Application Portfolio Governance – Improving Enterprise IT Investments

In most organizations, the spend for operating and managing applications makes up 75% to 80% of the IT budget. So when IT leadership is under pressure to deliver more with less - especially in today's economic conditions - Application Portfolio Management (APM) should be a fertile ground for identifying and harvesting funds for reinvestment.

Analysts posit the potential for double-digit percentage savings on IT spend through application rationalization - the first step in APM. We believe that a straight forward, three step process can be effective in not only achieving the initial savings, but in building a process for making APM an integral part of the organization's IT governance practices.

Virtually all organizations have executed an "application inventory collection effort" at one point or another. Many of our clients have gone through the process a number of times over the years. One element that usually characterizes these efforts is that they are "one-time events" where a push to collect application data results in a new spreadsheet (that is probably different from and unrelated to the one collected 18 months earlier!). Some painful, manual analysis is done on the spreadsheet data, and a few actions might be taken. In truth, however, there is often no continuity to the process, the data or the analysis. So, the next time, the organization will potentially go through the same time-consuming process again.

By using a web-based portfolio management tool to capture the data from the next application inventory effort, you can exploit the enterprise-wide availability of information to support an initial application review as well as an ongoing governance process. Instead of stand-alone spreadsheets with conflicting formats, you can develop a “best demonstrated practices” method of capture and review, using a standardized set of application governance metrics. In fact, with the newest tools for automated application discovery the inventory process can be aided by a tool that will automatically detect the applications across your network, making the basic collection and ongoing tracking of applications, supporting software and servers a continuous, low-effort process.

With the data collected either automatically or manually, and supplemented by application owner, business stakeholder and end user input, you have the opportunity to identify initial overlaps and duplications of functionality supporting the organization's various business processes. Especially in geographically dispersed organizations, you are likely to find multiple systems providing similar functionality. One client discovered over 30 billing systems, while another after years of mergers found nearly 100 separate voice mail systems! While you may not be able to consolidate the overlaps you find down into a single system, imagine the savings from just a 50% reduction in supported applications. Beyond application functionality, evaluation of the inventory against a set of preferred technologies (operating systems, languages, etc.) can provide an additional opportunity to align the technology inventory with the organization's current and/or planned enterprise architecture standards. New systems can be evaluated for implementation based on whether they meet the standards you expect in place next week or next year.

Ultimately, the organization should be moving toward an ongoing application governance process that will enable the organization to identify which applications should have additional investment, which should be maintained at the status quo and which should be decommissioned or replaced. Such a governance process (either quarterly or semi-annually) will enable the organization to reduce duplication, retire unnecessary applications and refresh its technology through a periodic, systematic review of existing and proposed application investments. In a period of shrinking technology budgets, application portfolio management is a method that will enable you to enhance your application portfolio's ROI while improving your ability to meet organizational goals.