Why is Application Portfolio Management important?
In today’s world, information technology (IT) plays a central role in determining how well your business is poised for the future. Nowadays, virtually no transformation project takes places without, more or less, a major change to IT. Disruptive achievements in any industry are almost always based on novel technologies. That means: either new applications have to be introduced to optimally support the required process improvements, or existing applications have to be adapted.
Therefore, your company’s IT must primarily serve as an enabler rather than a blocker of such transformation initiatives. To this end, it is strongly advised that you create a “digital twin” of your organization, to better plan and coordinate the impact of change on your enterprise architecture. This is why your applications (or apps), as well as the creation of a comprehensive and up-to-date application portfolio play an integral role in this process. And for a good reason.
According to the latest statistics, more than two-thirds of all companies complain about having too many applications in their portfolio. In addition, the majority assumes that most of their applications generate little to no value for the organization (see Info-Tech Research Group). One reason behind such negative perceptions is the lack of a process for rationalization and harmonization of the company applications in use.
Due to complex architectural landscapes, IT today is primarily concerned with maintaining existing operational systems and keeping them running. Thus, it is becoming increasingly difficult to develop new strategies for the future and drive innovations from within the IT.
A guide to setting up your APM practice efficiently
Streamlining of the application landscape helps to reduce costs and resource requirements across the IT, and therefore simultaneously creates more room for innovation. Minimizing the complexity and, as a result, the overall risk of the portfolio is what in the end drives the transformation of your company.
In order to declutter your application landscape, your applications must first be measured and assessed on the basis of various dimensions – like their business value contribution, technical fitness or compliance conformity. Based on this assessment, you can decide whether to further invest in such applications, replace them, consolidate them with others, or simply tolerate them. Gartner describes these different investment strategies as the T(olerate)-I(nvest)-M(igrate)-E(liminate) model (see Gartner’s Application Portfolio Management: TIME for the Application Masses). If you create an overview of the applications and their assignment to the respective investment strategies, application roadmaps can then be defined which will help the business units reflect on their needs and requirements, as well as optimize or even fundamentally transform the business processes they support.
The applications of your organizations therefore play a decisive role, and represent a starting point of many transformation initiatives. In order to effectively transform your application landscape, you must first gain an extensive understanding of it and collect this knowledge centrally. A neatly documented application portfolio promises to be of great help here and describes the set of already existing and planned applications (cf. Karagiannis/Moser/Helmes, Benutzerzentrierte Unternehmensarchitekturen, 2020).
It is advisable to not only maintain this portfolio in the form of a list, but also collaboratively document it in an architecture tool so that this information can be maintained quickly and viewed at any time. This way, the so-called “shadow ITs” can be easily uncovered, functional and data redundancies investigated, and responsibilities and concrete lifecycle data properly captured.