Understanding the Value of Application Portfolio Management

What is Application Portfolio Management?

Application Portfolio Management, or APM in short, is a systematic approach to account for all the applications a company is using. With Application Portfolio Management methodology, a company’s applications are compiled and this list enables decision-makers to better understand what the company needs. APM is also used to evaluate an application’s fitness for both business and technical aspects. That is, APM helps identify which applications are necessary and important for business and which are not along with pointing out the applications that are not technically suitable for use.

Thanks to APM, a company can dominate their IT landscape by monitoring the efficiency of the software applications they are, in fact, currently paying a fee to use. So, APM could make it easier to optimize the IT budget. As IT is the backbone of a company today, understanding how the software in the company is doing would result in optimizing the workload. See Application Portfolio Management’s best practices here.

As APM is a systematic and modern approach towards IT Asset Management, there is not a single “correct answer” to employ. That is, a company may prefer managing their assets manually by collecting them in spreadsheets or providing APM software to make things easier on a broader scale. Because today’s business is incredibly fast, utilizing software dedicated to APM could be a better option, at the end of the day.

What Business Benefits Application Portfolio Management Brings?

Technology is an integral part of business, and insight into tech could be the most valuable IT resource in business. Application Portfolio Management makes it possible for anyone to get the factual data in order to fully understand who is utilizing what at any time and how the business processes using software are running.

Listing down a couple of benefits that Application Portfolio Management propose would be helpful:

1. Simpler IT landscape: The IT department of a company could be one of the most dynamic parts of a running business. New technologies, due licenses, technical dysfunctionalities and troubleshooting… the workload of IT department could get tiresome if not managed properly. Application Portfolio Management methodology helps the IT let off steam by digitalizing the software check-up processes. It is hard to monitor software-in-use and note down any changes regarding their business value. This manual method could result in spreadsheets silos that are quite hard to update. APM resolves such a problem. All the software in a single source. Done!
2. Visibility & Traceability: Monitoring applications currently owned by a company and removing Shadow IT (digital purchases without the consent of the IT department) would provide a clearer picture for evaluating the IT structure. This way, all software can be traced and the value they add to the business could be understood more properly. This methodical approach would bring about more visible and traceable software ownership.
3. Cost-savings: A more visible IT landscape means that the software dispensable for the business are also identified along with repeating purchases. It’s not a big surprise that the same product could be bought more than once and this is not really preferred for the economy of a business. Thanks to APM, these unnecessary purchases are easily identified and ruled out and a more optimized IT budget is possible.
4. Data for future decisions: Tracing what kind of applications are more efficient for the business is also beneficial for future planning and purchases.
5. Faster integration with new technologies: Keeping all the software compiled in an updated list also makes new integrations easier. APM, for example, is quite important for Cloud Migration. Before broadscale IT changes like re-platforming, considering and evaluating already-have applications greatly benefits the process. Read more about it here.

What Information is Included in the Application Portfolio of an Organization?

It depends on the approaches and techniques employed by a company. These may differ from company to company and from business sector to business sector. Yet, there are some pivots of general acceptance:

1. The cost to use and maintain an application: Understanding the real cost of an application is not only good for today but also crucial for plans tomorrow. Allocating resources for a worthy investment in the future can only be grounded with economic data APM provides. So, an APM methodology deals with the cost of an application both to calculate TCO (Total Cost of Ownership) and the potential business benefits for investments-to-come. Similarly, an application that costs much but doesn’t create that much revenue is identified and necessary actions could be taken. See the ways to optimize the IT budget here.
2. Business fitness: Business fitness simply deals with how much an application adds value to the business. An indispensable application is considered “business fit”, for example.
3. Technical fitness: Similar to business fitness, technical fitness accounts for the technical quality of an application. In order to succeed at what they are doing; company personnel should be able to truly command the software. A “technical fit” software facilitates creating that such a rapport.
4. Lifecycle/lifespan: Monitoring software is also an investment for decisions in the future, as covered above. So, keeping up with an application’s lifecycle (updates, malfunctions, rehosting, etc.) helps decision-makers to determine if an application is still in a good condition.
5. Person in charge: Malfunctions sooner or later happen. In a company dispersed with the management of their applications, deciding “who to call” could take a long time, postponing the coming back live process. So, APM methodologies generally assign people in charge of software and they become the “owners” of that software. Upon a malfunction or anything related to software, the owner takes responsibility. APM speeds up this process.