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Why CIOs Need More Than Application Portfolio Management

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Read more about author Wilko Visser.

Enterprise infrastructures are never finished. Even when you think you have completed deployment and installed all the necessary applications, you must start over again, refining performance and adding new applications. Most IT executives rely on strategic portfolio management tools to manage strategy to execution. Managing application assets in the enterprise portfolio isn’t enough. You also must consider the impact on the enterprise architecture as a whole to understand the impact of changes to the infrastructure.

IT managers rely on tools like application portfolio management (APM) to promote a more agile enterprise landscape. Start-ups have the luxury of starting with a clean slate. They can build the enterprise infrastructure they need from the ground up. Established organizations must adapt legacy systems to accommodate change, making the task harder. Innovation and digital transformation take longer and cost more as enterprise complexity grows. Mergers, acquisitions, special projects, and unique departmental needs lead to application sprawl. 

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Traditional application portfolio management tools don’t offer the dynamic visibility needed to see the impact of changes on the overall enterprise architecture. Making changes to the existing infrastructure requires trying to streamline changes to the infrastructure, which is slow and limits the ability to take advantage of new opportunities. Alternately, the organization sacrifices integration for speed, shortening deployment time by eliminating integration, which only contributes to application sprawl.

The Limitations of Application Portfolio Management

Application portfolio management technology delivers real value in specific areas, such as application rationalization. According to Infosys, using application portfolio management for application rationalization can save more than $2 million in a single enterprise. APM also has value in consolidating software licenses. Using application portfolio management for cost control and risk reduction is valuable, but that’s only part of the overall need. IT managers need to be able to balance costs and capabilities moving forward. They must understand how to mix different capabilities for maximum agility to take advantage of new opportunities.

Application portfolio management has several shortcomings when it comes to strategic enterprise planning:

  • Data is incomplete: The data for any application portfolio management solution is scattered across the enterprise, which means some of it may be in spreadsheets that are instantly outdated or stored in someone’s head. Too often, application portfolio management projects focus on short-term savings rather than long-term strategies, so it’s easier to take shortcuts with incomplete information. Without a complete picture, actionable insights are overlooked. Governance becomes more complicated.
  • Budget concerns reign: Reducing immediate IT costs takes precedence over long-term planning. Focusing on short-term benefits often results in long-term consequences since no one considers the application lifecycle or the need for portfolio responsiveness.
  • TCO becomes unclear: When you focus on short-term savings, you also lose sight of the total cost of ownership (TCO). Every application and piece of network hardware is associated with other enterprise assets. You can’t evaluate actual costs without a complete understanding of those associations. You need to understand the TCO before you can rationalize applications or address governance.
  • Time is lost: Data gathering becomes complicated without understanding the enterprise architecture. You can shorten the discovery phase by using a central data repository that establishes a single source of truth. Having one central resource that is complete and accurate makes it easier for enterprise architects to move forward.
  • Management and IT aren’t on the same page: To get real value from application portfolio management, the application landscape needs to map to business processes. For senior management, IT, and enterprise architects to agree on strategic objectives, APM insights must be shared – and understood – with all stakeholders. Too often, IT works on its own, making strategic decisions about applications with little input from the business side. 
  • Application portfolio management is treated as “one and done”: Updating enterprise applications and architectures is an ongoing exercise. An initial application portfolio management approach may yield immediate results, but you need governance for long-term ROI. You need clear assessment and purchasing processes and end-of-life processes for enterprise applications. Otherwise, your application portfolio will become bloated. It’s better to maintain a well-devised, ongoing enterprise management strategy than to start over every 18 months.

Looking Beyond Portfolio Management

Application portfolio management has become the centerpiece for strategic portfolio management and the foundation for digital transformation. Application portfolio management provides a central data repository for essential information about the enterprise architecture and business processes. But that’s only part of the solution. In addition to management information, you need insight into the enterprise architecture to match business capabilities and functions with architectural policies and principles.

Having a perspective on enterprise architecture as well as application management offers several advantages:

  • You get an understanding of functional overlap. Seeing where applications and architecture intersect rationalizes redundancy, potentially saving money on enterprise software that can be reallocated for other digital transformation projects.
  • You identify potentially risky applications. By gaining a complete overview of the enterprise infrastructure, you can see the relationships between applications, business processes, and data, including where data or projects may be at risk at an application layer.
  • You can determine the application characteristics that can facilitate future growth. Understanding how applications and architecture work together can support decision-making and improve resource allocation. It also can identify potential obstacles to innovation.

To gain a holistic view of enterprise applications and architecture working together, you must start with a central data repository. This means enlisting all stakeholders to collaborate to ensure the data is complete and up to date. Giving business users a stake in the accuracy of the data helps keep the information current so everyone benefits.

You can make smarter strategic decisions with a comprehensive view of your enterprise infrastructure that encompasses both application management and architecture. A holistic perspective also simplifies tactical decisions and promotes enterprise agility. Every enterprise is constantly changing and seeing the impact of those changes in real time is the best way to be ready for the next step in your digital transformation.

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