Application Portfolio Management

Challenge

Organizations must manage competing interests of business priorities, costs, risks and security, and system performance with respect to the application portfolio. However, creating fact-based project proposals that map application functionality to processes and that correlate application costs to performance; risk and project spend can be exceedingly difficult and cumbersome. Organizations need a comprehensive application portfolio framework to quantify all competing principles, create strategic plans, and demonstrate the value-add of IT to constituents.

Solution

The Microsoft Enterprise Project Management (EPM) Solution repository can provide the needed framework to meet the challenges of managing complex application portfolios.

Build Application Inventory

A central, standardized application inventory is the foundation of an APM solution.  An APM team has the capability to upload multiple inventories from around the enterprise, remove any duplicates and standardize all entries.  The team can assign applications to portfolios, link them with other applications, associate their costs to related projects and funding organizations, and map application functionality to business processes.  Classification of each application by domain, technology, platform, and other standardized categories should be determined.  Then using standard models for risk and performance, the application owners can generate standardized metrics.  The  application owners can also align each application to the business strategy, to quantify strategic impact.  The architecture team is able to generate architectural fit scores by measuring applications’ alignment to portfolio standards of architectural quality.  All of these metrics combined will fuel an analytical platform for managing the application portfolio.

Manage Application Costs

With an APM solution, IT managers are able to budget and track the “lights on” cost of applications and link them to the costs of associated projects to calculate total cost of ownership (TCO).  IT managers can identify cost drivers by comparing average costs of applications by type, domain, technology, age, and correlating other attributes to cost.  Correlating application cost elements to other metrics, like business value, performance and architectural fit, can highlight cost-effective design patterns and identify best  practice “outliers”.

Measure Applications’ Business Contribution

Using the business alignment framework in the Office Project Portfolio Server 2007  teams can forge a true business-IT partnership.  Each application derives a strategic impact score from its contribution to business processes and the strategic importance of those processes.  Teams can compare application costs to the strategic importance of the processes they support to illustrate the value added by IT spend.  A team can correlate costs to risk and performance metrics to portray the payback of architecture controls to users.

With a committee of business stakeholders, CIOs can create several scenarios to align to business needs by optimizing the strategic impact of the application portfolio; subject to constraints of budget, risk and human resources.

Rationalize the Application Portfolio

By using cross-references to a standard set of business functions to not only identify functional redundancy, but to also identify redundancies in a process context, a team can identify application consolidation opportunities and the most effective investments for new application interfaces, thereby reducing the redundancy from the application portfolio.

Analyze Architectural Fit

APM helps organizations to go beyond standards and design reviews. An architectural fit score based on standards of reliability, information protection, cost-effectiveness, interoperability, and other principles correlates to metrics of risk, cost and operational performance to identify the most successful design patterns. A reverse-costing exercise can be conducted to compare the architectural principles to the cost of applications that adhere to them.

A report on architectural fit, grouped by underlying technology and sorted by strategic impact, can be used for prioritizing architectural upgrade programs.

Identify Risk Patterns

With APM, any risk management office can correlate the standardized risk metric to strategic impact and architectural fit in a “magic quadrant” diagram.  They can re-run the analysis using application attributes like user count or application age to identify and prioritize risk mitigation investments. 

A risk management office can create a compound metric by weighting a standard risk score by strategic impact, or user count.  The risk management office can aggregate the compound risk metric to compare averages by application type, and quantify the application risk of a portfolio.