VAAL UNIVERSITY OF TECHNOLOGY
DEPARTMENT OF INFORMATION AND COMMUNICATION TECHNOLOGY
BTECH INFORMATION TECHNOLOGY
Student Number Name of Students (in alphabetical order)
208045368 Chuma, Beverley
209116234 Legodi, Malebo209043229 Maidi, Kuli209121106 Makhuba, Isaac
209098880 Mangole, Keamogetswe20588739 Parkins, Lorato
211127124 Tsheole, Lesego209129131 Rakau, Mohlala209051426 Segooa, Frans208067833 Sobantu, Lindiwe
209122374 Shiluvana, Linda
Contact email address [email protected] and [email protected] telephone number 078 4893 520 and 071 3383 411
Name of Module Information Technology Management
Module Code AIITM4A
Name of Lecturer Isaac Skhumbuzo Gama
Date of Submission 30 May 2018
Declaration: We declare that this assignment, submitted by us, is our own work and that we have referenced all the sources that we have used.
Signature of Leader Date received Signature of Administrator Mark Date Signature of Lecturer Note:
Signature of all team members is required and all team members must sign the declaration.
Importance of Application management portfolio in an organization
Table of Contents
TOC o “1-3” h z u 1.Executive Summary: PAGEREF _Toc515484413 h 42.Introduction: PAGEREF _Toc515484414 h 52.1 An Application: PAGEREF _Toc515484415 h 52.2 Application Portfolio Management: PAGEREF _Toc515484416 h 53.Discussion: PAGEREF _Toc515484417 h 63.1Requirements of Application Portfolio Management: PAGEREF _Toc515484418 h 63.2Application Portfolio Management Lifecycle: PAGEREF _Toc515484419 h 73.3Technology Lifecycle PAGEREF _Toc515484420 h 93.4Benefits of Application Portfolio Management: PAGEREF _Toc515484421 h 103.4.1Application Value and Business Capabilities PAGEREF _Toc515484422 h 123.5Challenges and Difficulties of APM: PAGEREF _Toc515484423 h 123.6Implementation and Adoption of APM: PAGEREF _Toc515484424 h 133.6.1Ensuring a Successful APM Implementation PAGEREF _Toc515484425 h 133.6.2Sustainable APM and IT governance PAGEREF _Toc515484426 h 143.6.3Main Application Portfolio Management Process. PAGEREF _Toc515484427 h 153.6.4APM Capabilities. PAGEREF _Toc515484428 h 153.6.5Dynamic service delivery PAGEREF _Toc515484429 h 163.6.6Data-driven portfolio management PAGEREF _Toc515484430 h 174.Conclusion: PAGEREF _Toc515484431 h 175.Keys and Terms: PAGEREF _Toc515484432 h 176.Bibliography: PAGEREF _Toc515484433 h 18
Abstract:Application portfolio management involves continuous assessment of the application portfolio in terms of business value, enhancement potential, and cost and technology concerns. Application Management help facilitate strategic application development, maintenance, transformation and retirement. There has been quite an insightful number of researches conducted over the years on the use and importance of Application Management Portfolio which has led to companies implementing its practice, this report serves to highlight the common practices performed in this area of study and profession.
Introduction:An Application:An application is a set instructions (Generally referred to as code) that is positioned between you and the hardware of the device, enabling you to use it. It is an invisible component of a computer system that makes it possible to interact with the physical component of a computer. An Application is what allows you to communicate with smartphones, tablets, game consoles, media players and similar devices such as Microsoft offices 365 and Adobe.
The application lifecycle is the supervision of a software application from initial planning stage to the retirement stage. Application Portfolio managers need to be cognizant of the stages involved in managing the organization’s applications portfolio.
In this context we refer to applications as a set of tools used by businesses in order to enable the automation of their manual business processes. This will result in businesses being able to meet their short and long term strategical and operational goals.
2.2 Application Portfolio Management:APM is the ongoing management process of categorization, assessment and rationalization of the IT application portfolio, which allows organizations to identify which applications to maintain, invest in, replace, or retire. The overall goal of APM is to enable organizations to determine the best approach for IT to meet business demands from both tactical and strategic. CITATION Jam10 l 7177 (Smith, 2010)The APM program must analyse the effectiveness of the existing application portfolio to identify the best options for improvement, which could mean application retirement, migration or adaptation for selected applications. It must also identify risks linked to these changes, such as end of support for applications, and gaps in skills. (Vila, 2014).
