What is Application Portfolio Management?

Application Portfolio Management is a framework that manages enterprise IT software applications and other software-based services. Over the growth of an organization, The IT department buys several applications, many times without realizing the presence of the existing, similar applications. This results in the piling up of applications along with non-usage of paid and installed softwares. An organization incurs unnecessary expenses if its application portfolio is cluttered and not up to date. It is also susceptible to security breaches. Such scenarios can be avoided by adopting Application Portfolio Management solutions.

Application Management process can be used to maintain business applications, to drive capability planning for marketing or sales and to drive smart investments.

Application Portfolio Management (APM) focuses on gathering data regarding each application the organization uses, for the purpose of monitoring and measuring the application’s business value. An APM process enables an organization to assess the contribution of all existing business applications, which helps the IT personnel in deciding whether to retain or discard them. The applications are ranked based on certain criteria like:

  • Cost of building & maintenance
  • Business value contributed
  • Expected lifespan

Benefits of Application Portfolio Management:

  1. Reduced Risk

    A complete organized list of the applications used by an organization helps prevent a security or compliance breach. Penalties for the same can cost a business huge fines.
  2. Improved Efficiency

    Ensuring there is no duplication in the existing applications is one of the first steps of the APM process. Also, possessing just the right number of application licenses can help streamline the application management process. As a result, the organization experiences an improvement in overall efficiency.
  • Monetary Savings

    Discarding of unused and dispensable applications can help an organization cut costs by 15%, without compromising on the business performance.
  1. Eliminate RedundancyLinking of applications to business needs will help you identify which software are not required, as many software have potential features that are not required for the business.
  2. Prioritization of projects

    An efficient application portfolio management helps you in identifying the business value delivered by projects and their associated applications. This helps you in identifying the priority demanded by each of these applications.
  3. Infrastructure Consolidation

    Once the redundant applications are discarded, you can accordingly reduce and reallocate the infrastructure resources.
  • Optimization of Business processes

    A disciplined management of application portfolio helps in identifying gaps and redundancies that hinder the speed of business processes. Once identified, they can be eliminated, thus making business processes gain momentum.
  • Better Outsourcing decisions

    By doing a thorough check on the business inventory, you can identify which applications are critical and hence make better decisions as to what has to be outsourced.
  1. Reduced Technical RisksApplications and licenses, if left unchecked can pose severe dangers pertaining to security. Application Portfolio Management effectively does the work of saving businesses from such technical disasters.
  2. Move to the cloud

    A lot of applications serve better when moved to cloud. But this can be identified only by a thorough assessment of applications. This assessment is done by Application Portfolio Management.
  3. Alignment with business needs

    Identifying applications that fulfil the business requirements and eliminating those that don’t will help declutter the application inventory and efficiently streamline the business processes.
  • Future-Oriented

    Modernizing the applications and discarding the unwanted can save the technical budget, which can further be used for other innovative purposes.

WHAT are the Key Strategies to Manage an Application Portfolio?

  1. Create an inventory of all the applications used or owned by the OrganizationCategorize every application used by your organization, either in the past, present or proposed for any future use. Make a note of the cost of each application, its functionality, its integration with any project or its concurrent usage with any other application. Since this is a huge and overwhelming process, it is better to start with the currently being used applications, rather than the ones being used infrequently.
  2. Discard redundant applicationsOnce you have a good perspective of the functions performed by each of the applications, you can identify applications that perform similar functions. Eliminate the softwares with overlapping functionalities to witness significant cost-savings in the business.
  3. Identify the function and business value of each application

    After the elimination of redundant applications, the existing applications must be assessed. This assessment should not be limited only to the financial aspect but should involve a comprehensive approach in determining the value of each application. The applications are ranked on criteria like strategic alignment, business process impact, direct payback, architecture, risk, and revenue.
  4. Use the TIME chart to map your applications

    The Gartner’s Portfolio Tirage process helps in determining where each application fits in a TIME chart. The TIME chart consists of the following categories which help you to determine what steps must be taken in order to maximize the business value of the applications:Tolerate – Applications that fall under this category are those that deliver business value but are not modern and not in alignment with the company’s infrastructureInvest/Integrate/Innovate – The applications in this category require the company to invest in upgrading the infrastructure. These applications have great potential and will perform at the highest level if integrated with the latest and upgraded infrastructure.Migrate/Modernize – This application category consists of softwares that no longer require human resources with specialized knowledge. Such softwares can accordingly be migrated or updated.Eliminate – Certain applications deliver little or no business value, and their costs outweigh their results. Such applications should be discarded to save costs.
  5. Optimization of resources against all applications Now that you are aware of the costs of each application and the resources required to operate them, you need to maximize the application’s efficiency by deploying an effective human supply chain. A portfolio resource management platform can be utilized to monitor the process and to implement effective work systems.

WHY Application Portfolio Management matters?

For any organization, which relies heavily on applications to meet its business requirements, Application Portfolio Management is extremely essential. The growth of a business leads to the proliferation of applications. Management and maintenance of these applications are of utmost importance, to avoid chaos and clutter. In simpler terms, how every house needs to be organized and clutter-free for the smooth functioning of the household, every organization must similarly adapt application portfolio management to efficiently maintain its application stack. Implementation of an effective APM process ensures that your business develops agility and stays on par with its competitors.