Should You Be Concerned About Application Portfolio Management

By CIOReview | Tuesday, August 16, 2016
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Application Performance Management (APM) software market worldwide is predicted to reach $5 billion by 2020, driven by the rising need to monitor performance of applications in complex software-defined enterprises. The market is witnessing a phase of revived growth led by revolutionary developments in cloud and DevOps technologies, the growing need to gain better business visibility and enhance operational efficiency, innovations in the field of real-time monitoring and analytics and focus on the use of customer facing apps to enhance customer satisfaction. Other major factors supporting growth include widespread deployment of highly dynamic and virtualized IT technologies, rising importance of analytics in enterprise mobile apps, growing importance of mobile applications in business and emphasis on maximizing real ROI from enterprise apps.

However, many companies face massive challenges in unlocking business value from their application portfolios: a) landscape evolving to a peculiar mix of technologies, applications, and versions—with high determined costs, b) functioning with existing applications is certainly a challenge for organizations, while they juggle cost reduction and demand in business transformation, c) optimizing existing applications is critical to meet these demands and deliver IT value of new opportunities, for example:

• Increasing business value while reducing on-going costs constrained by “untouchable” applications as knowledge and skills reduce

• Leveraging enterprise value of cloud-computing constrained by inflexible applications which resist change

• Delivering mobile business functionality constrained by data accessibility and application architecture

• New business and application architectures constrained by integration rules and complexity

With the boom in business users, executives demand modern applications usage. Enterprise architects corroborate that bloated applications portfolios in the mainstream are the reason behind slow down of workflow. A research report from Cambridge, Mass.-based Forrester Research, comments resource-hogging legacy applications drive modernization. However, experts suggest, the risk of reintroducing redundancy—without the need of thorough, ongoing application portfolio assessment—to the portfolio is a to-do. Enterprise architects instead should reckon assessment as an ongoing effort, rather than a one-time project.

According to NASA’s Office of the Chief Information Officer:

“APM is really about implementing a repeatable process to assess what we have, and, if an application is not performing or does not meet our architectural requirements, eliminating it and replacing it with a better performing application. We’re doing it to try and reduce the money we spend on maintaining existing applications (that don’t perform well) and freeing up that money to invest in new and better performing applications.”

Five general principles for evaluating an application portfolio are Business value, Investment value, Technical quality, Functional value and Management value.

a) The business importance of an application must be aligned—even if they cost a lot of money to produce or a lot of time to maintain—in order to be seen as valuable for the organization. Also, business value is proposed as one of the agents in determining how much should be invested in an application and in accordance with its use.

b) To compare applications objectively, investment value or total financial cost of the application is evaluated; the investments usually represents the cost for purchasing, operations, and maintenance of the application. The investment justification of an application is proportional to the value it adds to the business.

c) The technical quality of an application includes--data accuracy and reliability, source code quality, output quality, and response time. If these are not met, the technical quality of the application is compromised. Technical quality is a significant factor when it comes to the usage and performance of an application.

d) Functional value refers to the usage of the application. One way to access the purpose of use is to examine the role of all applications. The optimal use of an application is a behavioral indicator which acts as an alternate for evaluating the effectiveness of the system.

e) Management value signifies the usefulness of a system to senior managers for performing their job without putting the extra effort from outside.

How could you do APM the right way?

It is unfortunate that many organizations approach APM as just one-shot application rationalization. Being focused on cost and short-term technical problems, unforeseen major issues can hinder your business and divert from its goals. Instead of cleaning up application landscape, a lifecycle approach to the application landscape is much needed.  Also, applications are often evaluated on a stand-alone basis. Considering dependencies between applications and with the business processes they support, the complexity and risks involved, simply substituting or turning out an application in isolation is usually not an option.

It’s essential to know the business value of applications and how they support the business processes and capabilities. But how do you settle this in an objective way (i.e. not just by asking users)? To this end, you need to use enterprise architecture models across all architecture domains. This also includes demonstrating use cases, value chains and workflows of how they are supported by the applications, their functionalities, and data objects, e.g. for a product or a customer. This assists in assessing and improves the value of applications by revealing it to new potential uses

APM is related to other disciplines

One effective way to relate your application portfolios to the corporate strategy is via business capabilities. Business needs are the key building blocks of the business: unique and independent from each other and tend to be stable over time. It lays the foundation for structuring application portfolios and determining the strategic consequence of the applications therein. Moreover, strong APM requires being a part of the day-to-day processes in order to maintain and enhance the application landscape. On a bigger note, switching off applications can be offending, and rationalizing decision making may not be in everyone’s pursuit. But by focusing on business outcomes, better decisions can be initiated within the organization and something every organization strives for i.e. business value is attained.