As organizations grow, IT departments and even individual employees buy applications to solve urgent problems without giving any (or at least enough) thought to the implications. As a result, applications accumulate and become difficult or impossible to integrate with existing applications or other infrastructure. Similar apps for completing the same tasks are purchased multiple times. Others fall out of favor and are no longer used but are still paid for – never being uninstalled. Still others are bought and never used at all! Then there are applications that are inconsistent with technological infrastructure, or its near future.
Meanwhile, businesses are faced with the challenge of controlling costs and improving technology services for future business growth and profitability. How does an organization provide clear insight into how many and what applications are in use, their business value, supporting technologies, risks and their place in a life cycle?
APM is a framework for managing enterprise IT software applications and software-based services. APM provides managers with an inventory of the company's software applications and their associated metrics to examine the overall benefits of each application relative to each application’s cost and business / technology fit and risk. It is in this context that analogous project portfolio management fundamentals are applied to the optimization enterprise technology assets – see Axelerate’s article “3 Stages of PPM Maturity.”
APM is one of the single most effective IT management paradigms ever developed. When implemented properly, its impacts on the software inventory, its associated infrastructure and the cost of external organizations supporting it are astonishing.
APM builds on the capabilities of traditional application mining tools (also known as impact analysis tools) by establishing a periodically updated application inventory that is augmented with additional business attributes. Quantifiable business information such as system owner and supporting labor costs can now be collected.
APM makes use of numerous data types and system inputs – including: Demographics; Cost; Effort; Usage; Availability; Business Value Metrics, Technology Fit Metrics; and Application Risk Factors. This broader APM function allows management to quantify the application portfolio from perspectives other than a purely technical snapshot and enables business and IT management to decide the lifecycle dispositions of applications: Invest; Maintain; Replace; or Retire.
APM augments the infrastructure mining tools with the following capabilities:
Conceptually speaking, the APM process is simple. An application inventory is taken, it is evaluated and a disposition for each application is determined. The steps are as follows:
Once the applications have been inventoried and scored, the evaluation must be completed. While there are numerous metrics and approaches to assessing the application portfolio – we provide a typical one here. TV, BV, ACO and Risk described below offer a reasonable cross-section of attribute groupings. These cross-sections are described as follows:
Ultimately, these 4 quantities will enable an enterprise to understand the condition of an application in terms of its technological and business status, its recurring operation and support costs as well as a measure of risk to indicate the expected quality of those estimations.
This set of information is reviewed against set criteria to determine an application's disposition. Once a disposition is assigned, more specific actions can be employed for each application. Figure 1 plots BV vs TV in a typical bubble diagram and displays a basic 4 quadrant graphic with these areas identified. The relative size of the applications circle is proportional to ACO and its color (green, yellow, red) indicates the application’s risk score.
Invest: Warrants additional investments required to move towards an 'Maintain' status.
Maintain: Aligned with functional, technical and architectural standards.
Replace: Investment in prioritized functionality and operational environment. Not targeted to move toward 'maintained' status.
Retire: Targeted for retirement.
Application Alignment – Identify which apps support which business capabilities and eliminate those that don’t fulfill a valuable business purpose.
Optimize Software Inventory – Consolidating vendors, getting rid of duplicate applications and ensuring you have the right number of licenses streamlines application effort and costs.
Consolidate Infrastructure – A smaller number of more valuable applications allows you to reduce or reallocate infrastructure resources accordingly.
Minimize Technical Risks – Legacy apps and unsupported licenses can be security and compliance time-bombs. Application Portfolio Management helps to remove them.
Reduce Costs – Eliminating shrink-wrapped apps, and unused licenses could help cut software costs by as much as 15% without affecting business performance.
Eliminate Functional Overlap – Many apps come with a lot of functionality that most organizations will never need or use. The ability to link apps to business capabilities helps you identify which ones you can do without, so you can get rid of them.
Optimize Business Processes – Once you have rationalized your app portfolio, gaps and redundancies that slow down processes will become clear – then you can eliminate them.
Improve Outsourcing – By knowing which applications and services are critical, you can make better decisions about what to outsource before you sign any agreements.
Prioritize Projects – Active Application Portfolio Management helps you prioritize projects and associated applications according to the portfolio investment techniques based on business value they deliver, and eliminate those that aren’t pulling their weight.
APM is one of the single most IT management paradigms ever developed. When implemented properly, its impacts on the software inventory, its associated infrastructure and the cost of external organizations supporting all of it can be astonishing.
I’ll leave you with three examples of APM in action:
APM leads to a cost reduction of $2 million in a single enterprise (Infosys).
At least 10% of IT project costs can be avoided through application rationalization (Oracle).
A considerable amount of infrastructure was eliminated during this APM initiative (Planview).