Chapter © 2015 Pearson Education, Inc. Publishing as Prentice Hall

17-2 The ongoing management process of categorization, assessment, & rationalization of IT application portfolio Allows organizations to identify which applications to maintain, invest in, replace, or retire (i.e., avoid maintaining applications quagmire).

© 2015 Pearson Education, Inc. Publishing as Prentice Hall 17-3 Built-over-time application systems that support key operations of the organization Often obsolete & unsupported by any vendor; host to countless “workarounds”; remain poorly undocumented; are often duplicated

© 2015 Pearson Education, Inc. Publishing as Prentice Hall 17-4 More than 80% of IT spending used in these applications Line-of-business managers reluctant to change applications to avoid agony of change They restrict the enterprise vision of IT

© 2015 Pearson Education, Inc. Publishing as Prentice Hall 17-5 This perspective evaluates the existing applications (i.e., the applications portfolio) against set of potential applications that can be used across business units (i.e., the project portfolio).

© 2015 Pearson Education, Inc. Publishing as Prentice Hall Investment Portfolio ManagementApplication Portfolio Management Professional management but the client owns the portfolio Professional management but the business owns the portfolio. Personal financial portfolio balanced across investments in: equities, fixed income, cash. Application portfolio balanced across investments in: new applications, currency (maintenance, enhancements, upgrades), retiring/decommissioning. Client directs investment where needed (e.g., 50% equities, 40% fixed, 10% cash). Business directs investments where needed (e.g., 40% new applications, 30% currency, 30% decommissioning). Client provides direction on diversity across investments (e.g., investment in one fund would exclude/augment investment in other funds). Business provides direction on diversity of investment (e.g., investment in one business capability might exclude/augment investment in another). Client receives quarterly updates on its portfolio health and an annual report. Business receives quarterly updates on application portfolio health and an annual report. New investments are evaluated on their impact on the overall portfolio as well as on their own merits. New applications are evaluated on their impact on the overall portfolio as well as on their own merits. 2-6

© 2015 Pearson Education, Inc. Publishing as Prentice Hall 17-7 Application portfolio identifying value of existing applications against corporate profitability, stability, usability & technical obsolescence Project portfolio identifying value of future spending on applications ▪ attempting to balance IT cost-reduction efforts ▪ and investments to develop new IT capabilities

© 2015 Pearson Education, Inc. Publishing as Prentice Hall 17-8 Visibility into where money is being spent, providing baseline to measure value creation Prioritization of applications across multiple dimensions – value to the business, urgency, & financial return Mechanism to ensure applications map directly to business objectives

© 2015 Pearson Education, Inc. Publishing as Prentice Hall 17-9 To deliver value with APM, three interrelated capabilities are needed: Capability 1: Strategy and governance. Capability 2: Inventory management. Capability 3: Reporting and rationalization.

© 2015 Pearson Education, Inc. Publishing as Prentice Hall “If strategy is the destination, then governance is the map” Application portfolio governance answers this: What decisions need to be made? Who should make these decisions? How are these decisions made?

© 2015 Pearson Education, Inc. Publishing as Prentice Hall Positioning APM within an enterprise IT governance framework

© 2015 Pearson Education, Inc. Publishing as Prentice Hall Common barriers during initial phases of APM: Lack of accountability in governance process (i.e., what governance practices should be applied). Application assessments not taken seriously Business managers lack awareness and accountability

© 2015 Pearson Education, Inc. Publishing as Prentice Hall Identification of applications to be included in the portfolio to be managed (e.g., limiting the portfolio to business-critical applications) Inventory determined by strategy & governance outlined in capability #1.

© 2015 Pearson Education, Inc. Publishing as Prentice Hall Identification starts by gathering following information about applications: General application information (i.e., functionality) Application categorization (e.g., business capability provided, life cycle status)

© 2015 Pearson Education, Inc. Publishing as Prentice Hall Technical condition (e.g., development language, operating system, architecture) Business value (e.g., business criticality, user base, effectiveness) Support cost (i.e., maintenance and upgrades)

© 2015 Pearson Education, Inc. Publishing as Prentice Hall A set of standard parameter-driven reports complement application inventory Reports help monitor status of all existing applications so that management can ascertain health of portfolio applications

© 2015 Pearson Education, Inc. Publishing as Prentice Hall Reports should compare applications on the basis of business value, technical condition, and cost.

© 2015 Pearson Education, Inc. Publishing as Prentice Hall The reports should provide information to meet the needs of various stakeholders. IT organization Mapping and assessing business functionality against applications Risk, audit, and security teams Assessing regulatory compliance and risk management Business teams Assessing the costs and business value of the applications used

© 2015 Pearson Education, Inc. Publishing as Prentice Hall Balance demand and supply regulate enhancements & releases for APM reporting Look for quick wins identify immediate & visible wins impacting bottom line Capture data at key life stages capture data in the approval, testing, production, modification & retirement of applications

© 2015 Pearson Education, Inc. Publishing as Prentice Hall Tie APM to TCO initiatives together. Information captured by APM initiative should support total cost of ownership (TCO) Provide an application “end-state” view Current & future information about applications key for business planning

© 2015 Pearson Education, Inc. Publishing as Prentice Hall Communicate APM benefits. Communicating goal of APM initiative, the results & next stages essential for effectiveness of APM

© 2015 Pearson Education, Inc. Publishing as Prentice Hall APM promises significant benefits to adopting organizations Benefits require development of three mutually reinforcing capabilities: Development of strategy reinforced with governance procedures Creation of an application inventory Reporting capability built to align application portfolio with strategy