implementing a reiterative process of establishing, monitoring and reporting on a set of key metrics to illustrate the business benefits of each application. Here are some of the most widely employed metrics for APM:

Return on Investment
Total Cost of Ownership
Business Value of IT
Usage
Age of Applications
Technology Mix

These metrics can be aimed at understanding the value of different aspects of a company, depending on what stakeholders are interested in, i.e., technology, business strategy etc. iServer enables APM professionals to inventory and manage their application and technology portfolios in a single central location, capturing relevant information such as costs, lifecycle dates, ownership and health assessments. The inventory allows users to show the business benefits of each application and therefore inform the decision-making process in order to steer the company onto the path of best value. This reduces costs and improves the value the organization derives from its application portfolio.

How is APM different from IT Portfolio Management or Strategic Portfolio Management (SPM)?

Application portfolio management is a subdomain of IT portfolio management, and it concerns itself with the management of an enterprise’s software applications and software-based services.

Strategic Portfolio Management is another subdomain of IT portfolio management. SPM groups project capabilities into packages that can scale as your business needs change. It considers the capabilities and functionalities needed for business and IT planning alignment, IT investment planning and management, IT portfolio optimization, strategy execution, and cost and risk management.