Discussion:Application Portfolio Management is a discipline for the governance of software applications through their entire life-cycle in support of maximizing the business value delivered. (Cio-wiki.org, 2018).
APM thinking has four salient features:
Governance Focus: The focus is on better IT decisions – higher business value at a lower cost, and risk.
Application Life Cycle: These decisions are along the entire application lifecycle – identify, select, fund, build, deploy, operate, and sunset.
Application Portfolio: The decisions are common across a group of applications.
Application Categories: In a category which contains applications with similar characteristics requiring similar governance approach.
Business Value: The objective is to govern the application portfolio driven by changing business needs for maximum business value.
Application portfolio management (APM) is designed after concepts of financial portfolio management. Application Portfolio Management is also referred to as Application Portfolio Rationalization. (Cio-wiki.org, 2018).
Requirements of Application Portfolio Management:There are three facets involved in application portfolio management. These include grouping, governing and management tools.
Grouping is perhaps the most important function involved in application portfolio management. In this scenario, applications that include similar functions are assessed according to their financial values and catalogued in a way that makes it easy to analyse them at a later period at multiple levels.
APM also needs to incorporate an ongoing process to ensure that all the future developments that include upgrades and other fixes or changes in the application are recorded. This is the governance part of application portfolio management where the processes are implemented at the same time when applications are rationalized and this ensures that the entire process is effective.
The next essential factor is an APM system which helps automate the process and provides the CIO with an overview of the value, risk and the number of applications that are present within an organization. These tools also provide a closer look at each of the groups within an organization and enable the IT infrastructure of an organization to be aligned closely with priorities such as budget as well as other business strategies. (Cio-wiki.org, 2018).
Application Portfolio Management Lifecycle:Application portfolio management lifecycle is an Application portfolio assessment, if carried out in a balanced fashion, can be of immense value before a modernization initiative and approach are finalized. It brings clarity on where most value risk anomalies are and how to objectively prioritize and create modernization sequence to effectively address business and IT concerns. Let us look at the reasons why it happens – after all the stakeholders strive for these initiatives to succeed.
The first major reason is that significantly few organizations know the real ‘as-is state’ of their application portfolio. At a strategic and operating level, there are visible, mostly aggregated symptoms of the problems, but nobody ever gets the priority and time to objectively break it down at the application level. It is like having a map, knowing where you want to be but without that “you are here” point on the map so you cannot work out your route options (traffic conditions, weather), budget and timelines. In the context of an application portfolio this “you are here” point is determined by several factors such as Total Cost of Ownership, value and risk of an application in the strategic and operating continuum, operating model for IT development and support, and degree of alignment between business and IT strategy.
The second reason is lack of or inadequate portfolio governance in various degrees and dimensions. Application Portfolio Management (APM) can effectively address these deficit areas. Lack of or insufficient portfolio governance creates value risk anomalies and complexities, multiple sources of truth for portfolio information and severely limits the ability to quickly respond to business needs.
APM is a strategic IT management approach for managing risks and costs of IT assets to maximize its value to business. It provides a management framework to support a continuous process of portfolio optimization covering the complete IT investment lifecycle (refer to image below) where it starts with strategic objectives and business priorities driving the portfolio assessment recommendations which, when integrated with budgeting process, leads to the right portfolio priorities and their most effective execution sequence. (Us.nttdata.com, 2018).
Another factor is the view that major stakeholders maintain towards their business applications portfolio. This view, to a large extent, influences how and at what level portfolio-related issues are articulated and addressed (i.e., a technology problem, an IT operations problem or a business problem). A mature portfolio assessment and rationalization approach establishes a single source of truth of your applications portfolio, providing insights that help you rebalance your IT assets to optimize value-risk and cost equation. (Neeraj Mishra, 2013.)
Patrick Buech, (2012.) explains The Process of Application Portfolio Management as a four-step process
Technology LifecycleGiven the rapid evolution and use of technology in today’s competitive environment, businesses have turned to technology, to drive business long term and short term strategic goals and objectives. This introduces new and enhanced applications in the current environment which drives the need for a continuous application portfolio management.
(lumenlearning.com) defines the technology life cycle (TLC) as the costs and profits of a product (Application) from technological development phase to market maturity to the eventual decommissioning of the application.
