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.

Application Management and Architecture: Opportunities for Cost Reduction and Business Alignment

IT Portolio Management May 19, 2023

This eBook explores governance models for your Application Portfolio, including critical support functions such as vendor management and contract management.

We have all seen Application environments where the number of seats / licenses being charged by vendors does not reflect the number of actual users. You also may have been overwhelmed by the number of CRM systems, Document Management systems, ERP, collaboration tools or data sources that need to be consolidated and optimized. Maybe your Application environment has hundreds of interfaces that are moving data all over your environment, but restricts your ability to be agile and responsive to market change. Or perhaps you’re in a situation where extensive scoping effort is required for a project, and adds significant costs and effort to identify and untangle the spaghetti.

These issues are a significant drag on your agility and ability to respond to a changing customer profile and market opportunities. CIOs and technology teams do not need to look much further than their existing IT function to see if Applications are being actively managed, owned and governed across the Portfolio, or if Projects and business units make all the calls on what Applications are introduced into the environment.

Most companies have a significant embedded cost of past business decisions and poor Application Governance, and are endeavouring to turn back 20-30 years of complexity. CIO’s are endeavouring to balance the need to fix the old and leap frog to the new digital world in their Application Portfolio planning and business stakeholders ask “Why has this been allowed to happen?”

In this eBook, Andrew Swindell describes why and how the Application Portfolio Management function is a critical lever for CIO’s to reduce your IT costs and improve alignment with your key business stakeholders. He outlines the key elements of Application Portfolio Management and explore approaches that highlight how creating some discipline in your Application Portfolio will reduce costs and gain the support of your business stakeholders.

 

What is APM used for? 

The details of your application portfolio might be scattered throughout your organisation. A central repository to collate this information is an important first step, but it doesn’t address the needs of all stakeholders.

The CIO can’t make informed decisions, the business analyst cannot see how IT supports the business, the architect struggles to reduce complexity, and users can’t access the information they need.

The business analyst needs to ensure that business and IT are aligned.

Unfortunately, the IT portfolio may not support the business strategy of your organisation well.

With no way to measure how well each application meets the business needs, how can the business analyst bring these into alignment?

 

What are typical APM use cases? 

Cloud Migrations: Understanding your full catalog of applications is a prerequisite to moving to the cloud. APM supports end-to-end visibility into what apps teams are using, becomes more important as IT groups manage a mixed portfolio of on-premise and cloud applications.

M&A: APM is useful for companies considering an acquisition or merger.

Cost optimization:

Reducing IT complexity:

Prioritizing IT initiatives: APM prioritizes projects and their associated applications according to business value, capabilities and available resources.

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What are the Benefits of APM?

APM how do you cut costs without cutting business? How can you invest more in innovation, development and growth? It is an unfortunate fact that almost all large organisations have many software applications, some of which may no longer be in use, some of which may duplicate each other’s functions. Forrester estimates that around 60% of IT spending in the average department goes to maintaining existing applications. APM attempts to address this situation, by creating a catalogue of all the applications in an organisation, and rating each one for technical fit, support for the business, cost, number of users and other factors.

  • Centralize your IT portfolio within a single repository
  • Increase the visibility of your portfolio by publishing online
  • Make informed investment and rationalization decisions
  • Eliminate needless redundancy and duplication of function
  • Greatly reduce your operating costs
  • Reduce compliance risk

 

 

What are the Challenges of APM? Why does APM fail?

 

  • Lack of product ownership and executive support
  • Gap between business / IT goals
  • Organizational immaturity

 

 

What tools does iServer365 offer for APM?

iServer365 offers several solutions packs extends the capabilities of the iServer architecture repository, providing all stakeholders with an insight into the application portfolio.

  • Application Portfolio Core
  • Application Rationalization
  • Application Roadmap

iServer365’s range of out of the box dashboards includes Application Scoring, Total Cost of Ownership, Operational Improvement, and Strategic Improvement. These web-based dashboards enable users to drill down into each application for more detailed information. The platform enables detailed reporting on both the application and technology portfolios. The application portfolio view shows a comprehensive list of all applications in the portfolio including total cost of each application, lifecycle status and complexity which is counted by the number of relationships the application has to other applications. In the technology portfolio, there are several views that can be generated including general view, details view, lifecycle view, and cost view. iServer365’s APM business view shows the number of applications supporting business processes and functions and the costs associated with each application.

Our Services team offers an APM Accelerator package. The APM Accelerator is a package containing all the tools needed to successfully set up an application portfolio management practice. Instead of wasting time and resources starting an APM function from scratch, you can opt to receive iServer365 preconfigured to it. The accelerator includes a method for APM, useful templates, together with tools that let you to start application consolidation and IT-business alignment immediately.

 

 

How do you get started with APM?

 

The first step is to collate and organise application information within a central architecture repository. Identify the owners and users of the application. Identify the lifecycle of the application and its business value, costs, and how it is serving the business

iServer365 then analyses the raw data and uses it to present each stakeholder with the views they need - such as cost or business and technical fit - through a series of user-friendly reports and dashboards.

Using SharePoint, iServer365 makes the application portfolio visible across the organization, helping business and IT stakeholders to co-operate, and allowing you to check the status of your application portfolio via a web browser, wherever you are. Application rationalization is a continuous process. IServer365 makes it easier to ensure that the IT landscape is actively aligning to business goals and objectives.

 


Further reading

Application Management and Architecture: Opportunities for Cost Reduction and Business Alignment

IT Portolio Management May 19, 2023

This eBook explores governance models for your Application Portfolio, including critical support functions such as vendor management and contract management.

We have all seen Application environments where the number of seats / licenses being charged by vendors does not reflect the number of actual users. You also may have been overwhelmed by the number of CRM systems, Document Management systems, ERP, collaboration tools or data sources that need to be consolidated and optimized. Maybe your Application environment has hundreds of interfaces that are moving data all over your environment, but restricts your ability to be agile and responsive to market change. Or perhaps you’re in a situation where extensive scoping effort is required for a project, and adds significant costs and effort to identify and untangle the spaghetti.

These issues are a significant drag on your agility and ability to respond to a changing customer profile and market opportunities. CIOs and technology teams do not need to look much further than their existing IT function to see if Applications are being actively managed, owned and governed across the Portfolio, or if Projects and business units make all the calls on what Applications are introduced into the environment.

Most companies have a significant embedded cost of past business decisions and poor Application Governance, and are endeavouring to turn back 20-30 years of complexity. CIO’s are endeavouring to balance the need to fix the old and leap frog to the new digital world in their Application Portfolio planning and business stakeholders ask “Why has this been allowed to happen?”

In this eBook, Andrew Swindell describes why and how the Application Portfolio Management function is a critical lever for CIO’s to reduce your IT costs and improve alignment with your key business stakeholders. He outlines the key elements of Application Portfolio Management and explore approaches that highlight how creating some discipline in your Application Portfolio will reduce costs and gain the support of your business stakeholders.