A critical step in developing an Enterprise Architecture (EA) strategy is Application Portfolio Management (APM). By establishing meaningful application metrics, APM enables you to improve management of tight IT budgets, better control the demands put on IT, and strategically align IT spending with organizational objectives.
META Group recently quantified the value of APM with an ROI that's hard to ignore: "Companies that have adopted IT Portfolio Management maintain exemplary records of continuous IT efficiency and effectiveness improvements — with some organizations reducing costs by up to 30% while increasing value 2x-3x."
Organizations achieve these gains, in part, by eliminating outdated technologies and unnecessary applications that have been replaced or are redundant across multiple sub-systems. This also eliminates the related maintenance costs, which can be significant. The first step in embracing APM is to take a complete inventory of your IT infrastructure and assets — including hardware, applications, networks, people, and processes as well as current and planned projects. Don't be surprised by what's likely to be an unwieldy number of portfolio components.
Then, it's critical to assess and prioritize these assets against pre-determined criteria in terms of value, risk, cost, and benefits. Numerous methodologies exist to support this undertaking. One increasingly popular method is the Portfolio Alignment approach, which categorizes the portfolio components into four quadrants based on levels of strategic value and operational impact. META has talked about classifying investments and projects into three distinct categories: run the business, grow the business, and transform the business. The Open Group Architecture Forum, Gartner, and Forrester also offer useful APM insights and methodologies.
Regardless of whether you select an established methodology or develop a hybrid approach of your own, your organization will begin seeing the payoffs of APM almost immediately. Furthermore, with the right approach and guidance, those results could be significant. In addition to delivering cost savings, APM enables IT to better anticipate business needs and bring innovative options to the business units. The result is a more nimble and competitive organization.
APM can also serve as an effective strategic tool among senior management. For example, as part of a comprehensive EA initiative we're managing, CherryRoad is helping a Fortune 100 company document and assess an Application Portfolio for a company it's acquiring and integrating into its operations. Our APM approach is enabling executives from disparate organizations to successfully collaborate and make decisions on which business processes — and complex groupings of supporting systems — to integrate and in what priority. The result: a cost-effective set of non-redundant processes and systems — easily worth millions in terms of financial and regulatory compliance as well as uninterrupted customer service.
Certainly, APM is a significant cultural commitment that involves both IT and operational stakeholders. It also must be an ongoing cycle in which investments are continually analyzed against expected results. But, developing and implementing an APM approach doesn't have to be disruptive or overwhelming. And, you'll undoubtedly accelerate and maximize the return on your APM commitment with an experienced partner at your side. If you'd like to learn more, contact us at info@cherryroad.com.