Webinar: Application Understanding

You already know that applications automate your core operations. But do you have adequate control over these systems? The answer is often 'no' because of the sheer size and complexity of your application portfolio.

Find out how you can regain control over the applications that run your business at a webinar on May 27. Register here:

http://www.microfocus.com/promotions/wwwcwwmw0509/default.aspx?page=email

The Hartford and APM

Insurance and Technology magazine had an interesting brief on insurance giant The Hartford. The piece discusses plans by the CIO, Brian O’Connell, to slash costs and boost agility via application portfolio management. Prioritizing cost cutting versus agility creation, or projects within each category is not a trivial task. Application portfolio management aids in precisely this area.

I outline a selected few points here that describe how a business-centric approach to application portfolio management can aid The Hartford in their initiative:

• Spot Rationalization Opportunities: An effective strategy for advancing application portfolio management is to identify and eliminate systems with low business-value. For instance, duplicate order management systems, unused and high-cost packaged applications, or internally developed systems that could be replaced by commercial software. This step can generally be achieved via stakeholder surveys that collect information on value and risk. Placing survey results into appropriate business context helps to ensure that decisions are made intelligently.

As The Hartford’s CIO describes the results of assessing his portfolio,

“we're able to see what products we're using, how many people use them, what they're used for, etc., and we're in a position to ask questions such as whether we need to pay the maintenance, how much we actually tap into the support we're paying for, and whether it might be better to pay for something on a time-and-materials basis.”

• Stretch Business Flexibility: Effective portfolio management increases agility in many ways. First, by identifying and slashing unnecessary assets, complexity is reduced, making proposed changes easier to execute. Second, using dependency mapping and architectural quality metrics, managers can and correct identify architectural weaknesses that slow enhancements. Third, development priorities can be compared based on measures like business-value, complexity, developer skills, etc. These decisions should be again placed within the appropriate business context. This allows value for a revenue generating process to be properly compared with a G&A application.

O’Connell parallels this line of thought:

We have to make sure that we don't break the alignment between our business lines and the components of IT critical to differentiating them," O'Connell said.

• Increase Ongoing Efficiency: Application portfolio management is not a one-off activity. Data ought to be collected on an ongoing basis and presented to users throughout the organization and up and down the chain of command to enable diverse decisions. This could be for a CIO to spot additional rationalization opportunities; for a development manager to monitor code quality from large centers of excellence or outsourced teams; for business users to understand where IT priorities lie; or for developers to validate the quality of their output.

Application portfolio management transcends the entire IT organization and supports its interactions with business owners. It enables IT to make smarter decisions about where to prioritize. The Hartford plans to use this period to get to that position of strength. O’Connell said:

"Gathering that information would have been more challenging in the good times. That is one long-term objective that we should have been pursuing but the current environment is providing an impetus for it."

Planning for Application Modernization

eWeek just published a strong piece on how to plan Application Modernization initiatives. In the first paragraph industry expert Tim Pacileo identifies the key for any modernization activity: justify it. CIOs face a multitude of competing interests when determining where to allocate resources. The pressures are more intense now that IT has become so tightly interwoven with very visible business processes. As a result, it is critical that the CIO has the right information available to determine which priorities should be selected and why.

This is the role of Application Portfolio Management. It provides a framework to collect measurements and place them into business context. This allows CIOs to quickly determine which projects make sense to act on based on the strategy of overall organization and not just on the narrower needs of IT. Justifying projects is vastly simplified when the interests of IT are tied to the business.

Interestingly, Pacileo suggests using a chargeback model to ensure that costs are properly associated with the correct IT activity. The best approach for this method is via business-centric portfolio management. By placing application portfolios into business context (by operational unit, geography, etc) CIOs can match costs to the exact software (and IT infrastructure) that is incurring the costs.

Pacielo also points out that in the rush to solve problems, IT often will product multiple overlapping applications that drain resources. A business-centric Application Portfolio Management solution is again the ideal approach. When IT compels itself to match business-value, cost, and risk to IT assets these kinds of glaring issues become readily apparent. He cites the example of one company having three overlapping systems. We've seen cases with more than 2 dozen duplicate systems being maintained separately.

Application Portfolio Management is an increasingly rigorous discipline. Executives should turn to this framework when determining where priorities lie and how to justify them.

Rationalization Debate

In response to a great question from Rex, I placed some more discussion about the application rationalization vs. application modernization discussion. It is on the application modernization sister site.

Portfolio Management is Top Priority for 2009

This week Baseline published its top IT trends for 2009. Among the usual contenders for top spot (such as virtualization and Software as a Service) was Project and Portfolio Management. The reason cited for its selection was the need to oversee IT activities and allocate resources toward high-priority tasks – which stands to reason in these challenging economic times.