Businesses anticipate a return on investment (ROI) over a period of time and also anticipate exploiting the benefits that should to be realised upon engaging in the technological investment. However these entities, particularly the application portfolio manager, must be cognisant of the technology life cycle that is inherited upon engaging in these investments and constantly ensure that the technology acquired is fit for purpose by managing the application portfolio efficiently and effectively.
Business spend a considerable amount of time and money engaging in these technology investments, the question is, are there measures in place in order to mitigate the risks that may arise due to the stages and phases established in the TLC, and if these measures exist how are these implemented, in order for businesses not to assume and inherit the financial risk associated with the stages defined.
(lumenlearning.com) defines the stages in the TLC as the following:
Research and Development – During this stage, risks are taken to invest in technological innovations. By strategically directing R&D towards the most promising projects, companies and research institutions slowly work their way toward beta versions of new technologies.
Ascent Phase – This phase covers the timeframe from product invention to the point at which out-of-pocket costs are fully recovered. At this junction the goal is to see to the rapid growth and distribution of the invention and leverage the competitive advantage of having the newest and most effective product.
Maturity Stage – As the new innovation becomes accepted by the general population and competitors enter the market, supply begins to outstrip demand. During this stage, returns begin to slow as the concept becomes normalized.
Decline (or Decay) Phase – The final phase is when the utility and potential value to be captured in producing and selling the product begins dipping. This decline eventually reaches the point of a zero-sum game, where margins are no longer procured.
Benefits of Application Portfolio Management:The concept of application portfolio management (APM) first emerged in the early 1990s, but its benefits really became apparent during the Y2K build-up. When organizations began preparing for Y2K remediation, they often discovered they had accumulated a large number of applications that were redundant, costly to maintain, and of little real business value. Moreover, the majority of applications were not catalogued in any logical, searchable fashion. As companies began to review their application portfolios, the benefits of having an ongoing process of doing so became apparent. (Feher and Scarlato, 2018).
Application portfolio management involves continuous assessment of the application portfolio in terms of business value, enhancement potential, cost and technology concerns. Such comprehensive evaluations help facilitate strategic application development, maintenance, transformation and retirement, (Cio-wiki.org, 2018) which, in turn, can help companies:
Align the application portfolio with business strategies
Develop Enterprise Applications: APM can assist IT in planning enterprise applications that replace many smaller applications that sit in silos and inhibit the enterprise’s ability to gain a single view of a customer or constituent. A clear picture of the limitations of applications in the portfolio can identify opportunities for system development that transform business and create efficiencies where they previously did not exist.
Reduce costs and optimize value:
Application Development Cost Reductions: A closer analysis of the components of each of the applications in the portfolio allows IT to leverage more application code when developing a new application.
Elimination of Redundant Applications: Because applications were created in silos over the years, many applications essentially perform the same functions as other applications. Applications can be consolidated and applications that are no longer needed can be sunset. This saves money and reduces the costs of system maintenance and enhancements.
Elimination of Applications of Little or No Value: Applications that are returning little or no value to the business can be eliminated.
Shared Services and Applications: Knowledge of the portfolio allows sharing services instead of building or procuring them in some cases. When a new service is requested IT can examine the portfolio to determine whether a solution to the need already exists. If so, that application can be shared or copied.
Technology Standardization: A full picture of the portfolio helps identify applications based on technology platforms that are considered legacy technology and identified for conversion to standard technologies. This conversion can save money, but more importantly helps maintain an environment that is supportable and sustainable into the future.
Standardize business practices
Implement shared services
Increase speed-to-deployment and speed-to-market.
Feher and Scarlato, (2018) asked an important question of “APM – Why Do You Need It?” and went on to answer as follows: “High costs of application maintenance, alignment and redundancy against business capabilities, and the pursuit of efficient application lifecycles drive us to look at Application Portfolio Management so that we can:
Manage the Cost of IT;
Ensure Business Capability Value;
Quantify an applications value based on stability, quality, and maintainability;
Provide the best solutions for our customers;
Utilize our resources more efficiently;
Determine where we can automate a business capability that is currently a manual process.”
Feher and Scarlato, (2018) went on and said “Application portfolio management is based on the analysis of information regarding all existing applications currently in use within the organization. The application information that is required to be regularly collected includes:
Contribution to the business
Application relationships with other applications
Costs to maintain and evolve applications”
The objective of such an approach is to manage the continuous evolution of the application portfolio to its optimal state and to provide concrete insight about applications (costs, reactivity, and quality, risks) to make valid decisions about the portfolio’s future.
