Pedram Asadi

Senior Consultant

Application Portfolio Management: The Backbone of Smart IT Decisions

Enterprise ArchitEcture

Application Portfolio Management

3 min read

The value behind application portfolios and how you can leverage them to make your organization ready for the future

Application specialist assessing his application portfolio on a tablet
Application specialist assessing his application portfolio on a tablet

Introduction

Have you ever wondered if your company is positioned well enough to face the future with confidence? Do you sometimes reflect on whether your organization is keeping pace with time, and is a successful player in its industry? Do you ever feel like your competition is outpacing you and your company is too passive to drive real innovation? Are the fast pace are complexity of today’s business world a sizeable challenge to your operations?

If your answer to any of these questions was yes, then be sure to read the following lines carefully and discover how a well-managed application landscape can be the key to your organization’s digital transformation. The following blog post reveals how you can create more room for digital innovation with the help of Application Portfolio Management (APM).

grupo de personas en bicicleta y una de ellos marcando el camino

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 webinar play an integral role in this process. And for a good reason.

dibujo en pizarra negra sobre la cartera de aplicaciones

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 Application Portfolio Management 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).

  • Tolerate
  • Invest
  • Migrate
  • Eliminate

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 (see our application portfolio e-learningpromises to be of great help here and describes the set of already existing and planned applications.

It is advisable to not only maintain this portfolio in the form of a list, but also collaboratively document it in an enterprise 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.

Business people cycling to success

Summary

As you can see, building an application portfolio is a powerful driver for the transformation and innovation of your enterprise. Being part of your digital twin, the portfolio can help you gain a competitive edge over your rivals. Setting up such an application portfolio can be done in small steps, and the first results can be already achieved with little effort.

In our free APM poster, you will find a summary of actionable insights and essential tips on setting up a solid application portfolio. And what’s more, we have also included a selection of other related content surrounding APM to help you leverage its full potential in driving your transformation forward. Download our poster to start with your APM initiatives today!

Tips & Tricks for successful Application Portfolio Management

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POSTER

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Frequently Asked Questions

What is Application Portfolio Management and why is it important?2025-08-12T08:44:35+00:00

Application Portfolio Management (APM) is the strategic practice of cataloging, evaluating, and managing an organization’s software applications to optimize business value, reduce costs, and align IT investments with business objectives. APM helps eliminate redundant applications, reduce licensing costs, and improve operational efficiency.

How much can APM reduce IT costs for mid-sized companies?2025-08-12T08:46:15+00:00

APM typically reduces IT costs by 15-30% for mid-sized companies through application rationalization, license optimization, and operational efficiency improvements. Organizations commonly save $500,000-2 million annually by eliminating redundant applications, consolidating functions, and optimizing vendor contracts and maintenance costs.

What is the TIME model in Application Portfolio Management?2025-08-12T08:47:12+00:00

The TIME model categorizes applications into four types: Tolerate (maintain status quo), Invest (enhance capabilities), Migrate (move to new platforms), and Eliminate (retire applications). This framework helps organizations make strategic decisions about application lifecycle management and resource allocation.

How to identify applications that should be eliminated from your portfolio?2025-08-12T08:48:19+00:00

Identify elimination candidates through low business value assessment, high maintenance costs, redundant functionality, poor user adoption rates, security vulnerabilities, vendor end-of-support status, compliance issues, and availability of superior alternatives. Focus on applications with declining usage and increasing costs.

What are the signs that your company needs Application Portfolio Management?2025-08-12T08:50:01+00:00

Key signs include rising IT costs without proportional value, numerous redundant applications, difficulty tracking software inventory, compliance audit challenges, shadow IT proliferation, integration complexity, vendor contract management issues, and lack of alignment between IT investments and business strategy.

What are the most common APM implementation mistakes to avoid?2025-08-12T08:51:03+00:00

Common mistakes include insufficient stakeholder engagement, incomplete application inventory, focusing only on technical metrics while ignoring business value, poor change management, unrealistic elimination timelines, inadequate migration planning, and failing to establish ongoing governance processes for portfolio management.

How to measure ROI from Application Portfolio Management initiatives?2025-08-12T09:18:13+00:00

Measure ROI through cost reduction (licensing, maintenance, support), operational efficiency gains, risk mitigation value, improved user productivity, faster time-to-market for new capabilities, and enhanced compliance. Typical APM ROI ranges 200-400% within 18-24 months through systematic portfolio optimization.

What are the risks of having a non-managed application portfolio?2025-08-12T09:28:43+00:00

Risks include escalating IT costs, security vulnerabilities from unsupported applications, compliance violations, operational inefficiencies, vendor lock-in situations, integration complexity, redundant functionality costs, and inability to support business transformation initiatives effectively due to technical debt accumulation.

What are the emerging trends in Application Portfolio Management for 2025?2025-08-12T09:23:03+00:00

Key trends include AI-powered portfolio analysis, automated application discovery, cloud-native portfolio optimization, microservices architecture impact, sustainability metrics integration, real-time portfolio monitoring, and integration with enterprise architecture planning tools for comprehensive IT landscape management.

How to assess business value of applications in your portfolio?2025-08-12T09:22:51+00:00

Assess business value through user adoption metrics, revenue impact analysis, cost-benefit calculations, strategic alignment scoring, operational criticality assessment, compliance requirements, innovation enablement, and stakeholder feedback. Use balanced scorecards combining quantitative metrics with qualitative business impact assessments.

What is the difference between APM and IT asset management?2025-08-12T09:22:40+00:00

APM focuses on strategic application management including business value assessment, lifecycle planning, and portfolio optimization, while IT asset management tracks physical and software assets for inventory, compliance, and cost control. APM is strategic, ITAM is operational and administrative.

How does APM support digital transformation initiatives?2025-08-12T09:29:51+00:00

APM supports transformation by identifying modernization candidates, eliminating technical debt, freeing resources for innovation, enabling cloud migration planning, supporting API-first architectures, and creating foundation for new digital capabilities while maintaining operational stability during transition periods.

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