The linkage between Project Portfolio Management (PPM) and Application Portfolio Management is an interesting one. PPM focuses on helping development managers to monitor and control in-flight development projects. Application Portfolio Management concentrates on the allocation of development and related infrastructure resources toward business priorities.

As discussed previously, Application Portfolio Management is at its most effective when measurements are placed into their appropriate business context. This could include managing applications by the business process they automate or by the geography that manages the applications, or other contexts or combinations of contexts. So, we could uncover complexities within a high-value business system managed in India, and decide to allocate resources to correct the issues.

We can think of PPM’s project entities as being another grouping through which we want to manage APM. This isn’t to say that APM should replicate PPM functionality, but rather that the technologies can effectively collaborate by sharing metadata. Much the same way that APM doesn’t replicate BPM functionality simply because it reuses business process models as a way to structure metrics reports.

Let’s look at how this can be deployed. A CIO of a bank is under pressure to improve responsiveness. Using APM, he looks at change request backlogs as organized by business process and spots an outlier in the customer management business process. He decides to investigate further. He looks at metrics for this process and sees that complexity levels are especially troublesome in the portion that is managed in Brazil. He decides to reallocate resources to attack complexity levels and whittle down the change request backlog.

This is clearly when PPM would become involved. Managers can use PPM to monitor deliverables, outcomes, and other elements that are part of a development project. But in parallel, APM continues to play a critical role. We could now overlay a new grouping onto our software; in this case the grouping would be by project. So, we are now tagging the portion of our application portfolio that is encompassed by the newly introduced project. Then, as we proceed we can collect metrics associated with the grouping of our project. This means that we can use APM to monitor the trend of value, cost, and risk of the software that is being enhanced by our project.

We can even start to combine business contexts, for instance by collecting metrics from software within Project A that is managed by Team A versus software managed by Team B. We start to see within APM very interesting metrics about adherence to SLAs as a result.

Best Practices for Application Portfolio Management: Gartner

An excellent piece of research by Jim Duggan came out from Gartner today. It details how companies should approach Application Portfolio Management – and of course, why you should be interested in APM in the first place. The why is clear: as the economy has slowed, companies must uncover and replicate efficiencies while slashing wasteful spending. The oft-quoted figure of 80% of IT budgets being dedicated to ‘lights-on’ activities is a primary reason why Application Portfolio Management has become such a hot topic.

But how should you discover where to focus rationalization and follow-on modernization activities? The paper relates a number of suggestions. The major thrust is that management should assess which portions of the application portfolio to rationalize based on different perspectives. That is, you should determine the ways in which you manage your business, and then rank your applications based on these views.

For instance, we could start with the most obvious perspective: cost. What are your most expensive applications and do you need to maintain these systems? Do they overlap and can be consolidated? Are they not used by the business? Is there a less expensive architecture?

You can then quickly move to other Application Portfolio Management perspectives. It could be by organization. Are applications that are managed by expensive / low-value providers that could be re-assigned? Or the perspective could be by business process. Are there business processes that could be better managed by an external service provider? Are there applications that support defunct business processes? You can see that executing APM from different perspectives allows you to rationalize based on KPIs that matter to your organization.

There is also a significant side advantage that comes from managing by these perspectives as you focus APM and continue to refresh APM. Once perspectives are in place – and rationalization decisions may have been made – you can focus modernization activities on sub-sets of the portfolio that matter to you. High-cost and low-business value areas? High-risk and frequently-changing applications? Now, resources can be applied to the right area. You may decide to deploy richer code analytics at this stage to get a complete picture about how developers should be concentrated.

Further, these perspectives –especially once placed onto the software – offer a ‘filtration mechanism’ for metrics as you collect them for APM. Looking for cost data on a business process, or risk information about applications managed by a particular organization? The perspectives provide the means to get these business answers. The result is highly business-centered development decisions.

Application Portfolio Management Resource Site

This new site exclusively is dedicated to best-practices for Application Portfolio Management is now online. The site explores what kinds of metrics that you should collect, how they should be combined into measures that have business utility, and what are the key attributes of an APM tool.

Application Portfolio Management is a methodology for identifying and prioritizing development activities. The aim is to locate misalignments between the application portfolio and business requirements, and then allowing managers and other IT professionals to adjust their resources accordingly.

APM is fundamentally about collecting business and technical metrics, combining them into useful KPIs in the right business context, and presenting them to decision-makers. On the site you'll find a wealth of relevant resources.