APM can often be misused when it is done in fragments and for short-term benefits, but it can be turned into an effective management tool if it is integrated in a global and structured approach.
Application Value and Business CapabilitiesTo determine an applications value, we look at what the applications can do and how well they do it. Measurement is the key.
Find redundancies in application support
Identify the metrics that will be used to establish how well an application is performing
CSAT (Customer Satisfaction)
Application Operational and Cost Assessment
Application Lifecycle and Release Process Management
Application Portfolio Optimization
Application Client/Customer Management
Challenges and Difficulties of APM:According to Lankhorst& Danny (2016). Huber (2017) Managing Application Portfolio has the following challenges and/or difficulties:
Failure to manage and understand scope – When the stakeholders identify the requirement of the application they think that they have identified all the requirements but they keep on adding more requirements which makes it difficult to manage and understand what they really want.
Convoluted or contrived estimation – When estimating the duration of the project, the estimation is based on assumptions and they hardly audited documents, which makes the project to be behind the duration and the business does not stop to plan for the project they attempt to absorb the change.
Definition of done is not clear – How do you know when you are done? What is your litmus test? Assumptions on what “done” means assumes that there is an end.
Too many applications – Too many applications that are being developed at the time
Lack of resources – All available resources is busy with other applications
Lack of clear priorities
Growing backlog of application support projects
Tendency to gather data which doesn’t provide useful information for decision makers
Insufficient criteria used for portfolio selection
Lack of effective monitoring and management of the portfolio. (Weinberger, 2018)
Implementation and Adoption of APM:With technology rapidly evolving promising returns on the investments organizations make of the technologies they adopt to drive forth their strategic goals and responsiveness, this however form the analytical perspective and common business sense, is only as true and the management behind the technologies. From the online article addressing similar analysis, (Dobbins, 2016) states that IT governance is one of the controls at the top of CIO goals to drive compliance.
Organizations often onboard risks while exploring the opportunities presented with the changes in technology. Application Portfolio Management helps in managing change, fully realizing benefits of new technology and enable the continued transformation of organization’s IT strategy, it helps direct investments where most crucial and with high yield of benefits (Dobbins, 2016). Essentially managers would want to have sight of applications of the enterprise and discover how resources are utilized and the state of the applications. Having sight of all these complexities and dependencies promotes discipline and standard approach within the organization.
Ensuring a Successful APM ImplementationThere has been quite an insightful number of researches conducted over the use and importance of Application Management Portfolio which has led to companies implementing such practice. In one article, which was published in January 2006, a simple and yet true reflection on this governance compares the value of APM with that of financial portfolio, the analogy states that – “A financial portfolio groups together similar investments, such as stocks, bonds, and real estate, and associates values with those investments. The financial portfolio can then provide a consolidated view of investments by class, assess the risk associated with the portfolio, and enable the portfolio owner to make sound decisions based on his or her strategic goals. Similarly, APM provides a view of all applications in the aggregate, as well as by functional attributes and financial values.” (Computer Economics, 2009).
There are consulting companies which can help organizations align their strategy and efficiently implement APM to realize its potential and success whereas software vendors such as Hewlett-Packard, Clarity and many others that can help with providing the right APM support tool / solution. The application software to provide support into the APM process is not on its own a complete solution but merely just a part of it and the key to achieve this process also entails forming governance to be maintained as changes and developments are made to the applications (Computer Economics, 2009). From this extract, it is eminent that the APM tool is also important, though might not be to the same value / priority as other applications, and requires proper maintenance and support for reporting purposes to the CIO and sustaining the APM knowledge base.
Sustainable APM and IT governanceIn every organization’s endeavour and management practice, it is crucial to assess the not only the probability but also the sustainability of every investment or product, this is likewise necessary to be done for the practice and implementation of APM process the organization aims to adopt. However just like any business function this would often also need to be reviewed or re-engineered continuously.
F. Villa (2014) states that, “An application portfolio can’t be managed without considering the related IT project portfolio and the infrastructure portfolio that support and affect the applications” (pg. 5).
This already gives an insight at the least, of the human resources required through this process /implementation – from support personnel perspective, for existing applications, application SME etc. Some of the reasons behind lack of or the failure of sustainable APM are outlined below:
Defining a Scope limited to application inventory: Limiting the APM scope to applications alone can lead to misjudgement and give faulty sense of accomplishment or future success of the principle. This should also be mapped around governance procedure to be followed across all business application entities.
Adopting the use of short-lived APM tools: Some tools, mostly customized or inhouse build, quickly becomes obsolete / depreciates and can no longer serve the APM objectives on its entirely.
Lack of CPI: Once APM gets implemented, even though providing sustainability in the long term, changes and emerging challenges often would need that the APM principles or governance be re-looked and improved to maintain alignment and process improvement.
As APM is an integrated process, the wider the organization’s application / structure, the more complex the solution needed to implement the practice. F. Villa (2014) lists activities to be carried out in implementation and support of APM as addressed below.
Main Application Portfolio Management Process.APM Program Activities:
Portfolio Review and Analysis: Suggesting improvements in alignment with objectives / CPI.
Application Portfolio governance: Organization wide practices.
Support Activities: Training, selecting best tools and technology development.
Defining Roles and Responsibilities: Establishing stakeholder category and their interest / capacity.
Establishing Governance of the Application Portfolio:
Building a framework and control structure.
Choosing the Cost Analysis Model: “This involves finding the right balance between the level of information detail that will make it possible to make informed decisions and the time necessary to obtain and maintain this information” (Fabrice Vila, 2014).
FIGURE 2. Main Activities of the APM Process, src: (Fabrice Vila, 2014, p.7).
APM Capabilities.According to (McKeen& Smith, 2010)” In order to get an APM initiative underway, it is necessary to build a business case” and if APM properly established and positioned, organizations may never get the business to pay for APM, however this requires the positioning of the APM as inventory management. Below is a high-level capabilities APM should provide.
FIGURE 3: Key APM Capabilities, src. (McKeen& Smith, 2010, p. 163)
APM strategy and governance are interlinked, as illustrated by (McKeen& Smith, 2010), governance is the map that leads to the realization of the organizations strategy. These are nothing but set of agreed policies, procedures and rules that guide decisions and define decision authorities. APM governance, again, answers the questions:
What decisions need to be made?
Who should make these decisions?
How are these decisions made?
Organizations need to identify what specific information about applications will need to be captured. Broken down into subject lines, focus points that can be derived into capturing the information include but not limited to, General Application information, Application Categorization, Technical Condition, Business Value and Support Cost etc.
According to (Marzullo, 2015), a solid portfolio optimization foundation is built on two techniques and they are: dynamic service delivery and data-driven portfolio management. When applied at the application and portfolio level, it successfully transforms the way applications are managed.
Dynamic service deliveryDynamic service delivery incorporates a scalable delivery model enabling services to be assigned by applications, based on business need and offers flexibility to change the service level as business conditions evolve. This approach also provides application-specific cost transparency, so IT and the business have clarity into, and control over, expenses and investments. ( Dynatrace LLC. 2018)
Data-driven portfolio managementThis second crucial technique provides a clearer view and greater understanding of business applications. The activity provides the original strategic intent classification for each application, and is reviewed periodically to ensure the designation keeps pace with changing application and business conditions. (Hawkins, G,2017)
Conclusion:Application Portfolio Management is a continuous process over time the technical quality of application may deteriorate or business importance may change. This influences future investment decisions. Application Portfolio Management (APM) sets out to deliver that understanding and enable the creation and continued evolution of business IT strategy. The APM tool market continues to grow, as CIOs realize both the need and availability of such technology in helping them reduce their application maintenance problems.
High costs of application maintenance, alignment and redundancy against business capabilities, and the pursuit of efficient application lifecycles drive us to look at Application Portfolio Management to:
Manage the Cost of IT.
Ensure Business Capability Value.
Quantify an applications value based on stability, quality, and maintainability.
Provide the best solutions for our customers.
Utilize our resources more efficiently.
Determine where we can automate a business capability that is currently a manual process.
Keys and Terms:CPI: Continuous Process Improvement.
APM: Application Portfolio Management.
ROI: Return on Investment.
Bibliography:Alexandra C, &Marzullo, M. 2015. Rethinking applications management. Hewlett Packard Enterprise Development.
Cio-wiki.org. (2018). CIO Wiki – Application Portfolio Management (APM). online
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Dobbins, J., 2016. The need for Application Portfolio Management. Online
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George Hawkins ,2017. online Managing portfolios: data-driven strategy and decision making. Available at: https://www.axelos.com/news/blogs/march-2017/managing-portfolios-data-driven-strategy-decisions Accessed 28 May 2018
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Available at: https://us.nttdata.com/en/blog/2013/december/the-reality-of-your-application-portfolio. Accessed 26 May 2018
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